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Categorical Variable

TL;DR

Section titled “TL;DR”
  • Data whose values fall into distinct groups (categories) rather than on a numerical scale.
  • Common in survey and marketing research to classify attributes like gender, race, or political affiliation.
  • Can be binary (two categories) or ordinal (categories with a natural order); categories are not suitable for arithmetic operations.

Definition

Section titled “Definition”

A categorical variable is a type of data that can be divided into distinct categories or groups. This variable is used to classify and analyze data based on specific characteristics or attributes.

Explanation

Section titled “Explanation”

Categorical variables group observations into non‑numeric categories rather than measuring them on a continuous numerical scale. They are frequently used in survey research and marketing research to capture attributes such as preferences and behaviors. Categories do not have inherent numerical meaning, so categorical variables cannot be used in mathematical operations like addition or subtraction. Categorical variables may be:

  • Binary: having only two categories (e.g., smoker vs. non‑smoker).
  • Ordinal: having categories with a natural ordering (e.g., a customer satisfaction rating from 1 to 5).
  • Nominal: having categories without a natural order (e.g., gender, race, religion, political affiliation, educational level).

Examples

Section titled “Examples”

Nominal examples

Section titled “Nominal examples”
  • Gender: male, female, or other.
  • Race: white, black, Hispanic.
  • Religion: Buddhist.
  • Political affiliation: Republican, Democrat.
  • Educational level: high school graduate.

Binary example

Section titled “Binary example”
  • Smoker vs. non-smoker.

Ordinal example

Section titled “Ordinal example”
  • Customer satisfaction rated on a scale from 1 to 5.

Use cases

Section titled “Use cases”
  • Survey research for classifying respondent attributes.
  • Marketing research for understanding customer preferences and behaviors.

Notes or pitfalls

Section titled “Notes or pitfalls”
  • Categories lack numerical meaning and therefore cannot be added, subtracted, or otherwise directly used in arithmetic operations.
  • Ordinal categorical variables have a natural ordering that can be used in analysis, unlike nominal categories.
Section titled “Related terms”
  • Binary categorical variable
  • Ordinal categorical variable
  • Nominal categorical variable
  • Numerical / continuous variable