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Correlation — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsCorrelation4 Marks
Question
When is rank correlation more precise than simple correlation coefficient?
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Answer

Rank correlation is more precise than simple correlation coefficient in situations when it is required quantify qualities. Ranking is a better alternative for quantification of qualities, which can’t be done in simple correlation. It is also useful when correlation coefficient between two variables with extreme values is quite different from the coefficient without the extreme values.
For example: In a beauty contest judges may have to prepare a list of participants in order of their beauty. There is no procedure or numerical system which judges beauty, so in order to prepare a list judges rank the participants based on their features. In this manner rank correlation can be used which gives more precise value than the simple correlation.

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