Scale and nominal variables serve a purpose in statistical studies, which in turn can help better tailor a company's performance or marketing. Variables that lack order lack statistical significance because they do not have a specific order that compares the value of one variable to another.
Nominal Variables Categorize Without Order
Nominal variables can sort into two or more categories that do not have a specific order. Hair color serves as an example nominal variable, because blond, brunette and redhead constitute more than two categories, and the hair colors lack the organic ordering system of numbers.
Scale Variables Categorize with Order and Intervals
Defining a scale or interval variable first requires an understanding of ordinal variables. Ordinal variables categorize similarly to nominal variables but differ in having an intrinsic ordering system. Educational levels serve as ordinal variables, because high school graduate, some college and college graduate have a set order. Scale variables take ordinal variables a step further by including a set interval between the ordered categories. Annual income ranges presented as part of a survey could serve as a scale variable example. Surveys tend to break annual income down into even ranges, such as $10,000 to $30,000 and $30,000 to $60,000.
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