Chi-Square (χ2) Statistic

What Is a Chi-Square Statistic?

A chi-square (_χ_2) statistic is a test that measures how a model compares to actual observed data. The data used in calculating a chi-square statistic must be random, raw, mutually exclusive, drawn from independent variables, and drawn from a large enough sample. For example, the results of tossing a fair coin meet these criteria.

Chi-square tests are often used in hypothesis testing. The chi-square statistic compares the size of any discrepancies between the expected results and the actual results, given the size of the sample and the number of variables in the relationship.

For these tests, degrees of freedom are utilized to determine if a certain null hypothesis can be rejected based on the total number of variables and samples within the experiment. As with any statistic, the larger the sample size, the more reliable the results.

The Formula for Chi-Square Is

χ c 2 = ∑ ( O i − E i ) 2 E i where: c = Degrees of freedom O = Observed value(s) \begin{aligned}&\chi^2_c = \sum \frac{(O_i - E_i)^2}{E_i} \\&\textbf{where:}\\&c=\text{Degrees of freedom}\\&O=\text{Observed value(s)}\\&E=\text{Expected value(s)}\end{aligned} χc2=∑Ei(Oi−Ei)2where:c=Degrees of freedomO=Observed value(s)

What Does a Chi-Square Statistic Tell You?

There are two main kinds of chi-square tests: the test of independence, which asks a question of relationship, such as, "Is there a relationship between student sex and course choice?"; and the goodness-of-fit test, which asks something like "How well does the coin in my hand match a theoretically fair coin?"

Chi-square analysis is applied to categorical variables and is especially useful when those variables are nominal (where order doesn't matter, like marital status or gender).

Independence

When considering student sex and course choice, a _χ_2 test for independence could be used. To do this test, the researcher would collect data on the two chosen variables (sex and courses picked) and then compare the frequencies at which male and female students select among the offered classes using the formula given above and a _χ_2 statistical table.

If there is no relationship between sex and course selection (that is, if they are independent), then the actual frequencies at which male and female students select each offered course should be expected to be approximately equal, or conversely, the proportion of male and female students in any selected course should be approximately equal to the proportion of male and female students in the sample.

A _χ_2 test for independence can tell us how likely it is that random chance can explain any observed difference between the actual frequencies in the data and these theoretical expectations.

Goodness-of-Fit

_χ_2 provides a way to test how well a sample of data matches the (known or assumed) characteristics of the larger population that the sample is intended to represent. This is known as goodness of fit. If the sample data do not fit the expected properties of the population that we are interested in, then we would not want to use this sample to draw conclusions about the larger population.

For example, consider an imaginary coin with exactly a 50/50 chance of landing heads or tails and a real coin that you toss 100 times. If this coin is fair, then it will also have an equal probability of landing on either side, and the expected result of tossing the coin 100 times is that heads will come up 50 times and tails will come up 50 times.

In this case, _χ_2 can tell us how well the actual results of 100 coin flips compare to the theoretical model that a fair coin will give 50/50 results. The actual toss could come up 50/50, or 60/40, or even 90/10. The farther away the actual results of the 100 tosses is from 50/50, the less good the fit of this set of tosses is to the theoretical expectation of 50/50, and the more likely we might conclude that this coin is not actually a fair coin.

When to Use a Chi-Square Test

A chi-square test is used to help determine if observed results are in line with expected results, and to rule out that observations are due to chance. A chi-square test is appropriate for this when the data being analyzed is from a random sample, and when the variable in question is a categorical variable. A categorical variable is one that consists of selections such as type of car, race, educational attainment, male vs. female, how much somebody likes a political candidate (from very much to very little), etc.

These types of data are often collected via survey responses or questionnaires. Therefore, chi-square analysis is often most useful in analyzing this type of data.

What is a chi-square test used for?

Chi-square is a statistical test used to examine the differences between categorical variables from a random sample in order to judge goodness of fit between expected and observed results. 

Who uses chi-square analysis?

Since chi-square applies to categorical variables, it is most used by researchers who are studying survey response data. This type of research can range from demography to consumer and marketing research to political science and economics.

Is chi-square analysis used when the independent variable is nominal or ordinal?

A nominal variable is a categorical variable that differs by quality, but whose numerical order could be irrelevant. For instance, asking somebody their favorite color would produce a nominal variable. Asking somebody's age, on the other hand, would produce an ordinal set of data. Chi-square can be best applied to nominal data.