Final answer:
A categorical variable is used for describing and explaining behavior, and it cannot be observed or measured directly. It places a person or thing into a category.
Step-by-step explanation:
A categorical variable is used for describing and explaining behavior. It cannot be observed or measured directly, but it places a person or thing into a category. Examples of categorical variables include party affiliation - Republican, Democrat, Independent - and favorite subject in school. Latent variables are not directly observable because they represent abstract constructs, such as intelligence or socio-economic status. These variables are often inferred from other variables that are observable and measured directly, such as test scores or income levels. Unlike numerical variables that take on values with equal units such as weight in pounds and time in hours, categorical variables do not have units and cannot be used for mathematical calculations.