t test, ANOVA and Normality

Test of Significance Approach

Recall, we can construct a t variable using the following formula which
follows a t-distribution with n-2 df.

2 2*
t
se( 2 )
By using the value of * 2 in the null hypothesis we can calculate the t value

0.5091 0.3
5.86
0.0357
Then we consult the t- table with 1% or 5% level of significance for
appropriate df. If the tabular value is smaller than the computed value then
we reject the null hypothesis. In this case for 8 df and for 5% level of
significance the tabular t value is 1.86 which is less than the computed value
of 5.86. So we reject the null hypothesis.
t

Rules of Thumb
Generally, null hypothesis is set as
H0 0

If the no. of degrees of freedom is 20 or more, and if , is set at 0.05

then the null hypothesis can be rejected if the computed t value is
higher than 2.

Choosing and the p value

Type I Error Probability of rejecting the true hypothesis

Type II Error Probability of accepting the false hypothesis.
By choosing a very low value of , you are reducing the Type I error.
After you have chosen a particular , let say 5% or 1%, then you can try to
minimize the Type II error which is called power of the test.
This exercise can be made simpler by considering the p value given by the
software packages.
P value is defined as the lowest significance level at which a null hypothesis can
be rejected.
This is mostly used by researchers to reject or not reject a null hypothesis.

Analysis of Variance (ANOVA)

TSS = ESS + RSS. A study of these components of TSS is known as
ANOVA.
2
2
2
2 x 2 u 2

i i i 2 i i

F = MSS of ESS/MSS of RSS

22 xi2
22 xi2

2
2

u
/
n

ANOVA table for the Two- variable Regression Model

Source of Variation

SS

df

Due to regression (ESS)

2
2
2
y i 2 xi

MSS
2
2
2 xi

u i
2
n-2
2

Due to residuals (RSS)

ui

TSS

yi

n-2

n 1

SS = sum of squares, MSS = Mean sum of squares