HYPOTHESIS TESTING

TEST of Hypothesis: an inference and a decision making process in which we use SAMPLE
information to test whether a POPULATION PARAMETER is less than, equal to or greater than
a specified value.
It will be possible to measure the reliability of the inference.

The parameter we will deal with (in this course) will be: the population mean, 
The population proportion, p
We need to:
 Define the population under investigation
 State the hypothesis
 Mention the significance level (reliability)
 Select a sample, collect data (generally done by the researcher)
 Perform calculations
 Reach and state a conclusion

SPEP 1
A Statistical Hypothesis is a theory about a population parameter, that may or may not be true.
We have two types of hypothesis:
 Null Hypothesis Ho: represents the status quo, the conservative theory from previous
experience that we accept until proven false.
(Trial defendant assumed not guilty unless otherwise proved)
Ho always contains the = sign. We always assume that Ho is true. It states that there is no
difference between a parameter and a hypothesized value

Ho:  = o or Ho: p = po

 Alternative Hypothesis Ha: a theory that contradicts the null hypothesis, by specifying a
DIFFERENCE between the parameter and the hypothesized value. It contains the claim, or
what the researcher wants to prove.

Ho:   o or Ho:  < o or Ho:  > o

Example: A medical researcher wants to find out whether a new medication has undesirable side
effects (ie pulse rate change). The mean pulse rate for the population under study is 82 beats per
minute........Will the mean remain unchanged?

Example: A chemical company claims its products will increase the life of car batteries. The mean
lifetime of cars’ batteries is 36 months........Test the company’s claim.

Example: A company claims its insulation will lower heating bills. If the average heating bill is
$86, ........test the company’s claim.
STEP 2
A test statistics is a formula used to decide whether to accept or reject the null hypothesis. The
formula follows the format
(sample) (population)
Test value = observed value – expected value
Standard error

Test for mean test for proportion

x  0 pˆ  p 0
x  np 0
z=  z= or z = p 0 (1  p 0 )
np 0 (1  p 0 )
n n

STEP 3
State the significance level , or the maximum probability of committing a type I error, or
rejecting the null hypothesis when Ho is true (convicting an innocent person).
Another type of error that can be committed is , (Type II error), or failing to reject Ho when it
is false (acquitting a guilty person).

Ho true Ho false
Reject Ho Type I error () OK
Accept Ho OK Type II error ()

Rejecting the null hypothesis when Ho is true is a serious mistake, so its probability  must be
small. We will generally use  = 5%, 10% or 1%
 measures the reliability of the inference.

STEP 4
Select a critical value from a set of tables, that will separate the rejection region from the accept
region.
The rejection region must have a probability  to contain the test statistics when the Ho is true,
and represents the region in which there is a significant difference between the sample value and
the hypothesized population value.

One tailed test (right) ( Ha : > )

If z > z Reject Ho
z < z Accept Ho

One tailed left (Ha : < )

If z < - z Reject Ho
z > - z Accept Ho

Two tailed test ( Ha :  )

If z > z/2 or z < If z < - z/2 Reject Ho

- z/2 < z < z/2 Accept Ho

STEP 6
Compare the test statistics with the critical value. Make a decision and state it in terms of
accept/reject H0
ACCEPT Ho means we do not have enough evidence to reject Ho and prove the claim.
(defendant is NOT Guilty differs from defendant is innocent)
REJECT Ho means that the claim is correct (Ha is accepted).