Level of measurement
Subject: Business, Business Statistics | Topics:

level of measurement helps you decide how to interpret the data from that variable. When you know that a measure is nominal (like the one just described), then you know that the numerical values are just short codes for the longer names.

There are typically four levels of measurement that are defined:

  • Nominal
  • Ordinal
  • Interval
  • Ratio

Each of these has different degrees of usefulness in statistical research. Ratio measurements have both a meaningful zero value and the distances between different measurements defined; they provide the greatest flexibility in statistical methods that can be used for analyzing the data. Interval measurements have meaningful distances between measurements defined, but the zero value is arbitrary (as in the case with longitude and temperature measurements in Celsius or Fahrenheit). Ordinal measurements have imprecise differences between consecutive values, but have a meaningful order to those values. Nominal measurements have no meaningful rank order among values.

Because variables conforming only to nominal or ordinal measurements cannot be reasonably measured numerically, sometimes they are grouped together as categorical variables, whereas ratio and interval measurements are grouped together as quantitative or continuous variables due to their numerical nature.

Finally, in ratio measurement there is always an absolute zero that is meaningful. This means that you can construct a meaningful fraction (or ratio) with a ratio variable. It’s important to recognize that there is a hierarchy implied in the level of measurement idea. At lower levels of measurement, assumptions tend to be less restrictive and data analyses tend to be less sensitive.

 

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