Testing Hypotheses:

Two-Sample Tests

Chapter 9
Statistics for Management
Levin and
Rubin
1
 Basics
• Hypotheses based on one group
• A two-sample case involves comparing a
parameter between two distinct groups, such as
males versus females.
A two-sample hypothesis test might be to analyze
the difference in the mean cholesterol level
between men and women. Or, to determine if
the percentage of job success is different
between men and women.

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Different Parameters

3
 Testing Hypothesis about Difference between
Two Population Means (Two Sample Tests of
Hypothesis)
H0: (µ1 - µ2)=D
esis H1: (µ1 - µ2)>D

µ1 < µ2] ..one-ta

is H1: (µ1 - µ2) ≠D
] .. t

(x1  x2 )  D0
z or z  (x1  x2 )
2 2 2 2
1   2 1   2
n1 n2 n1 n2

t available)
z > zα or z < -zα
(
two tailed test)
4
Mary Jo Fitzpatric is the Vice President for Nursing Services at
St. Luke’s Memorial Hospital. Recently she noticed in the job
posting for nurses that those that are unionised seem to offer
higher wages. She decided to investigate and gathered the
following sample information.

Group Mean Sample Standard Sample

Wage Deviation Size
Union $20.75 $2.25 40
Nonunion $19.80 $1.90 45

Would it be reasonable for her to conclude that there

is significant difference in earning between union and
non- union nurses? Use the .01 significance level.
5
 Example
• A manpower-development statistician is
asked to determine whether the hourly wages
of semiskilled workers are the same in two
cities. The results of the survey are presented
in the following table:

Hourly Wage Rate

6
 Solution
Step 1:
This is a two-tailed test. The hypothesis is stated below.
The significance level is 0.05 (given)
H0: μ1 = μ2 versus H1: μ1 ≠ μ2
Step 2:
Since this is a test of the means and the degrees of
freedom
(n1 + n2
- 2) is in excess of 30, a z test is appropriate. The
critical values are ± 1.96 (from a z table).

Step 3:
7
Step 4: Sketch the distribution, locate the critical values and the
test statistic.

Step 5: Decide! Since the test statistic values lies within the
rejection region then there is sufficient statistical evidence
based on this sample to reject H0.
The test for a difference between parameters does not have to
be zero, it can be non-zero. For example:

H0: μ1 - μ2 ≤ 0.10 versus H1: μ1 - μ2 > 0.10

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 Problem: 9-3
• Two research laboratories have independently
produced drugs that provide relief to arthritis
sufferers. The first drug was tested on a group of
90 arthri-tis sufferers and produced an average
of 8.5 hours of relief, and a sample standard
deviation of 1.8 hours. The second drug was
tested on 80 arthritis sufferers, producing an
average of 7.9 hours of relief, and a sample
standard deviation of 2.1 hours. At the 0.05 level
of significance, does the second drug provide a
significantly shorter period of relief?

9
 Problem: 9-6
• Notwithstanding the Equal Pay Act of 1963, in
1993 it still appeared that men earned more than
women in similar jobs. A random sample of 38
male machine-tool operators found a mean
hourly wage of $11.38, and the sample standard
de-viation was $1.84. A random sample of 45
female machine-tool operators found their mean
wage to be $8.42, and the sample standard
deviation was $1.31. On the basis of these
samples, is it reasonable to conclude (at a =
0.01) that the male operators are earning over
$2.00 more per hour than the female operators?

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 Testing Hypothesis about Difference
between Two Population Proportion
H0: (p1 - p2)=D or p1 = p2
•Null Hypothesis:
H1: (p1 - p2)>D (p1 - p2)<D
•Alternate Hypothesis
[p1 > p2 p1 < p2] ..one-tailed test
Alternate Hypothesis H1: (p1 - p2) ≠D
[p1 ≠ p2 ] .. two-tailed test
3. Test
Statistics:

Rejection Region z > zα or z < -zα (one tailed

z > zα/2 or z < -zα/2 test)
(two tailed test) 11
Testing Hypothesis about Difference between
Two Population Proportion: Pooled
When population param eters ‘p’ and ‘q’ are unknow n:
1. N ull Hypothe sis: H 0: p 1 = p2 [p1 -
p 2 = 0]
2. Alternate H 1: p 1 > p 2 p1 < p2
Hypothesis ..one -tailed test
Alternate Hypothesis H 1: p 1 ? p 2 two-tailed te st

x1 
3. Pooled proportion: pˆ 
n1  n 2
x2
z 1
4. Test Statistics: qˆ1[ 1pˆ2 )
p(ˆpˆ
]
n1
5. Re jection R egion z > z n 2or z < -z
α α one tailed te st) z
(
> zα/ 2 or z < -z α / 2( two tailed test) 12
 Example:
1. According to a report by the American Cancer Society, more
men than women smoke and twice as many smokers die
prematurely than nonsmokers. In random samples of 200
males and 200 females, 62 of the males and 54 of the
females were smokers. Is there sufficient evidence to
conclude that the proportion of male smokers higher from
the proportion of female smokers when α = .01?
2. A financial analyst wants to compare the turnover rates, in
percent, for shares of oil related stocks versus other stocks.
She selected 32 oil-related stocks and 49 other stocks. The
mean turnover of oil related stocks is 31.4 percent and the
standard deviation 5.1 percent. For the other stocks, the mean
rate was computed to be 34.9 percent and the standard
deviation 6.7 percent. Is there a significant difference in the
turnover rates of the two types of stock?
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 Problem: 9-22
• A coal-fired power plant is considering two different
systems for pollution abatement. The first system has
reduced the emission of pollutants to accept-able levels
68 percent of the time, as determined from 200 air
samples. The sec-ond, more expensive system has
reduced the emission of pollutants to ac-ceptable levels
76 percent of the time, as determined from 250 air
samples. If the expensive system is significantly more
effective than the inexpensive sys-tem in reducing
pollutants to acceptable levels, then the management of
the power plant will install the expensive system. Which
system will be installed if management uses a
significance level of 0.02 in making its decision?

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 Problem: 9-23
• A group of clinical physicians is performing tests on
patients to determine the effectiveness of a new
antihypertensive drug. Patients with high blood pressure
were randomly chosen and then randomly assigned to
either the control group (which received a well-
established antihypertensive) or the treatment group
(which received the new drug). The doctors noted the
per-centage of patients whose blood pressure was
reduced to a normal level within 1 year. At the 0.01 level
of significance, test appropriate hypotheses to determine
whether the new drug is significantly more effective than
the older drug in reducing high blood pressure.
Group Proportion That Number of Patients
Improved
Treatment 0.45 120
Control 0.36 150 15
 Test for difference between
Means: small sample size
• For small samples sizes, we must
estimate a 'pooled' estimate (a.k.a. a
weighted average) of the variances for the
two groups. This estimate is:

• and then, the estimated standard error is:

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 Tests for Difference Between Two Means:
Small Sample Size
1. Null Hypothesis H0: µ1=µ2
2. Alternative Hypothesis H1 : µ1 > µ2 or µ 1 < µ2
(o n e t a ile d t e s t)
H 1: µ 1 ? µ2 (t w o - ta ile d
te s t )
2 2
2 (n 1  1) s 1  ( n 2  1) s 2
3 . P o o le d E s t im at o r : s 
p
(n 1  1)  ( n 2  1)
x
1 x
4 . T e st S t a tis t ic s: t  2
 x1  x 2

x1  x 2 ˆ
t 
1 1
s p

n1 n2

d f  ( n1  n 2  2 )
5 . R e je c t ion R e g io n t > t α o r t < -t α (o n e ta il e d te st )
t > t α / 2 o r t < -t α /2 (tw o t a ile d t e s t)
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 Example:
• A company wishes to test when the sensitivity
achieved by a new program is significantly higher
than achieved under the legacy program. The
following information is available from test results.
Sensitivity
Mean Standard Sample
Deviation Size
Proposed 92 15 12
P.M.O. 84 19 15
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 Solution
Step 1:
This is a one-tailed test. The hypothesis is stated below.
The significance level is 0.05 (given) H0: μ1 ≤ μ2 versus H1: μ1
> μ2

Step 2:
Since this is a test of the means and neither n1 or n2 is in
excess of 30, a t test is appropriate. The critical value
is 1.708 (from a t table with
25 degrees of freedom).

Step 3:

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Step 4:
Sketch the distribution, locate the critical values and the test
statistic.

Step 5:
Decide! Since the test statistic values lies within the retention
region then there is no sufficient statistical evidence based on
this sample to reject H0.

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 Example:
Five vice presidents and four market research analysts
of a large industry were asked to estimate what they
consider to be the optimal market share for the
company. Their responses are given in the
following table. Do the data suggest that corporate
vice presidents and market research nalysts tend to
disagree when estimating their firm’s optimal market
share?
Vice Test at a 5% level
Presidents 22.5 of25.0
significance.
30.0 27.5 20.0
Market Analysts 21.0 17.5 17.0 20.0

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 Problem: 9-8
• A credit-insurance organization has developed a
new high-tech method of training new sales
personnel. The company sampled 16 employees
who were trained the original way and found
average daily sales to be $688 and the sample
standard deviation was $32.63. They also
sampled 11 employees who were trained using
the new method and found aver-age daily sales
to be $706 and the sample standard deviation
was $24.84. At a = 0.05, can the company
conclude that average daily sales have in-
creased under the new plan?

22
 Problem: 9-9
• A large stock-brokerage firm wants to determine how
successful its new ac-count executives have been at
recruiting clients. After completing their training, new
account execs spend several weeks calling prospective
clients, trying to get the prospects to open accounts with
the firm. The following data give the numbers of new
accounts opened in their first 2 weeks by 10 randomly
chosen female account execs and by 8 randomly chosen
male ac-count execs. At a = 0.05, does it appear that the
women are more effective at generating new accounts
than the men are?
Number of New Accounts
Female account execs 12 11 14 13 13 14 13 12
14 12
Male account execs 13 10 11 12 13 12 10 12
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 Paired Difference Test: Dependent
Samples
Paired Difference Test: Dependent
1. Null Samples
Hypothesis H :µ - µ =µ
0 1 2 d=D0=0
2. Alternative H1: µd > 0 or µd < 0
Hypothesis (one tailed
test) H1: µd ? 0 (two-tailed
3. Test Statistics x   0 test)
t
s n
4. Rejection
Region t > t α or t < -t α ( one tailed
t > tα/2 or t < -tα/2 (two
test) tailed
test)

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 Problem: 9-15
• Jeff Richardson, the receiving clerk for a chemical-
products distributor, is faced with the continuing problem
of broken glassware, including test-tubes, petri dishes,
and flasks. Jeff has determined some additional ship-
ping precautions that can be undertaken to prevent
breakage, and he has asked the Purchasing Director to
inform the suppliers of the new measures. Data for 8
suppliers are given below in terms of average number of
broken items per shipment. Do the data indicate, at a =
0.05, that the new measures have lowered the average
number of broken items?
Supplie 1 2 3 4 5 6 7 8
r
Before 16 12 18 7 14 19 6 17
After 14 13 12 6 9 15 8 15

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 Problem: 9-17
• Aquarius Health Club has been advertising a rigorous
program for body conditioning. The club claims that after
1 month in the program, the aver-age participant should
be able to do eight more push-ups in 2 minutes than he
or she could do at the start. Does the random sample of
10 program par-ticipants given below support the club's
claim? Use the 0.025 level of sig-nificance.

Participan 1 2 3 4 5 6 7 8 9 10
t
Before 38 11 34 25 17 38 12 27 32 29
After 45 24 41 39 30 44 30 39 40 41

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 Another way to look at
hypothesis testing (more
• In common)
typical hypothesis testing, the analyst does not go
through the procedures manually. Instead, they use
a computer and a statistical analysis software
package (such as SAS, SPSS, Minitab, etc.)
• Instead of drawing the distribution and determining
the location of the test statistic value (within the
rejection or retention region), the computer calculates
the area under the normal curve in excess of the test
statistic value. This area is called the probability
value or p-value
• So, you do not have to determine the location of the
test statistic to make your decision on H0. You 27
 Benefits
• Saves time since all computer statistics
packages compute the p-value, and

• Not all people share your personal level of

risk assessment. That is, you might use
an alpha value of 0.05 but someone else might
use a higher/lower value.You might reject H0
using
α = 0.05 but someone else might retain H0 at a28
Decision rule using p-values

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