DEFINITION of 'Degrees Of Freedom'
In statistics, the number of values in a study that are free to vary. For example, if you have to take ten different courses to graduate, and only ten different courses are offered, then you have nine degrees of freedom. Nine semesters you will be able to choose which class to take; the tenth semester, there will only be one class left to take  there is no choice, if you want to graduate.
Degrees of freedom are commonly discussed in relation to chisquare and other forms of hypothesis testing statistics. It is important to calculate the degree(s) of freedom when determining the significance of a chi square statistic and the validity of the null hypothesis.
INVESTOPEDIA EXPLAINS 'Degrees Of Freedom'
There are two types of chi square tests: the goodnessoffit test (does a coin tossed 100 times turn up heads 50 times and tails 50 times?) and the test of independence (is there a relationship between gender and a perfect SAT score?).
Degrees of freedom are used to then determine whether a particular null hypothesis can be rejected based on the number of variables and samples of in the experiment. For example, while a sample size of 50 students might not be large enough to obtain significant information, obtaining the same results from a study of 500 samples can be judged as being valid.

GoodnessOfFit
Used in statistics and statistical modelling to compare an anticipated ... 
Nonparametric Statistics
A statistical method wherein the data is not required to fit ... 
Sampling Error
A statistical error to which an analyst exposes a model simply ... 
Null Hypothesis
A type of hypothesis used in statistics that proposes that no ... 
Descriptive Statistics
A set of brief descriptive coefficients that summarizes a given ... 
Statistics
A type of mathematical analysis involving the use of quantified ...

Investing Basics
What Are The Odds Of Scoring A Winning Trade?
Just because you're on a winning streak doesn't mean you're a skilled trader. Find out why. 
Investing Basics
Regression Basics For Business Analysis
This tool is easy to use and can provide valuable information on financial analysis and forecasting. Find out how. 
Active Trading
The Linear Regression Of Time and Price
This investment strategy can help investors be successful by identifying price trends while eliminating human bias. 
Personal Finance
What is the average salary for an accountant?
Learn about the average salaries of various accounting positions, and see the difference that an accounting degree makes in attaining higher wages. 
Fundamental Analysis
Lognormal and Normal Distribution
When and why do you use lognormal distribution or normal distribution for analyzing securities? Lognormal for stocks, normal for portfolio returns. 
Economics
Where is cost of living lowest in the world?
Learn how the cost of living is the lowest in India based on numbers derived from the CPI and organizations like Expatistan and Numbeo. 
Economics
Is the Bureau of Labor Statistics accurate?
Read this brief analysis of the accuracy of Bureau of Labor Statistics, including a summary of the types of reports issued and how they are compiled. 
Investing Basics
Using Normal Distribution Formula To Optimize Your Portfolio
Normal or bell curve distribution can be used in portfolio theory to help portfolio managers maximize return and minimize risk. 
Economics
How does the Bureau of Labor Statistics define contingent workers?
Discover how contingent workers are a significant part of the labor force and are defined as persons who do not expect their jobs to last. 
Economics
How does the Bureau of Labor Statistics determine the Consumer Price Index (CPI)?
Changes in the average price level of more than 200 goods and services across the U.S. economy are used to determine the Consumer Price Index, or CPI.