Dichotomous variables are variables that have two levels. A very common example of a dichotomous variable is gender, which has two outcomes and is reported as male or female.

Dichotomous variables are part of a larger type of variable called a categorical variable. Categorical variables are not measured by numbers, but they can instead be categorized. Dichotomous variables are any categorical variable that has two distinct outcomes. Survey questions that yield yes or no answers are also examples of dichotomous variables. When formulating hypotheses to test a dichotomous variable, it is essential to test the variables as mutually exclusive. This means that one outcome excludes the possibility of the other outcome.