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On

TESTS

OF

HYPOTHESIS

Submitted To: Submitted By: Simi Mam Sumeet Singh MBA (Gen)

Roll. No.= 89 Sec = B

Contents

Sr.No. Subject Covered

Page No.

1

Introduction

3

2 3 4

Decision Errors: Decision Rules: One-Tailed Tests: and Two-Tailed

5 5 7

5

A General Procedure for Conducting Hypothesis Tests:

8-10

6

Common test statistics

11-13

2

7 8

Importance:

14 14

Criticism:

Introduction:

A statistical hypothesis test is a method of making statistical decisions using experimental data. In statistics, a result is called statistically significant if it is unlikely to have occurred by chance. The phrase "test of significance" was coined by Ronald Fisher: "Critical tests of this kind may be called tests of significance, and when such tests are available we may discover whether a second sample is or is not significantly different from the first. Hypothesis testing is sometimes called confirmatory data analysis, in contrast to exploratory data analysis. In frequency probability, these decisions are almost always made using nullhypothesis tests; that is, ones that answer the question Assuming that the null hypothesis is true, what is the probability of observing a value for the test statistic that is at least as extreme as the value that was actually observed? One use of hypothesis testing is deciding whether experimental results contain enough information to cast doubt on conventional wisdom.

3

Statistical hypothesis testing is a key technique of frequentist statistical inference, and is widely used, but also much criticized. The main alternative to statistical hypothesis testing is Bayesian inference. The critical region of a hypothesis test is the set of all outcomes which, if they occur, will lead us to decide that there is a difference. That is, cause the null hypothesis to be rejected in favour of the alternative hypothesis. The critical region is usually denoted by C. A statistical hypothesis is an assumption about a population parameter. This assumption may or may not be true. The best way to determine whether a statistical hypothesis is true would be to examine the entire population. Since that is often impractical, researchers typically examine a random sample from the population. If sample data are consistent with the statistical hypothesis, the hypothesis is accepted; if not, it is rejected. There are two types of statistical hypotheses.

1.

Null hypothesis. The null hypothesis, denoted by H0, is usually the hypothesis that sample observations result purely from chance. Alternative hypothesis. The alternative hypothesis,

2.

denoted by H1 or Ha, is the hypothesis that sample observations are influenced by some non-random cause.

4

For example, suppose we wanted to determine whether a coin was fair and balanced. A null hypothesis might be that half the flips would result in Heads and half, in Tails. The alternative hypothesis might be that the number of Heads and Tails would be very different. Symbolically, these hypotheses would be expressed as H0: P = 0.5 Ha: P ≠ 0.5 Suppose we flipped the coin 50 times, resulting in 40 Heads and 10 Tails. Given this result, we would be inclined to reject the null hypothesis and accept the alternative hypothesis.

Decision Errors:

Two types of errors can result from a hypothesis test. Type I error. A Type I error occurs when the researcher rejects a null hypothesis when it is true. The probability of committing a Type I error is called the significance level. This probability is also called alpha, and is often denoted by α. Type II error. A Type II error occurs when the researcher accepts a null hypothesis that is false. The probability of committing a Type II error is called Beta, and is often denoted by β. The probability of not committing a Type II error is called the Power of the test.

1.

2.

5

Decision Rules:

The analysis plan includes decision rules for accepting or rejecting the null hypothesis. In practice, statisticians describe these decision rules in two ways - with reference to a P-value or with reference to a region of acceptance. P-value. The strength of evidence in support of a null hypothesis is measured by the P-value. Suppose the test statistic is equal to S. The P-value is the probability of observing a test statistic as extreme as S, assuming the null hypothesis is true. If the P-value is less than the significance level, we reject the null hypothesis. Region of acceptance. The region of acceptance is a range of values. If the test statistic falls within the region of acceptance, the null hypothesis is accepted. The region of acceptance is defined so that the chance of making a Type I error is equal to the significance level. The set of values outside the region of acceptance is called the region of rejection. If the test statistic falls within the region of rejection, the null hypothesis is rejected. In such cases, we say that the hypothesis has been rejected at the α level of significance.

1.

2.

6

These approaches are equivalent. Some statistics texts use the P-value approach; others use the region of acceptance approach. In subsequent lessons .

**One-Tailed and Two-Tailed Tests:
**

1. One-Tailed Test : A test of a statistical hypothesis, where

the region of rejection is on only one side of the sampling distribution, is called a one-tailed test. For example, suppose the null hypothesis states that the mean is less than or equal to 10. The alternative hypothesis would be that the mean is greater than 10. The region of rejection would consist of a range of numbers located located on the right side of sampling distribution; that is, a set of numbers greater than 10.

7

2. Two-Tailed Test: A test of a statistical hypothesis, where

the region of rejection is on both sides of the sampling distribution, is called a two-tailed test. For example, suppose the null hypothesis states that the mean is equal to 10. The alternative hypothesis would be that the mean is less than 10 or greater than 10. The region of rejection would consist of a range of numbers located located on both sides of sampling distribution; that is, the region of rejection would consist partly of numbers that were less than 10 and partly of numbers that were greater than 10

A

General

Procedure

for

Conducting

Hypothesis Tests:

All hypothesis tests are conducted the same way. The researcher states a hypothesis to be tested, formulates an analysis plan, analyzes sample data according to the plan, and accepts or rejects the null hypothesis, based on results of the analysis.

1. State the hypotheses. Every hypothesis test requires

the analyst to state a null hypothesis and an alternative hypothesis. The hypotheses are stated in such a way that

8

they are mutually exclusive. That is, if one is true, the other must be false; and vice versa.

2. Formulate an analysis plan. The analysis plan describes

how to use sample data to accept or reject the null hypothesis. It should specify the following elements.

a. Significance

level.

Often,

researchers

choose

**significance levels equal to 0.01, 0.05, or 0.10; but any value between 0 and 1 can be used.
**

b. Test method. Typically, the test method involves a

test statistic and a sampling distribution. Computed from sample data, the test statistic might be a mean score, proportion, difference between means, difference between proportions, z-score, t-score, chisquare, etc. Given a test statistic and its sampling distribution, a researcher can assess probabilities associated with the test statistic. If the test statistic probability is less than the significance level, the null hypothesis is rejected.

3. Analyze

sample data. Using sample data, perform

**computations called for in the analysis plan.
**

a. Test statistic. When the null hypothesis involves a

**mean or proportion, use either of the following equations to compute the test statistic.
**

Test statistic = (Statistic - Parameter) / (Standard deviation of statistic) Test statistic = (Statistic - Parameter) / (Standard error of statistic)

9

where

Parameter

is

the

value

appearing

in

the

null

hypothesis, and Statistic is the point estimate of Parameter. As part of the analysis, you may need to compute the standard deviation When the deviation or and parameter in the standard error of the statistic. error. involves Previously, we presented common formulas for the standard standard null hypothesis

categorical data, you may use a chi-square statistic as the test statistic. Instructions for computing a chi-square test statistic are presented in the lesson on the chi-square goodness of fit test.

b. P-value. The P-value is the probability of observing a

**sample statistic as extreme as the test statistic, assuming the null hypothesis is true.
**

4. Interpret the results. If the sample findings are unlikely,

given the null hypothesis, the researcher rejects the null hypothesis. Typically, this involves comparing the P-value to the significance level, and rejecting the null hypothesis when the P-value is less than the significance level.

10

**Common test statistics
**

In the table below, the symbols used are defined at the bottom of the table. Many other tests can be found in other articles.

Name Formula Assumptions or notes (Normal population or n > 30) and σ known. (z is the distance from the mean in relation to the standard deviation of the mean). For non-normal distributions it is possible to calculate a minimum proportion of a population that falls within k standard deviations for any k (see: Chebyshev's inequality).

One-sample z-test

11

Two-sample z-test

Normal population and independent observations and σ1 and σ2 are known (Normal population or n > 30) and σ unknown

One-sample t-test

Paired t-test

(Normal population of differences or n > 30) and σ unknown

**Two-sample pooled t-test, equal variances*
**

[5]

(Normal populations or n1 + n2 > 40) and independent observations and σ1 = σ2 and σ1 and σ2 unknown

**Two-sample unpooled ttest, unequal variances*
**

[6]

(Normal populations or n1 + n2 > 40) and independent observations and σ1 ≠ σ2 and σ1 and σ2 unknown

Oneproportion ztest

n .p0 > 10 and n (1 − p0) > 10 and it is a SRS (Simple Random Sample). n1 p1 > 5 and n1(1 − p1) > 5 and n2 p2 > 5 and n2(1 − p2) > 5 and independent observations n1 p1 > 5 and n1(1 − p1) > 5 and n2 p2 > 5 and n2(1 − p2) > 5 and independent observations

Twoproportion ztest, pooled

Twoproportion ztest, unpooled

12

One of the following One-sample chi-square test • All expected counts are at least 5 • All expected counts are > 1 and no more that 20% of expected counts are less than 5 Arrange so H0 for F > > and reject

***Twosample F test for equality of variances
**

•

F(α / 2,n1 −

1,n2 − 1)

•

[7]

α, the probability of

Type I error (rejecting a null hypothesis when it is in fact true) n = sample size n1 = sample 1 size n2 = sample 2 size = sample mean μ0 = hypothesized population mean μ1 = population 1 mean μ2 = population 2 mean σ = population standard deviation

s = sample

standard deviation s2 = sample variance s1 = sample 1 standard deviation s2 = sample 2 standard deviation t = t statistic df = degrees of freedom = sample mean of differences d0 = hypothesized population mean difference

•

• •

• • • • • • •

• • • • • • • •

•

= x/n = sample proportion, unless specified otherwise p0 = hypothesized population proportion p1 = proportion 1 p2 = proportion 2 min{n1,n2} = minimum of n1 and n2

• • •

**x1 = n1p1 x2 = n2p2 χ2 = Chi-squared
**

statistic

•

F = F statistic

•

σ2 = population

variance

•

•

sd = standard

deviation of differences

In general, the subscript 0 indicates a value taken from the null hypothesis, H0, which should be used as much as possible in constructing its test statistic.

13

Importance:

Statistical hypothesis testing plays an important role in the whole of statistics and in statistical inference. For example, Lehmann (1992) in a review of the fundamental paper by Neyman and Pearson (1933) says: "Nevertheless, despite their shortcomings, the new paradigm formulated in the 1933 paper, and the many developments carried out within its framework continue to play a central role in both the theory and practice of statistics and can be expected to do so in the foreseeable future".

Criticism:

Some statisticians have commented that pure "significance testing" has what is actually a rather strange goal of detecting the existence of a "real" difference between two populations. In practice a difference can almost always be found given a large enough sample, the typically more relevant goal of science is a determination of causal effect size. The amount and nature of the difference, in other

14

words, is what should be studied. Many researchers also feel that hypothesis testing is something of a misnomer. In practice a single statistical test in a single study never "proves" anything. Rejection of the null hypothesis at some effect size has no bearing on the practical significance at the observed effect size. A statistically significantly not be relevant in practice due to other, larger effects of more concern, whilst a true effect of practical significance may not appear statistically significant if the test lacks the power to detect it. Appropriate specification of both the hypothesis and the test of said hypothesis is therefore important to provide inference of practical utility.

15

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