One Sample

One Sample Hypothesis Testing Paper Wendy Priest

One Sample One Sample Hypothesis Testing Paper

Hypothesis Testing Methodology begins with an assumption regarding a question that needs to be answered. More specifically, a hypothesis is an assumption about a particular population parameter. A parameter is defined as a characteristic of the population, like the parameters mean or variance. The parameter must be identified before any research can be initiated. To begin the process, Team A will state what the Null Hypothesis (Ho) is for the assumption they wish to test. When stated, the team will begin the process with the assumption that the null hypothesis is initially true (Levine, Bersenson, Stephan, and Krehbiel, 1999). This paper will state a one sample hypothesis, and perform the five-step hypothesis test using the research data. Additionally, the paper will discuss the results of the test and explain how the findings from the testing can be utilized to answer the research question. Lastly, Team A will include in the paper the raw data tables and results from the computations of the z-test. The team will use graphical and tabular methods of displaying the data and results. To begin the team will discuss the issue. Hypothesis Issue Americas banking industry is experiencing rapid changes. In times past, a majority of bank customers used written checks to pay for their purchases and bills. The modern trend is leaning toward the use of debit cards to pay for these same purchases. However, the debit card is much faster at pulling the funds out of a customers account versus the older method of using paper checks, which usually provided the customer with at least a couple of days before their check would be obtained by their bank, and the funds removed from the account (Halperin, 2007).

One Sample Research Hypothesis Statement

Team A theorizes that this change in banking has caused a windfall of overdraft charges for these American bank customers and will continue to be a problem well into the future; due to the increasing use of these debit cards. One recent survey study claims that 46% of overdraft charges are a result of debit card or ATM use. This data was obtained from a survey done by the Center for Responsible Learning (CRL) which surveyed 2,400 participants (Halperin, 2007). The Null Hypothesis statement for this bank survey is Ho = > 46. The Alternative Hypothesis is H1 = < 46. The team will address the testing steps next. Hypothesis Testing Steps A researcher must follow a process to see whether a stated hypothesis claim can be proven true or untrue. To begin the process the researcher must first write out the Null Hypothesis as Team A did earlier for their claim in regard to the rising overdraft charges at banks resulting from the rising use of debit cards. To restate, the Null and Alternative Hypothesis are the following: The Null Hypothesis statement for this bank survey is Ho = > 46. The Alternative Hypothesis is H1 = < 46. This statement of the Null Hypothesis is the first step. The next step is to select a level of significance (Stat Trek, 2008). The level of significance is the criterion used for rejecting the null hypothesis. The significance level determines the difference between the results or the experiment and the null experiment. Many tests often use a level of significance, also known as the alpha, of 0.05 or 0.01. Team A has decided to use a 0.05 level of significance for

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their test. The next step is to identify the test statistic (Levine, Bersenson, Stephan, and Krehbiel, 1999). To identify the test statistic, the researcher knows that only two outcomes of a hypothesis test are possible: either the null hypothesis is rejected or the null hypothesis is not. The researcher can use a z-score that can be used to determine the probability of obtaining a given value, so to test the hypothesis the researcher must decide beforehand what number to use as a cutoff for whether the Null hypothesis is rejected or not. This number is sometimes referred to as the critical value and can be found on a table of numbers. This number will represent the level of probability that the researcher will use to test the hypothesis. Team A has chosen a test statistic of 95%, which is the z = 1.65 value. Next the researcher must state the Decision rule (Asmus, 2000). The decision rule compares the sample mean to the hypothesized mean. If the sample mean is "close" to the hypothesized mean, we accept the null hypothesis. The decision rule is normally described in two ways. One way is in reference to the p-value or another way is in reference to a region of acceptance. The p-value is the strength of the evidence in support of a null hypothesis. The region of acceptance is a range of values where if the test statistic falls within the region of acceptance, then the null hypothesis is accepted (Davis, 2009) Team A has concluded that the decision rule shows that the null hypothesis is accepted. The last step is to take a sample and arrive at a decision. This step occurs when the researcher decides what data to use as a sample. Once the data is determined, the researcher will run the test and determine the result. Team A will now discuss the results of their test.

One Sample Test Results

The next step is to test the hypothesis and see if the test fails to not reject the null hypothesis or reject the null hypothesis. Since the sample size is greater than 30, we will be performing a Z-test to come to our conclusion. The variables are as follow: = 46, n = 2400, x-bar is 16.67, Standard deviation of 15.54 with an alpha level of 0.5. Based on the alpha level and our test being one-tailed, our critical value is 1.645. The formula is as follows: z= (16.67 46)/ (15.54 x sqrt (2400). Further reducing the formula: z= (16.67 46)/ (15.54 x 48.99) = .039. Since the solution of .039 falls outside of the rejection area: We fail to reject the Null Hypothesis. Raw Data Tables in Graphical/Tabular Methods

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Fee Paid per Dollar from Overdraft Loans

$2.50 $2.00 $1.50 $1.00 $0.50 $0.00 POS POS $2.17 ATM $0.76 ELEC $1.08 Check $0.86 $0.76 $1.08 $0.86 $2.17 POS ATM ELEC Check

Based on the results of our analysis, our learning team has failed to reject the null hypothesis which dictates that 46% or more of the overdraft charges are as a result of debit card or ATM usage. Conclusion In conclusion, Team A was able to use the hypothesis testing methodology regarding the bank data set which gave the team steps to try and prove or disprove the Null Hypothesis claim. In following the steps, which are to first write out the Null Hypothesis claim, then choose the level of significance, as well identify the test statistic. Team A was able to use the decision rule to compare the sample mean to the hypothesized mean to see if the range of value fell in or out of the area of rejection. The team was able to work out the test and conclude that our test was proven to fail to reject the Null Hypothesis claim.

One Sample References

Asmus, E. (2000). A guide to test statistics. Retrieved April 7, 2009, from University of Miami Web site: http://www.music.miami.edu/research/statistics/guide/ Davis, P. (2009). Decision rule for hypothesis testing. Retrieved April 7, 2009, from University of Utah Web site: http://www.chpc.utah.edu/~byron/FCS3210/Decision %20Rule.htm Halperin, E. (2007). Debit card danger. Retrieved April 6, 2009, from Center for Responsible Lending Web site: http://responsiblelending.org Levine, D., Bersenson, M, Stephan, D., & Krehbiel, T (1999). Statistics for managers. New Jersey: Prentice-Hall. Stat Trek, (2008). Statistics: Tests of significance. Retrieved April 7, 2009, from Stat Trek Web site: http://www.stattrek.com