Data interpretation refers to the implementation of processes through which data is reviewed for the purpose of arriving at an informed conclusion. The interpretation of data assigns a meaning to the information analyzed and determines its signification and implications.

The importance of data interpretation is evident and this is why it needs to be done properly. Data is very likely to arrive from multiple sources and has a tendency to enter the analysis process with haphazard ordering. Data analysis tends to be extremely subjective. That is to say, the nature and goal of interpretation will vary from business to business, likely correlating to the type of data being analyzed. While there are several different types of processes that are implemented based on individual data nature, the two broadest and most common categories are “quantitative analysis” and “qualitative analysis”.

The varying scales include:

  • Nominal Scale: non-numeric categories that cannot be ranked or compared quantitatively. Variables are exclusive and exhaustive.
  • Ordinal Scale: exclusive categories that are exclusive and exhaustive but with a logical order. Quality ratings and agreement ratings are examples of ordinal scales (i.e., good, very good, fair, etc., OR agree, strongly agree, disagree, etc.).
  • Interval: a measurement scale where data is grouped into categories with orderly and equal distances between the categories. There is always an arbitrary zero point.
  • Ratio: contains features of all three.