Non Parametric Methods

ASDM & RM
Term III; PGDM I
 Non-parametric Methods
• Testing of hypotheses with “order statistics” or “non-
parametric statistics” or “distribution free statistics” are
known as non-parametric statistics.
• In Testing of Hypothesis, we assume that the samples
either came from large or normally distributed
populations. When it is not, we require alternative tests.
• In many business applications, we compare two outcomes
to decide which is better. For e.g. We compare two
different training methods; two different ad campaigns,
two different locations, etc., In such situations we are
interested in the order (rank) of values rather than
absolute values.
 Non-parametric Methods...some tests
• Sign test for single set of values, where positive or
negative signs are substituted for quantitative value
differences w.r.t. an assumed value. (e.g. Cricketer’s
score w.r.t. his average so far)
• Test of hypothesis concerning no difference among two or
more sets of data - such as two-sample sign test, Fisher-
Irwin Test.
• Wilcoxon Matched-pairs test or Signed Rank Test, where
the differences between each pair of values are ranked,
regardless of sign (on the absolute value) and totaled for
plus and minus values, and tested with t test.
 Non-Parametric tests .. Rank sum tests
• Rank sum tests are a whole family of tests, where we
rank the data jointly, in ascending or descending
order, to determine whether the two sets of data
come from same population or not
• Mann-Whitney U test which can also be used in the
above case, to determine whether two independent
samples have been drawn from the same population.
• Kruskal-Wallis H test, which replaces the ANOVA,
(used in parametric statistics) to dispense with the
assumption that the populations are normally
distributed.
 Non-Parametric tests .. Other tests
• Runs test used to judge the randomness of a sample on
the basis of the order in which the observations are
taken.
• Spearman Rank Correlation, a method for doing
correlation analysis whn the data are not available to use
in the numerical form but when the information is
sufficient to rank the data first, second, third and so
forth.
• Kolmogorov-Smirnov test, which is a method for
determining the goodness of fit between an observed
sample and a theoretical probability distribution.
Measures of Association... Interval and Ratio Data
• Pearson product moment correlation - for continuous
linearly related variables.
• Bivariate linear regression, for predicting one dependent
variable value from another independent variable.
• Partial and multiple correlation, taking three or more
variables, one dependent and two or more independent
variables.
 Measures of Association... Ordinal Data

• Gamma
• Kendall’s tau b
• Kendall’s tau c
• Spearman’s rho
 Measures of Association... Nominal Data
• Phi - Chi squrare for 2 x 2 table
• Cramer’s V for tables of size more than 2 x 2
• Lambda
• Contingency coefficient
• Goodman & Kruskal’s tau