Brent Griffin

Revised Fall 2006

Unlocking the Mysteries
of Hypothesis Testing
Whats this all about?
Hypothesis
An educated guess
A claim or statement about a
property of a population
The goal in Hypothesis Testing is to
analyze a sample in an attempt to
distinguish between population
characteristics that are likely to
occur and population characteristics
that are unlikely to occur.
Null Hypothesis
vs. Alternative
Hypothesis

Type I vs. Type II
Error

vs.
The Basics
Null Hypothesis vs. Alternative
Hypothesis
Null Hypothesis

Statement about the
value of a population
parameter
Represented by H
0

Always stated as an
Equality

Alternative Hypothesis

Statement about the
value of a population
parameter that must
be true if the null
hypothesis is false
Represented by H
1

Stated in on of three
forms
>
<

Type I vs. Type II Error
Referring
to H
o
, the
Null
Hypothesis

True False
Reject Type I
Error
O.K
Fail to
Reject
O.K. Type II
Error

Alpha vs. Beta
is the probability of Type I error
is the probability of Type II error
The experimenters (you and I) have the
freedom to set the -level for a
particular hypothesis test. That level is
called the level of significance for the
test. Changing can (and often does)
affect the results of the testwhether
you reject or fail to reject H
0
.

Alpha vs. Beta, Part II
It would be wonderful if we could force
both and to equal zero.
Unfortunately, these quantities have
an inverse relationship. As
increases, decreases and vice versa.
The only way to decrease both and
is to increase the sample size. To
make both quantities equal zero, the
sample size would have to be infinite
you would have to sample the entire
population.
Type I and Type II Errors
True State of Nature
We decide to
reject the
null hypothesis
We fail to
reject the
null hypothesis
The null
hypothesis is
true
The null
hypothesis is
false
Type I error
(rejecting a true
null hypothesis)

Type II error
(rejecting a false
null hypothesis)

Correct
decision
Correct
decision
D
e
c
i
s
i
o
n

Forming Conclusions
Every hypothesis test ends with the
experimenters (you and I) either
Rejecting the Null Hypothesis, or
Failing to Reject the Null Hypothesis
As strange as it may seem, you never
accept the Null Hypothesis. The best
you can ever say about the Null
Hypothesis is that you dont have
enough evidence, based on a sample,
to reject it!
Seven Steps to Hypothesis
Testing Happiness
(Traditional or Classical Method)
1) Describe in words the population
characteristic about which
hypotheses are to be tested
2) State the null hypothesis, H
o

3) State the alternative hypothesis, H
1

or H
a

4) Display the test statistic to be used
The Seven Steps
5) Identify the rejection region
Is it an upper, lower, or two-
tailed test?
Determine the critical value
associated with , the level of
significance of the test
6) Compute all the quantities in
the test statistic, and compute
the test statistic itself
The Seven Steps
The Seven Steps
7) State the conclusion. That is,
decide whether to reject the null
hypothesis, H
o
, or fail to reject the
null hypothesis. The conclusion
depends on the level of significance
of the test. Also, remember to state
your result in the context of the
specific problem.
Types of Hypothesis Tests
Large Sample Tests, Population Mean
(known population standard deviation)

Large Sample Tests, Population
Proportion (unknown population
standard deviation)

Small Sample Tests, Mean of a Normal
Population
The End
Actually, its just the
beginning...