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In what situations are nonparametric statistics useful?

Short Answer

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Nonparametric statistics are useful in situations where: 1. Data are ordinal - they can be ranked, but exact differences between ranks are not known, for example, Likert-scale surveys. 2. Data have skewness or outliers issues, such as income data. 3. The sample size is very small, for instance, a study involving 10 participants.

Step by step solution

01

Identifying Nonparametric Statistical Scenario 1

Nonparametric statistics are especially useful when data are ordinal - they can be ranked, but the exact differences between ranks are unknown. An example could be a survey using Likert scale (strongly disagree to strongly agree). These ordinal scales are not suitable for parametric statistics, but can be analyzed using nonparametric statistics.
02

Identifying Nonparametric Statistical Scenario 2

Nonparametric statistical methods also come in handy when dealing with data that have skewness or outlier issues. These types of data can violate the assumptions of parametric tests, such as normality. For instance, income data often contain outliers and are right-skewed; much of population earns relatively little, while a small fraction earns significantly more. In this situation, nonparametric statistics could be used.
03

Identifying Nonparametric Statistical Scenario 3

When the sample size is very small, nonparametric statistical methods can provide useful insight when parametric methods are unsuitable due to large sample-size requirement. For example, if you collected data from a sample of 10 people, nonparametric statistics like the Wilcoxon signed-rank test could be applied.

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