Hypothesis testing

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 Hypothesis testing
A common aim in many studies is to check whether the data agree
with certain predictions.
These predictions are hypotheses about variables measured in the
study.
A hypothesis is a statement about some characteristic of a variable
or a collection of variables.

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 Hypothesis testing
A significance test is a way of statistically testing a hypothesis by
comparing the data to values predicted by the hypothesis.
Data that fall far from the predicted values provide evidence
against the hypothesis.
All significance tests have five elements: assumptions,
hypotheses, test statistic, p-value, and conclusion.
All significance tests require certain assumptions for the tests to
be valid.
These assumptions refer, e.g., to the type of data, the form of the
population distribution, method of sampling, and sample size.
 Hypothesis testing

Example: a firm produces metal boxes and

wants to evaluate the production process. They
want to be sure that the longest side of the box
is 368 mm. They keep a sample of 25 boxes. If
the length of the side would result different, the
all production process will need a correction.

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 Hypothesis testing
A significance test considers two hypotheses about the value of a
population parameter: the null hypothesis and the alternative
hypothesis.
The null hypothesis H0 is the hypothesis that is directly tested. This
is usually a statement that the parameter has value corresponding
to, in some sense, no effect.
The alternative hypothesis HA is a hypothesis that contradicts the
null hypothesis. This hypothesis states that the parameter falls in
some alternative set of values to what null hypothesis specifies.

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 Hypothesis testing
A significance test analyzes the strength of sample evidence against the
null hypothesis.
The test is conducted to investigate whether the data contradict the null
hypothesis, hence suggesting that the alternative hypothesis is true.
The alternative hypothesis is judged acceptable if the sample data are
inconsistent with the null hypothesis. That is, the alternative hypothesis
is supported if the null hypothesis appears to be incorrect.
The hypotheses are formulated before collecting or analyzing the data.
The test statistics is a statistic calculated from the sample data to test
the null hypothesis. This statistic typically involves a point estimate of the
parameter to which the hypotheses refer.
 Hypothesis testing
The sample distribution of the test statistics is divided into two regions:
•Region of rejection
•Region of acceptance

Decision rule:

Value of test statistics

Falls in region of acceptance Falls in region of rejection

Null hypothesis cannot be rejected Null hypothesis must be rejected

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Hypothesis testing
To decide on the null hypothesis, we need to find the critic
value of the test statistics.
This is the value that divide the acceptance and rejection region

Critic Critic
value value
Rejection Acceptance Rejection
region region region

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 Hypothesis testing
The p-value is the probability, if H0 were true, that the test statistic would fall
in this collection of values.
The p-value is the probability, when H0 is true, of a test statistic value at least
as contradictory to H0 as the value actually observed.
The smaller the p-value, the more strongly the data contradict H 0.

For example, a p-value such as 0.3 or 0.8 indicates that the observed data
would not be unusual if H0 were true. But a p-value such as 0.001 means
that such data would be very unlikely, if H0 were true. This provides strong
evidence against H0.
Test for the mean (known variance)
To verify that the mean of a population is equal to a certain
value μ, against the alternative hypothesis of a value different
from it, if we know σ, we can use the test statistics Z:

X is distributed as a Normal => under H0, Z is distributed as a

standardised normal
If Z has values near 0 we can accept H0, else we refuse H0 (two side
test).

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 Test for the mean (known variance)
Critical value approach (level of significance of 0.05)

Decision rule:
Refuse H0
if Z>+1,96 or
if Z<-1,96 -

else
Rejection Acceptance Rejection
accept H0 region region region

Critic Critic
value value

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 Test for the mean (known variance)
Example: a firm produces metal boxes and wants to evaluate the production
process. They want to be sure that the longest side of the box is 368 mm. They
keep a sample of 25 boxes. The standard deviation id 15 mm and the sample
mean is 372,5 mm. H0: μ = 368
H1: μ ≠ 368

-
With the value of the test
statistics, H0 cannot be Rejection Acceptance Rejection
region region region
refused.
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P-value approach

Decision rule:
• if the p-value greater than or equal to , null hypothesis is accepted.
• if the p-value è is less than , the null hypothesis is rejected.

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 Test for the mean (unknown variance)

Usually we do not know σ and we estimate it through S.

In this case the test statistics to be use is t:

It has the Student’s t distribution with n − 1 degrees of freedom

if H0 is true.

Also in this case we can use the critic value approach or the p-value
one. The tables to be used are the t-Student’s ones.

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Test for the mean (unknown variance)
Example: t with a level of significance 0.05 and 11 degrees of
freedom

Rejection Acceptance region Rejection

region region

Critic Critic
value value

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 Test for the mean (unknown variance)

Example: The following data are the amounts in dollars in a random

sample of 12 sales invoices.
108.98 152.22 111.45 110.59 127.46 107.26
93.32 91.97 111.56 75.71 128.58 135.11
n n

 X i  X
2
X i
X i 1
 112.85 S i 1
 20.80
n n 1

H0: μ=120 H1:μ≠120 α=0.05

X   112.85  120
t   1.19
S 20.80
n 12

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 …Example

Since -2.201<t=-1.19<2.201 we do not reject H0.

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