Answer to Question #155777 in Statistics and Probability for Wachira Ann Wangari

Question

Discuss circumstances under which we use chi-square in data analysis and derive the chi-square formula

Answer 1

1. Market researchers use the Chi-Square test when they find themselves in one of the following situations:

- They need to estimate how closely an observed distribution matches an expected distribution. This is referred to as a “goodness-of-fit” test.

- They need to estimate whether two random variables are independent.

2. The Chi-Square test is most useful when analyzing cross tabulations of survey response data.

Because cross tabulations reveal the frequency and percentage of responses to questions by various segments or categories of respondents (gender, profession, education level, etc.), the Chi-Square test informs researchers about whether or not there is a statistically significant difference between how the various segments or categories answered a given question.