paired-comparison-analysis

Paired Comparison Analysis In A Nutshell

A paired comparison analysis is used to rate or rank options where evaluation criteria are subjective by nature. The analysis is particularly useful when there is a lack of clear priorities or objective data to base decisions on. A paired comparison analysis evaluates a range of options by comparing them against each other.

Understanding a paired comparison analysis

Paired comparison analyses can be used in a variety of scenarios. One business may use them to settle on the required skills or qualifications for a new position. Another may use the analysis to ask consumers to review a new product or service.

The method is very effective and inexpensive to run. By showing the relative importance of different options, a business can identify the most pressing problem to solve or highlight the most beneficial solution.

Conducting a paired comparison analysis

Conducting a paired comparison analysis is a relatively simple affair.

A team should first be assembled and then follow these steps:

  1. Identify the options to be evaluated and assign a letter to each. For example, a coffee roasting business looking to expand may identify options such as expansion into overseas markets, improving customer service, and improving the quality of the beans.
  2. Then, create a matrix with options occupying row and column headings. Cells in the matrix that compare options with themselves should be greyed out. Duplicate comparisons between options should also be greyed out.
  3. In the remaining cells, compare each row option with the corresponding column option. In each cell, the team must place the letter of the option they deem more important. Then, they must score the difference in importance using a scoring system. Many teams choose to use a 0 (no difference) to 3 (major difference) system. 
  4. Add up all the option values and convert each score into a percentage of the total. The coffee roasting business may determine that overseas markets (Option A) received the highest score, followed closely by improving bean quality (Option C). Improving customer service (Option B) was not seen as important, potentially because it was already more than satisfactory.
  5. Depending on the level of detail required, the business may choose to undertake further analyses by comparing the positive aspects of certain options against each other.

Limitations to the paired comparison analysis

While the paired comparison analysis removes the subjectivity from decision making, it does not incorporate statistical inferences. In other words, teams have no means of discovering whether the differences between option pairs are statistically significant. 

Inevitably, there will also be disagreement on which of the compared options is more important. Since there are only two choices, the paired comparison analysis leaves little room for interpretation in the degree of importance for team members. This has the potential to stifle collaboration and comprise the integrity of the results.

Key takeaways

  • A paired comparison analysis objectively ranks a range of options by comparing them against each other.
  • A paired comparison analysis is cheap, effective, and simple to administer. It can be used in any situation where a business needs to identify the best decision among a list of potential scenarios.
  • A paired comparison analysis does not allow teams to make any statistical inferences about their results. The binary measure of option importance has the potential to decrease collaboration and impact on results integrity.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"