HYPOTHESIS TESTING

CONCEPT OF HYPOTHESIS
A hypothesis is a proposition which the researcher wants to verify. In research hypothesis are generally concerned with the causes of a certain phenomenon or a relationship between two or more variables under investigation.

Procedure in hypothesis testing

1.

2.
3. 4. 5.

Formulate a hypothesis Setup a suitable significance level Choose a test criterion Compute Make decisions

1. Formulate a hypothesis
Conventional approach hypothesis testing is to set up 2 hypothesis instead of 1 in such a way that if one hypothesis is true, the other is false. Or if one hypothesis is rejected / false then the other in true / accepted. 1. Null hypothesis 2. Alternative hypothesis Null hypothesis (H0) - means nothing / invalid e.g.. Let us assume that avg income of population is Rs. 9000/- . Since we have assumed, this is our null hypothesis. H0 : = RS. 9000/- whereas H0 is null hypothesis. The alternative hypothesis will be HA : Rs.9000/Rejection of null hypothesis will show that income is not Rs. 9000/- & other hypothesis will be accepted.

2. Set a suitable significance level

After setting hypothesis next step is to test its validity at a certain level of significance. The significance level of say, 5 per cent means that in the log run, the risk of making the wrong decision is about 5%. The researcher will likely to be wrong in accepting a false hypothesis or rejecting a true hypothesis in 5 out of 100 occasions. If significance level is 1% implies that researcher will likely to be wrong in accepting a false hypothesis or rejecting a true hypothesis in1out of 100 occasions. Thus,1% significance level provide greater confidence.

3. Select test criterion

Selection of appropriate statistical technique as a test criterion. E.g.. Z-test hypothesis pertains to a large sample (30 or more) , z test implying normal distribution is used. T-test sample size is small (less than 30) Selection of proper test is crucial. Choice should depend on no of considerations as no of variables involved, type of data (ration, interval, ordinal / nominal), size of sample, whether samples are independent or not.

4. Compute
After selecting the statistical method, next step is performance of various computations, necessary for the application of that particular test. These computations include the testing statistics as also its standard error.

5. Make decisions

Last step is to draw a statistical decisions, involving the acceptance or rejection of the null hypothesis. Will depend on whether computed value falls within the region of acceptance or rejection as a given level of significance. It is much easier to prove something false than to prove it true. Thus, when the researcher says that the null hypothesis is not rejected, he does not say that it is true.

Two types of errors in hypothesis testing

Type I error Type II error

H0 accept H0 true H0 false Type II error () H0 reject Type I error ()

Type I error hypothesis is true but rejected Type II error hypothesis is false but accepted. =1

E.g.
W1, good salesman A1, reward is given A2, reward is not given Correct decision Incorrect, error W2, poor salesmen Incorrect, error Correct decision