Contingency Analysis & Chi-square Test
For finding an association between two nominal variables, contingency analysis table and chi square test is employed. The contingency table is created by listing values of one variable as row and other as column.
The Pearson chi-square test or “goodness-of-fit” is used to check if the expected frequency in the table is different from the actual frequency in the contingency table. The test statistics is assumed to follow chi-square distribution. Other statistics which can be used is Likelihood Ratio Chi Square test. As sample size increases both Chi-square Test and Likelihood Ration Chi Square test statistics converges.