Lecture 1

Revision
Hypothesis Testing

Niza
Talukder
 Normal Distribution

• One of the most important concept in statistical analysis.

• A symmetric, bell curve that is overwhelmingly common in statistics
• Useful for data exploration and solving a number of important problems in
statistics.

• Example: Suppose a large group of students take a test. Many of the students
are likely to get scores about the mean and scores in ranges of a fixed width are
likely to tail off away from the mean. Let’s say that the average score was 60.
We would expect to find more students in the range 55-65 than in the range 85-
95. These considerations suggest a probability density function that peaks at the
mean and tails off at its extremities.

(Refer to class discussions to see how the histogram transitions to a normal distribution)
 µ

 
Properties:
• The distribution is symmetrical about the mean,
• Mean, median and mode are all equal due to the symmetry of the distribution
• Mean of the random variable is E(X) =
• Variance of a random variable is Var (X) = E
• Total area under the curve is 1

There are two parameters fundamental to this distribution; . A random variable X having a normal
distribution will be denoted with the following notation, X )
 • There is no convenient formula in determining probabilities. Thus, area under the curve
cannot be calculated in the usual manner. Probabilities of any normal distribution is
calculated and tabulated.

Standard Normal Distribution

• To evaluate probabilities associated with a normal distribution, a standard normal
distribution is used. It is the same as a normal distribution but with a mean of zero and
variance of 1.
A standard normal variable is denoted as Z where Z

• All normal distribution can be transformed into standard normal. This transformation is
achieved by

Z=x- where X is distributed normally

 Example 1
Suppose you wish to evaluate P (12< X < 16) where X

P (12 <X <16) = P (12 – 10 < X-10 < 16 – 10)

4 4 4

This is the standardized form:

P (0.5 < Z < 1.5)

Draw the standard normal diagram.

Find probabilities from the z- table

(Note: the z-table I provided gives you the area towards the right side of the figure)
 
Example 2
If X(15, 16), find the probability that X is larger than 18.

Example 3
A company produces lightbulbs whose lifetimes follow a normal
distribution with mean 1200 hours and standard deviation 250 hours.
If a lightbulb is chosen randomly from the company’s output, what is
the probability that its lifetime will be between 900 and 1300 hours?
Empirical Rule:
Recall standard deviation: it measures how spread out the numbers are. When we calculate standard deviation,
Generally it is observed that

68% of the values are within 1 standard deviation away from the mean

95% of the values are within 2 standard deviations away from the mean

99.7% of the values are within 3 standard deviations away from the mean
 Central Limit Theorem

• It states that distribution of the means of the samples taken from a population with any
distribution (given it has finite expected value and variance) will converge to a normal
distribution with mean, and variance

• CLT describes how samples drawn from a non normal distribution become increasingly
approximated by the normal distribution as sample size increases.

• The fact that the sample distribution is approximated to normal distribution whatever the
underlying distribution is an extremely powerful result
 Sampling distribution of the mean

• A probability distribution of a statistic obtained through a large number of samples drawn from a

specific population.

• If the sample size is a small proportion of the population size, then subtracting the mean and dividing by
the standard error yields a random variable,

that has a standard normal distribution.

Exercise 4

A lightbulb manufacturer claims that the lifespan of its lightbulbs has

a mean of 54 months and a standard deviation of 6 months. Your
consumer advocacy group tests 50 of them. Assuming the
manufacturer's claims are true, what is the probability that it finds a
mean lifetime of less than 52 months?
Interval Estimation:

• Estimator: an estimator of a population parameter is a random variable that depends on the sample
information and whose realization provide approximation to this unknown parameter. A specific
realization of that random variable is called an estimate.

Eg . Estimator of population mean is the sample mean

• Point estimator: point estimator of a population parameter is a function of the sample information that
yields a single number. The corresponding realization is called the point estimate of the parameter.
Example: You want to find the average family income in your neighborhood based on a random sample
of 20 families. Suppose you found the sample mean to be $49000. Point estimator over here is the sample
mean and point estimate is $49000

• For most practical situations, point estimate alone is inadequate or difficult to obtain. In that case, you
will want to use an interval estimate - range of values in which the quantity to be estimated appears
likely to lie
•  Significance level: probability at which we reject a null hypothesis given that it is true i.e. rejecting a claim
made in a certain situation. It is represented by

• Confidence interval: 1 -
Eg. A 95% confidence interval means that we are 95% sure/confident that a parameter will lie within a certain
range.

• In this figure, 95% falls in the unshaded region i.e. the confidence interval. The shaded region is the significance
level.
• If you are dealing with a two tailed distribution, this 5% will be divided by 2 since you consider two tails-
one at the right; the other at the left.
 Confidence Interval for the mean of a normal population:

In this section, we will estimate an unknown population parameter by establishing an interval of values.
Suppose that we have a random sample of n observations from a normal distribution with mean and
variance . If is known, and the observed sample mean is , then a 100(1-) % confidence interval for the
population mean is given by

- < µ < +

Using only a point estimate is like fishing in a murky lake with a spear. You can throw a spear where you saw
a fish, but you’ll probably miss it. On the other hand, if you toss a net in that area, you have a good chance of
catching the fish. A confidence interval is like a fishing net, and it represents a range of plausible values
where you are likely to find the population parameter.
 
Example 5

A random sample of sixteen observations from a normal

population with standard deviation 6 had mean 25. Find a 90%
confidence interval for the population mean,
Example 6

A process produces bags of refined sugar. The weights of the contents

of these bags are normally distributed with standard deviation 1.2
ounces. The contents of a random sample of twenty five bags had mean
weight of 19.8 ounces. Find a 95% confidence interval for the true
mean weight for all the bags of sugar produced by the process.
 n= 25 = 19.8 = 1.2

At 95%, = 0.5

Here you will be drawing a two-tailed figure (since you are dealing with a range), thus will be divided by 2. We
have = 0.025. Now, find the probability from the table and do the calculation.

Interpretation: If 25 observations are drawn from this population repeatedly, we are 95% confident that each
time the true mean weight will range from 19.33 to 20.27 ounces.
Example 7

In order to ensure efficient usage of a server, it is necessary to estimate the mean

number of concurrent users. According to records, the sample mean and sample
standard deviation of number of concurrent users at 100 randomly selected times
is 37.7 and 9.2, respectively. Construct a 90% confidence interval for the mean
number of concurrent users.
  Hypothesis Testing

• Often we want to be able to formulate a statement that can either be correct or incorrect. In such cases, we
use statistical evidence to suggest if the proposed statement is true or not. For example:

1) Will reducing the class size affect the performance of students?

2) Does income of individuals depend on their level of education (years of schooling)?

• Suppose, it is suggested that students perform better when the class size is smaller. What is the probability
that this statement is true? This is where we use the hypothesis test to determine the likelihood of this
claim.

• Hypothesis test enables us to determine the validity of a claim/conjecture by using sample data.

• Null hypothesis: a commonly accepted fact. Denoted as

A statistical hypothesis you want to accept, reject or nullify in favour of an alternative

• Alternative hypothesis: refers to the situation when the null hypothesis is not true (opposite of ).
Denoted as
A statement that you want to prove/test/determine.
 EXAMPLES

State the appropriate null hypothesis and alternative hypothesis for each of the following cases.

(a) The mean area of the several thousand apartments in a new development is advertised to be 1250 square
feet. A tenant group thinks that the apartments are smaller than advertised. They hire an engineer to measure a
sample of apartments to
test their suspicion.

: µ = 1250 ( the claim)

: µ < 1250 ( opposite of the null)
(one sided hypothesis)

b) Larry's car consume on average 32 miles per gallon on the highway. He now switches to a new motor oil that
is advertised as increasing gas mileage. After driving 3000 highway miles with the new oil, he wants to
determine if his gas mileage actually has increased.

: µ = 32
: µ > 32
  The diameter of a spindle in a small motor is supposed to be 5 millimetres. If the spindle is either too small or too
c)
large, the motor will not perform properly. The manufacturer measures the diameter in a sample of motors to
determine
whether the mean diameter has moved away from the target.
: µ = 5 ( the claim)
:µ≠5
Note: The above requires a two sided hypothesis.

• Hypothesis testing : A neurologist is testing the effect of a drug on response time by injecting100 rats
with a unit of the drug, subjecting each to neurological stimulus and recording its response time. The
neurologist knows that the mean response time of the rats not injected with the drug is 1.2 seconds.
The mean of the 100 injected rats’ response time is 1.05 seconds with a sample standard deviation of
0.5 seconds. Do you think that the drug has an effect on the response time? Use 1% significance level

: Drug has no effect µ= 1.2 s (with the drug)

: Drug has effect µ ≠ 1.2 s
Now how do we know whether we should accept the alternative or default to the null hypothesis because the data
isn’t convincing
•  Assume that is true

• Then find the z score which refers to the standard deviations away from the mean

z = = = -3
• Draw the figure as shown in class
• Rejection rule
Since this is a two sided test, you reject the null if
z stat > or z stat < -
In this case, the z – score is -3 which is less than the critical value (or - ) , - 2.57.
Z- score lies in the rejection region.

• Conclusion:
At 1% significance level, z-score is less than the critical value, -2.57. Thus, we have enough evidence to reject
the null in favor of the alternative. Hence, we can conclude that the drug has an effect on the reaction time of
the rats.
 
Finding the p-value
• Interpretation of p-value: the smallest significance level at which the null hypothesis can be rejected given
the single observed sample mean.

• Now refer to the previous example

Assume that the null hypothesis is true
What is the probability that the drug will not have any effect on the response time?
(Figure on the board).

• Construct the Z statistic = = = -3

(z-score is the number of standard deviations from the mean)

The mean is 3 standard deviations away. So what is the probability of getting a result this extreme?

• Refer to the z-table and find the probability for -3. The value is 0.00135; since it is a two tailed test, double
the value by 2 (2x0.00135). This 0.0027 is the p-value, meaning the probability that the drug has no effect
on response time. The p-value is too small, thus we can reject the null.
 
Guidelines for Hypothesis testing
Hypothesis testing is a proof by contradiction. The testing process has 5 steps:

Step 1: Assume is true.

Step 2: Use statistical theory to make a statistic (function of the
data) that includes . This statistic is called the z- statistic.
Step 3: Find the probability that the z- statistic ( t stat used when sample size is small) would take a value
as extreme or more extreme than that actually observed.
Think of this as: probability of getting our sample assuming is
true.
Step: 4: Draw the figure
Step 5: If the probability we calculated in step 3 is high it means that the sample is likely under and so we
have no evidence against . If the probability is low, there are two possibilities:

• we observed a very unusual event, or

• our assumption is wrong
 
One-tailed and two-tailed tests
• In the previous section, we only wanted to see if the drug has any effect or not. Whether positive or
negative, both would be considered an effect. We conducted a two-tailed test.
• Now, let’s look at the following hypothesis where we want to test whether the drug has a lower response
time.
• µ = 1.2 : µ < 1.2

The z-score would remain the same but the figure and critical value will change because this is a one-tailed
test.
• Rejection rule for a left-tailed hypothesis test:
Z score < - (Note: over here we shall not divide because we are not considering two tails). So, is equal to 0.01
which has a critical value of - 2.32
Z-score falls in the rejection region, thus we reject the null and conclude that the drug has an effect on the
response time.

Finding the p-value is similar to the previous example:

• Does the drug lower response time? What is the probability of getting a result this extreme?
• If the null is true, there’s only 0.15% chances of getting a situation where the drug lowers response time.
This p value is extremely small! Thus, we reject the null.
 
P-value
Definition: The probability of rejecting a null hypothesis. The smaller the p-value, the stronger the evidence
against provided by the data.

Guideline for how small is “small”:

• P-value > 0.1 provides no evidence against

• 0.05 < P-value < 0.1 provides weak evidence against

• 0.01 < P-value < 0.05 provides moderate evidence against

• P-value < 0.01 provides strong evidence against

• We can compare the P-value we calculate with a fixed value that we regard as decisive. The decisive
value of P is called the significance level (this is our α). Most common values for α are 0.1, 0.05, 0.01.
Example

An air freight company wishes to test whether or not the mean weight
of parcels shipped on a particular route exceeds 10 pounds. A random
sample of 49 shipping orders were examined and found to have an
average weight of 11 pounds. Assume that the standard deviation of
the weight is 2.8 pounds. Conduct a hypothesis test at 5%
significance level.
Question for next class

The hourly wages in a particular industry are normally

distributed with mean $13.20 and standard deviation $2.50. A
company employs 40 workers paying them an average of $12.20
per hour. Can this company be accused of paying substandard
wages? Use α = 0.01