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Chapter 12. Proportions > 12.1 Introduction

12.1 Introduction

The next two chapters deal with categorical data. As discussed in Chapter 1, JMP uses the terms nominal or ordinal for such data. Categorical data occur regularly in many business applications. The simplest form of nominal data is called binary, with only two categories. Binary variables occur, for example, when parts are classified as good or defective or applicants for a job are either qualified or unqualified. Similarly, polling and marketing research questionnaires contain many questions with binary variables. For example, a person is either registered or not registered to vote, or an interviewee either purchased or did not purchase a particular brand.

Data can be recorded as categorical outcomes directly or can first be recorded on a continuous scale and then converted to categories. For example, a lending institution classifies applicants for a particular loan type with a credit score at or above 720 as qualified and those with a score below 720 as unqualified. The continuous variable Credit Score is changed into a binary variable for use in making loan decisions.


  

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