Hypothesis Testing;

Z-Test, T-Test, F-Test

BY NARENDER SHARMA
 2
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What is Hypothesis?

 Hypothesis is a predictive statement, capable of

being tested by scientific methods, that relates an
independent variables to some dependent
variable.
 A hypothesis states what we are looking for and it is
a proportion which can be put to a test to
determine its validity
e.g.
Students who receive counseling will show a greater
increase in creativity than students not receiving
counseling

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Characteristics of Hypothesis

 Clear and precise.

 Capable of being tested.
 Stated relationship between variables.
 limited in scope and must be specific.
 Stated as far as possible in most simple terms so that the same is
easily understand by all concerned. But one must remember that
simplicity of hypothesis has nothing to do with its significance.
 Consistent with most known facts.
 Responsive to testing with in a reasonable time. One can’t spend a
life time collecting data to test it.
 Explain what it claims to explain; it should have empirical reference.

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Null Hypothesis

 It is an assertion that we hold as true unless we have

sufficient statistical evidence to conclude otherwise.
 Null Hypothesis is denoted by 𝐻0
 If a population mean is equal to hypothesised mean
then Null Hypothesis can be written as

𝐻0 : 𝜇 = 𝜇0

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Alternative Hypothesis

 The Alternative hypothesis is negation of null

hypothesis and is denoted by 𝐻𝑎
If Null is given as 𝐻0 : 𝜇 = 𝜇0

Then alternative Hypothesis can be written as

𝐻𝑎 : 𝜇 ≠ 𝜇0
𝐻𝑎 : 𝜇 > 𝜇0
𝐻𝑎 : 𝜇 < 𝜇0

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Level of significance and
confidence

 Significance means the percentage risk to reject a

null hypothesis when it is true and it is denoted by 𝛼.
Generally taken as 1%, 5%, 10%
 (1 − 𝛼) is the confidence interval in which the null
hypothesis will exist when it is true.

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Risk of rejecting a Null Hypothesis
when it is true

Risk Confidence
Designation Description
𝜶 𝟏−𝜶
More than $100 million
0.001 0.999
Supercritical (Large loss of life, e.g. nuclear
0.1% 99.9%
disaster
0.01 0.99 Less than $100 million
Critical
1% 99% (A few lives lost)
0.05 0.95 Less than $100 thousand
Important
5% 95% (No lives lost, injuries occur)
0.10 0.90 Less than $500
Moderate
10% 90% (No injuries occur)

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Type I and Type II Error

Decision

Situation Accept Null Reject Null

Null is true Correct Type I error
( 𝛼 𝑒𝑟𝑟𝑜𝑟 )

Null is false Type II error Correct

( 𝛽 𝑒𝑟𝑟𝑜𝑟 )

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 Two tailed test @ 10
5% Significance level

Acceptance and Rejection

regions in case of a Two Suitable When 𝐻0 : 𝜇 = 𝜇0
tailed test 𝐻𝑎 : 𝜇 ≠ 𝜇0

𝑅𝑒𝑗𝑒𝑐𝑡𝑖𝑜𝑛 𝑟𝑒𝑔𝑖𝑜𝑛 𝑅𝑒𝑗𝑒𝑐𝑡𝑖𝑜𝑛 𝑟𝑒𝑔𝑖𝑜𝑛

𝑇𝑜𝑡𝑎𝑙 𝐴𝑐𝑐𝑒𝑝𝑡𝑎𝑛𝑐𝑒 𝑟𝑒𝑔𝑖𝑜𝑛
/𝑠𝑖𝑔𝑛𝑖𝑓𝑖𝑐𝑎𝑛𝑐𝑒 𝑙𝑒𝑣𝑒𝑙 /𝑠𝑖𝑔𝑛𝑖𝑓𝑖𝑐𝑎𝑛𝑐𝑒 𝑙𝑒𝑣𝑒𝑙
(𝛼 = 0.025 𝑜𝑟 2.5%) 𝑜𝑟 𝑐𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 𝑙𝑒𝑣𝑒𝑙 (𝛼 = 0.025 𝑜𝑟 2.5%)
(1 − 𝛼) = 95%
𝐻0 : 𝜇 = 𝜇0

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 Left tailed test @ 11
5% Significance level

Acceptance and Rejection

regions in case of a left tailed Suitable When 𝐻0 : 𝜇 = 𝜇0
test 𝐻𝑎 : 𝜇 < 𝜇0

𝑅𝑒𝑗𝑒𝑐𝑡𝑖𝑜𝑛 𝑟𝑒𝑔𝑖𝑜𝑛 𝑇𝑜𝑡𝑎𝑙 𝐴𝑐𝑐𝑒𝑝𝑡𝑎𝑛𝑐𝑒 𝑟𝑒𝑔𝑖𝑜𝑛

/𝑠𝑖𝑔𝑛𝑖𝑓𝑖𝑐𝑎𝑛𝑐𝑒 𝑙𝑒𝑣𝑒𝑙 𝑜𝑟 𝑐𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 𝑙𝑒𝑣𝑒𝑙
(𝛼 = 0.05 𝑜𝑟 5%) (1 − 𝛼) = 95%

𝐻0 : 𝜇 = 𝜇0

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 Right tailed test @ 12
5% Significance level

Acceptance and Rejection

regions in case of a Right Suitable When 𝐻0 : 𝜇 = 𝜇0
tailed test 𝐻𝑎 : 𝜇 > 𝜇0

𝑇𝑜𝑡𝑎𝑙 𝐴𝑐𝑐𝑒𝑝𝑡𝑎𝑛𝑐𝑒 𝑟𝑒𝑔𝑖𝑜𝑛 𝑅𝑒𝑗𝑒𝑐𝑡𝑖𝑜𝑛 𝑟𝑒𝑔𝑖𝑜𝑛

𝑜𝑟 𝑐𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 𝑙𝑒𝑣𝑒𝑙 /𝑠𝑖𝑔𝑛𝑖𝑓𝑖𝑐𝑎𝑛𝑐𝑒 𝑙𝑒𝑣𝑒𝑙
(1 − 𝛼) = 95% (𝛼 = 0.05 𝑜𝑟 5%)

𝐻0 : 𝜇 = 𝜇0

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Procedure for Hypothesis
Testing

State the null State a Decide a test Calculate the

(Ho)and alternate significance level; statistics; z-test, t- value of test
(Ha) Hypothesis 1%, 5%, 10% etc. test, F-test. statistics

Compare
Calculate the p-
the p-value P-value >
value at given
with Calculated Accept Ho
significance level
calculated value
from the table
value

P-value <
Calculated Reject Ho
value
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Hypothesis
Testing of Z-TEST AND T-TEST

Means

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Z-Test for testing means

Test Condition Test Statistics

 Population normal and
infinite
 Sample size large or small, 𝑋−𝜇𝐻0
 Population variance is
𝑧= 𝜎𝑝
known 𝑛
 Ha may be one-sided or
two sided

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Z-Test for testing means

Test Condition Test Statistics

 Population normal and
finite,
 Sample size large or small,
𝑋 − 𝜇𝐻0
 Population variance is 𝑧=𝜎
𝑝
known × 𝑁−𝑛 𝑁−1
𝑛
 Ha may be one-sided or
two sided

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Z-Test for testing means

Test Condition Test Statistics

 Population is infinite and
may not be normal, 𝑋−𝜇𝐻0
 Sample size is large, 𝑧= 𝜎𝑠
 Population variance is 𝑛
unknown
 Ha may be one-sided or
two sided

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Z-Test for testing means

Test Condition Test Statistics

 Population is finite and may
not be normal, 𝑋 − 𝜇𝐻0
𝑧=𝜎
 Sample size is large, 𝑠 × 𝑁−𝑛 𝑁−1
𝑛
 Population variance is
unknown
 Ha may be one-sided or
two sided

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T-Test for testing means

Test Condition Test Statistics

 Population is infinite and
normal, 𝑋−𝜇𝐻0
 Sample size is small,
𝑡= 𝜎𝑠
𝑛
 Population variance is
𝑤𝑖𝑡ℎ 𝑑. 𝑓. = 𝑛 − 1
unknown
 Ha may be one-sided or 𝑋𝑖 − 𝑋 2
two sided 𝜎𝑠 =
(𝑛 − 1)

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T-Test for testing means

Test Condition Test Statistics

 Population is finite and 𝑋 − 𝜇𝐻0
normal, 𝑡=𝜎
𝑠 × 𝑁−𝑛 𝑁−1
 Sample size is small, 𝑛
 Population variance is
𝑤𝑖𝑡ℎ 𝑑. 𝑓. = 𝑛 − 1
unknown
 Ha may be one-sided or 𝑋𝑖 − 𝑋 2
two sided 𝜎𝑠 =
(𝑛 − 1)

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Hypothesis
testing for
difference Z-TEST, T-TEST

between
means

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Z-Test for testing difference
between means

Test Condition Test Statistics

 Populations are normal
 Samples happen to be
large, 𝑋1 − 𝑋2
𝑧=
 Population variances are 2 2
known 𝜎𝑝1 𝜎𝑝2
+
 Ha may be one-sided or 𝑛1 𝑛2
two sided

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Z-Test for testing difference
between means

Test Condition Test Statistics

 Populations are normal
 Samples happen to be large,
 Presumed to have been 𝑋1 − 𝑋2
drawn from the same
population 𝑧=
1 1
 Population variances are 𝜎𝑝2 +
known 𝑛1 𝑛2
 Ha may be one-sided or two
sided

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T-Test for testing difference
between means

Test Condition Test Statistics

 Samples happen to be small,
 Presumed to have been
drawn from the same 𝑋1 − 𝑋2
population 𝑡=
2 2
𝑛1 − 1 𝜎𝑠1 + 𝑛2 − 1 𝜎𝑠2 1 1
 Population variances are × +
unknown but assumed to be
𝑛1 + 𝑛2 − 2 𝑛1 𝑛2
equal
 Ha may be one-sided or two 𝑤𝑖𝑡ℎ 𝑑. 𝑓. = (𝑛1 + 𝑛2 − 2)
sided

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Hypothesis
Testing for
comparing PAIRED T-TEST

two related
samples

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Paired T-Test for comparing
two related samples

Test Condition Test Statistics

 Samples happens to be 𝐷−0
small 𝑡=𝜎
𝑑𝑖𝑓𝑓.
 Variances of the two 𝑛
populations need not be 𝑤𝑖𝑡ℎ (𝑛 − 1) 𝑑. 𝑓.
equal
𝐷 = Mean of differences
 Populations are normal
𝜎𝑑𝑖𝑓𝑓. = Standard deviation of differences
 Ha may be one sided or
two sided 𝑛 = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑎𝑡𝑐ℎ𝑒𝑑 𝑝𝑎𝑖𝑟𝑠

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Hypothesis
Testing of Z-TEST

proportions

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Z-test for testing of proportions

Test Condition Test statistics

 Use in case of qualitative
data 𝑝−𝑝
 Sampling distribution may 𝑧=
take the form of binomial 𝑝. 𝑞
probability distribution 𝑛
 Ha may be one sided or two
sided
𝑝 = 𝑝𝑟𝑜𝑝𝑜𝑟𝑡𝑖𝑜𝑛 𝑜𝑓 𝑠𝑢𝑐𝑒𝑠𝑠
 𝑀𝑒𝑎𝑛 = 𝑛. 𝑝
 𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 = 𝑛. 𝑝. 𝑞

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Hypothesis
Testing for
difference Z-TEST

between
proportions

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Z-test for testing difference
between proportions

Test Condition Test statistics

 Sample drawn from two
𝑝1 − 𝑝2
different populations 𝑧=
𝑝1 𝑞1 𝑝2 𝑞2
 Test confirm, whether the +
𝑛1 𝑛2
difference between the
proportion of success is 𝑝1 = proportion of success in sample one
significant
𝑝2 = proportion of success in sample two
 Ha may be one sided or
two sided

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Hypothesis
testing of
equality of F-TEST
variances of
two normal
populations

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 F-Test for testing equality of 32
variances of two normal
populations

Test conditions Test statistics

 The populations are normal
2
 Samples have been drawn 𝜎𝑠1
randomly
𝐹= 2
𝜎𝑠2
 Observations are
independent; and 𝑤𝑖𝑡ℎ 𝑛1 − 1 and 𝑛2 − 1 d. f.
 There is no measurement
error
2
𝜎𝑠1 is the sample estimate for 𝜎𝑝1
2

 Ha may be one sided or two 2

𝜎𝑠2 is the sample estimate for 𝜎𝑝2
2
sided

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Limitations of the test of
Hypothesis

 Testing of hypothesis is not decision making itself; but help

for decision making
 Test does not explain the reasons as why the difference
exist, it only indicate that the difference is due to
fluctuations of sampling or because of other reasons but
the tests do not tell about the reason causing the
difference.
 Tests are based on the probabilities and as such cannot be
expressed with full certainty.
 Statistical inferences based on the significance tests
cannot be said to be entirely correct evidences
concerning the truth of the hypothesis.
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 34

Thank You
 35
Shakehand with Life
Corporate Training and Management Education

www.shakehandwithlife.in , www.shakehandwithlife.puzl.com

 Leading Training, Coaching, Consulting services in Delhi NCR for Managers at all levels,
 Future Managers and Engineers in MBA and B.E. / B. Tech.,
 Students in Graduation and Post-Graduation, Researchers, Academicians.
 Training with MS-Excel for managerial decision making skills,
 Working with MS-Excel to solve all mathematical and statistical problem.

Call Now WhatsApp

9468267324, 8684861131 9468267324

E-mail: shakehandwithlife@gmail.com
www.shakehandwithlife.in