![]() In auto-finance, for example, it is common to calculate a ratio consisting of the monthly ‘auto-loan payment’ to a person’s monthly income – and to presume that this ratio measures the ‘affordability’ of a vehicle for that person. ![]() Often an assumption or some theory colors the use of a measurement to affect it’s application. The validity of a measurement has to do with whether the measure taken truly relates to what one thinks is being measured. Often, for example, a borrower will state, or ‘estimate’ on a loan application that they earn more (or sometimes less) than they really earn – so ‘self-reported’ income is not a very reliable measure of real, verifiable income. A good example of this is ‘self-reported’ income. An unreliable measure is like an elastic ruler – it can provide a measure of that is likely to be different each time the measurement is taken. ![]() If data are collected at multiple times and in multiple situations and result in very consistent and reproducible measures, then the measure is considered reliable. Reliability of data has to do with the consistent nature of the measurement and data collection process.
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