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Economics · Ch 6 — Correlation

Techniques For Measuring Correlation

6.3

Techniques For Measuring Correlation

Three important tools are used to study the correlation between two variables:

  • Scatter diagram — a graph that visually presents the nature of the association between the variables, but gives no specific numerical value.
  • Karl Pearson's coefficient of correlation — a numerical measure of the linear relationship between two variables. A relationship is linear when it can be represented by a straight line.
  • Spearman's rank correlation — measures the linear association between the ranks assigned to items according to some attribute. It is meant for attributes that cannot be measured numerically, such as intelligence, physical appearance or honesty. …