19-1

Chapter 19
Measures of Association

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Learning Objectives
Understand . . . how correlation analysis may be applied to study relationships between two or more variables uses, requirements, and interpretation of the product moment correlation coefficient how predictions are made with regression analysis using the method of least squares to minimize errors in drawing a line of best fit

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Learning Objectives
Understand . . . how to test regression models for linearity and whether the equation is effective in fitting the data nonparametric measures of association and the alternatives they offer when key assumptions and requirements for parametric techniques cannot be met

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Exhibit 19-1 Measures of Association: Interval/Ratio

Pearson correlation coefficient
Correlation ratio (eta) For continuous linearly related variables For nonlinear data or relating a main effect to a continuous dependent variable One continuous and one dichotomous variable with an underlying normal distribution Three variables; relating two with the thirds effect taken out Three variables; relating one variable with two others

Biserial

Partial correlation Multiple correlation Bivariate linear regression

Predicting one variable from anothers scores

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Exhibit 19-1 Measures of Association: Ordinal

Gamma Based on concordant-discordant pairs; proportional reduction in error (PRE) interpretation P-Q based; adjustment for tied ranks P-Q based; adjustment for table dimensions P-Q based; asymmetrical extension of gamma Product moment correlation for ranked data

Kendalls tau b

Kendalls tau c

Somerss d Spearmans rho

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Exhibit 19-1 Measures of Association: Nominal

Phi Cramers V Contingency coefficient C Lambda Chi-square based for 2*2 tables CS based; adjustment when one table dimension >2 CS based; flexible data and distribution assumptions PRE based interpretation PRE based with table marginals emphasis

Goodman & Kruskals tau Uncertainty coefficient

Kappa

Useful for multidimensional tables

Agreement measure

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Relationships
To truly understand consumers motives and actions, you must determine relationships between what they think and feel and what they actually do.
David Singleton, Vice President of Insights, Zyman Marketing Group

19-8

Pearsons Product Moment Correlation r

Is there a relationship between X and Y?

What is the magnitude of the relationship?

What is the direction of the relationship?

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Exhibit 19-2 Scatterplots of Relationships

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Exhibit 19-4 Scatterplots

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Exhibit 19-7 Diagram of Common Variance

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Interpretation of Correlations
X causes Y

Y causes X

X and Y are activated by one or more other variables X and Y influence each other reciprocally

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Exhibit 19-8 Artifact Correlations

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Interpretation of Coefficients

A coefficient is not remarkable simply because it is statistically significant! It must be practically meaningful.

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Exhibit 19-9 Comparison of Bivariate Linear Correlation and Regression

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Exhibit 19-10 Examples of Different Slopes

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Concept Application
X Average Temperature (Celsius) Y Price per Case (FF)

12 16 20 24 Mean =18

2,000 3,000 4,000 5,000 Mean = 3,500

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Exhibit 19-11 Plot of Wine Price by Average Temperature

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Exhibit 19-12 Distribution of Y for Observation of X

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Exhibit 19-14 Wine Price Study Example

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Exhibit 19-15 Least Squares Line: Wine Price Study

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Exhibit 19-16 Plot of Standardized Residuals

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Exhibit 19-17 Prediction and Confidence Bands

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Testing Goodness of Fit

Y is completely unrelated to X and no systematic pattern is evident There are constant values of Y for every value of X
The data are related but represented by a nonlinear function

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Exhibit 19-18 Components of Variation

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Exhibit 19-19 F Ratio in Regression

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Coefficient of Determination: r2

Total proportion of variance in Y explained by X Desired r2: 80% or more

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Exhibit 19-20 Chi-Square Based Measures

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Exhibit 19-21 Proportional Reduction of Error Measures

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Exhibit 19-22 Statistical Alternatives for Ordinal Measures

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Exhibit 19-23 Calculation of Concordant (P), Discordant (Q), Tied (Tx,Ty), and Total Paired Observations: KeyDesign Example

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Exhibit 19-24 KDL Data for Spearmans Rho

_______ _____ Rank By_____ _____ _____ Applicant 1 2 3 4 5 6 7 8 9 10 Panel x 3.5 10.0 6.5 2.0 1.0 9.0 3.5 6.5 8.0 5.0 Psychologist y 6.0 5.0 8.0 1.5 3.0 7.0 1.5 9.0 10.0 4.0 d -2.5 5.0 -1.5 .05 -2 2.0 2.0 -2.5 -2 1.0 d2 6.25 25.00 2.52 0.25 4.00 4.00 4.00 6.25 4.00 _1.00_ 57.00
.

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Key Terms
Artifact correlations Bivariate correlation analysis Bivariate normal distribution Chi-square-based measures Contingency coefficient C Cramers V Phi Coefficient of determination (r2) Concordant Correlation matrix Discordant Error term Goodness of fit lambda

19-34

Key Terms
Linearity Method of least squares Ordinal measures Gamma Somerss d Spearmans rho tau b tau c Pearson correlation coefficient Prediction and confidence bands Proportional reduction in error (PRE) Regression analysis Regression coefficients

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Key Terms
Intercept Slope Residual Scatterplot Simple prediction tau