© 2000 Prentice-Hall, Inc.

STATISTICS II

Inferences Based on Two Samples:

Confidence Intervals & Tests of Hypotheses
Week III

9-1
 Thinking Challenge
© 2000 Prentice-Hall, Inc.

How Would You Try to Answer These

Questions?
Who Gets Higher Which Programs Are
Grades: Males or Faster to Learn:
Females? Windows or DOS?

D
O
S
9-2
 Two Population Tests
© 2000 Prentice-Hall, Inc.

Tw
Twoo
Populations
Populations

Pa
Paired
ired
M
Mean
ean Proportion
Proportion Variance
Variance
Indep.
Indep.

ZZ Test
Test tt Test
Test tt Test
Test
(La
(Large
rge (Sm
(Smaallll (Pa
(Paired
ired ZZ Test
Test FF Test
Test
sam
sample)
ple) sam
sample)
ple) sam
sample)
ple)

9-3
© 2000 Prentice-Hall, Inc.

Testing Two Means

Independent Sampling
& Paired Difference Experiments

9-4
 Independent & Related
© 2000 Prentice-Hall, Inc.
Populations
Independent Related
1. Different Data 1. Same Data
Sources Source
 Unrelated  Paired or Matched
 Independent  Repeated Measures
(Before/After)
2. Use Difference 2. Use Difference
Between the 2 Sample Between Each Pair of
Means Observations
 X1 -X2  di = X1i - X2i

9-5
 Two Independent
© 2000 Prentice-Hall, Inc.
Populations Examples

1. An economist wishes to determine whether

there is a difference in mean family income
for households in 2 socioeconomic groups.
2. An admissions officer of a small liberal arts
college wants to compare the mean SAT
scores of applicants educated in rural high
schools & in urban high schools.

9-6
 Two Related Populations
© 2000 Prentice-Hall, Inc.
Example

An analyst for Educational Testing Service

wants to compare the mean GMAT scores
of students before & after taking a GMAT
review course.

9-7
 Thinking Challenge
© 2000 Prentice-Hall, Inc.

Are They Independent or Paired?

1. Miles per gallon ratings of cars before &
after mounting radial tires
2. The life expectancy of light bulbs made in
2 different factories
3. Difference in hardness between 2 metals:
one contains an alloy, one doesn’t

9-8
© 2000 Prentice-Hall, Inc.

Testing
2 Independent Means

9-9
 Two Independent Populations
© 2000 Prentice-Hall, Inc.
Hypotheses for Means

Research
Research Questions
Questions
No Difference
Hypothesis No Difference
Hypothesis Pop 11 
Pop Pop
Pop 22 Pop 11 
Pop  Pop
Pop 22
Any
Any Difference
Difference Pop
Pop 11 << Pop
Pop 22 Pop
Pop 11 >> Pop
Pop 22
H
H00 11 -- 22 == 00 11 -- 22  00 11 -- 22  00
H
Haa 11 -- 22 0
0 11 -- 22 << 00 11 -- 22 >> 00

9 - 10
 Sampling Distribution
© 2000 Prentice-Hall, Inc.

Popula
Population
tion 
11 
22 Popula
Population
tion
11 22

11 
22

Select
Select sim
simple
ple ra
random
ndom Com
ComputeX
puteX11 -X
-X22 Select
Select sim
simple
ple ra
random
ndom
sam
sample,
ple, size
size nn11.. for
for every
every pair
pair sam
sample,
ple, size
size nn22..
Com pute X
Compute X11 of
of sa
sam
mples
ples Com
ComputeX
puteX22

Astronom
Astronomicalical num
numberber Sa
Sammpling
pling
of X
of X11 -X
-X22 va
values
lues Distribution
Distribution

11 -- 22
9 - 11
© 2000 Prentice-Hall, Inc.

Large-Sample Z Test
for 2 Independent Means

9 - 12
 Large-Sample Z Test
© 2000 Prentice-Hall, Inc.
for 2 Independent Means
 1. Assumptions
 Independent, Random Samples
 Populations Are Normally Distributed
 If Not Normal, Can Be Approximated by
Normal Distribution (n1  30 & n2  30 )
2. Two Independent Sample Z-Test Statistic
(X1 X 2 1   2 ) (X1 X 2 1   2 )
Z 2 2
 2 2
1 2 s1 s2
 
9 - 13
n1 n2 n1 n2
 Large-Sample Z Test
© 2000 Prentice-Hall, Inc.
Example
You’re a financial analyst for Charles Schwab.
You want to find out if there is a difference in
dividend yield between stocks listed on NYSE
& NASDAQ. You collect the following data:
NYSE NASDAQ
Number 121 125
Mean 3.27 2.53
Std Dev 1.30 1.16
Is there a difference in average
yield ( = .05)?
© 1984-1994 T/Maker Co.
9 - 14
 Large-Sample Z Test
© 2000 Prentice-Hall, Inc.
Solution
H0: 1 - 2 = 0 (1 = 2) Test Statistic:
Ha: 1 - 2  0 (1  2) 3.27  2.5
z  4.69
  .05 1.698 1. 353

n1 = 121, n2 = 125 121 125
Critical Value(s): Decision:
Reject H0 Reject H0
Reject at  = .05
.025 .025
Conclusion:
There is Evidence of a
-1.96 0 1.96 z Difference in Means
9 - 15
 Large-Sample Z Test
© 2000 Prentice-Hall, Inc.
Thinking Challenge
You’re an economist for the Department of
Education. You want to find out if there is a
difference in spending per pupil between urban &
rural high schools. You collect the following:
Urban Rural
Number 35 35
Mean $ 6,012 $ 5,832
Std Dev $ 602 $ 497
Is there any difference in population
means ( = .10)?
9 - 16
 Large-Sample Z Test
© 2000 Prentice-Hall, Inc.
Solution*
H0: 1 - 2 = 0 (1 = 2) Test Statistic:
Ha: 1 - 2  0 (1  2) (6012 5832)  0
z 2 2
 1.36
  .10 602 497

n1 = 35, n2 = 35 35 35
Critical Value(s): Decision:
Reject H0 Reject H0
Do Not Reject at  = .10
.05 .05
Conclusion:
There is No Evidence of
-1.645 0 1.645 z a Difference in Means
9 - 17
© 2000 Prentice-Hall, Inc.

Small-Sample t Test
for 2 Independent Means

9 - 18
 Small-Sample t Test
© 2000 Prentice-Hall, Inc.
for 2 Independent Means
1. Tests means of 2 independent
populations having equal variances
2. Assumptions
 Independent, random samples
 Both populations are normally distributed
 Population variances are Unknown but
assumed equal

9 - 19
 Small-Sample t Test
© 2000 Prentice-Hall, Inc.
Test Statistic

t
X 1  X 2  1   2 
1 1 Hypothesized
   
2
SP difference
 n1 n2 

SP
2

n1  1 S
 n2  1 S 2
1
2 2

n1  n2  2
df  n1  n2  2

9 - 20
 Small-Sample t Test
© 2000 Prentice-Hall, Inc.
Example
You’re a financial analyst for Charles Schwab. Is
there a difference in dividend yield between
stocks listed on the NYSE & NASDAQ? You
collect the following data:
NYSE NASDAQ
Number 21 25
Mean 3.27 2.53
Std Dev 1.30 1.16
Assuming normal populations,
is there a difference in average
yield ( = .05)?
9 - 21 © 1984-1994 T/Maker Co.
 Small-Sample t Test
© 2000 Prentice-Hall, Inc.
Solution

t
X 1  X 2  1   2 

3.27  2.53  0  2.03
1 1  1 1 
SP
2
    1.510    
 n1 n2   21 25 

SP
2

n1  1 S1  n2  1 S 2
2 2

n1  n2  2


21  1 1.30   25  1 1.16 
2 2
 1.510
21  25  2

9 - 22
 Small-Sample t Test
© 2000 Prentice-Hall, Inc.
Solution
H0: 1 - 2 = 0 (1 = 2) Test Statistic:
Ha: 1 - 2  0 (1  2) 3.27  2.53
t  2.03
 1 1 
  .05 1.510    
 21 25 
df  21 + 25 - 2 = 44
Critical Value(s): Decision:
R eject H 0 R eject H 0 Reject at  = .05
.025 .025 Conclusion:
There is evidence of a
-2.0154 0 2.0154 t difference in means
9 - 23
 Small-Sample t Test
© 2000 Prentice-Hall, Inc.
Thinking Challenge
You’re a research analyst for General Motors.
Assuming equal variances, is there a difference in
the average miles per gallon (mpg) of two car
models ( = .05)?
You collect the following:
Sedan Van
Number 15 11
Mean 22.00 20.27
Std Dev 4.77 3.64

9 - 24
 Small-Sample t Test
© 2000 Prentice-Hall, Inc.
Solution*
H0: 1 - 2 = 0 (1 = 2) Test Statistic:
Ha: 1 - 2  0 (1  2) 22.00  20.27
t  1.00
  .05 1 1
18.793    
 15 11 
df  15 + 11 - 2 = 24
Critical Value(s): Decision:
R eject H 0 R eject H 0 Do not reject at  = .05
.025 .025 Conclusion:
There is no evidence of
-2.0639 0 2.0639 t a difference in means
9 - 25
 Small-Sample t Test
© 2000 Prentice-Hall, Inc.
Solution*

t
X 1  X 2  1   2 

22.00  20.27   0
 1.00
1 1 1 1
2
S P     18.793    
 n1 n2   15 11 

SP
2   2
 
n  1  S1  n2  1  S 2
 1
2

n1  n2  2


15  1 4.77   11  1 3.64
2 2
 18.793
15  11  2

9 - 26
© 2000 Prentice-Hall, Inc.

Paired-Sample t Test

Paired Difference Experiments

9 - 27
 Two Population Tests
© 2000 Prentice-Hall, Inc.

Tw
Twoo
Populations
Populations

Pa
Paired
ired
M
Mean
ean Proportion
Proportion Variance
Variance
Indep.
Indep.

ZZ Test
Test tt Test
Test tt Test
Test
(La
(Large
rge (Sm
(Smaallll (Pa
(Paired
ired ZZ Test
Test FF Test
Test
sam
sample)
ple) sam
sample)
ple) sam
sample)
ple)

9 - 28
 Paired-Sample t Test
© 2000 Prentice-Hall, Inc.
for Mean Difference
1. Tests means of 2 related populations
 Paired or matched
 Repeated measures (before/after)

2. Eliminates variation among subjects

3. Assumptions
 Both population are normally distributed
 If not normal, can be approximated by normal
distribution (n1  30 & n2  30 )

9 - 29
 Paired-Sample t Test
© 2000 Prentice-Hall, Inc.
Hypotheses

Research Questions
Hypothesis No Difference Pop 1 Pop 2 Pop 1  Pop 2
Any Difference Pop 1 < Pop 2 Pop 1 > Pop 2

H0 d = 0 d  0 d  0
H1 d 0 d < 0 d > 0
Note: di = X1i - X2i for ith observation

9 - 30
 Paired-Sample t Test
© 2000 Prentice-Hall, Inc.
Data Collection Table

Observation Group 1 Group 2 Difference

1 x11 x21 d 1 = x11-x21
2 x12 x22 d 2 = x12-x22
   
i x1i x2i d i = x1i - x2i
   
n x1n x2n d n = x1n - x2n

9 - 31
 Paired-Sample t Test
© 2000 Prentice-Hall, Inc.
Test Statistic

Xd 
t  df  n  1
Sd dd

n
d

Sample Mean Sample

n Standard n

di Deviation  (di - Xd)2

i 1 i 1
X  Sd 
d n n 1
d d

9 - 32
 Paired-Sample t Test
© 2000 Prentice-Hall, Inc.
Example
You work in Human Resources. You want to see if a
training program is effective. You collect the
following test score data:
Name Before (1) After (2)
Sam 85 94
Tamika 94 87
Brian 78 79
Mike 87 88
At the .10 level, was the
training effective?

9 - 33
 Computation Table
© 2000 Prentice-Hall, Inc.

Observation Before After Difference

Sam 85 94 -9
Tamika 94 87 7
Brian 78 79 -1
Mike 87 88 -1
Total -4

9 - 34
 Null Hypothesis
© 2000 Prentice-Hall, Inc.
Solution
1. Was the training effective?
2. Effective means ‘After’ > ‘Before’.
3. Statistically, this means A > B.
4. Rearranging terms gives 0 B - A.
5. Defining D = B - A & substituting into (4)
gives 0 D or D .
6. The alternative hypothesis is Ha: D 0.

9 - 35
 Paired-Sample t Test
© 2000 Prentice-Hall, Inc.
Solution
H0: D = 0 (D = B - A) Test Statistic:
Ha: D < 0 xd  D 1  0
t Sd
  .306
 = .10 6.53
df = 4 - 1 = 3 nd 4
Critical Value(s): Decision:
Reject Do not reject at  = .10
.10
Conclusion:
There is no evidence
-1.6377 0 t training was effective
9 - 36
 Paired-Sample t Test
© 2000 Prentice-Hall, Inc.
Thinking Challenge
You’re a marketing (1) (2)
research analyst. You Store Client Competitor
want to compare a 1 $ 10 $ 11
client’s calculator to a 2 8 11
competitor’s. You 3 7 10
sample 8 retail stores. 4 9 12
At the .01 level, does 5 11 11
your client’s calculator 6 10 13
sell for less than their 7 9 12
competitor’s 8 8 10

9 - 37
 Paired-Sample t Test
© 2000 Prentice-Hall, Inc.
Solution*
H0: D = 0 (D = 1 - 2) Test Statistic:
Ha: D < 0 xd  D 2.25  0
t Sd
  5.486
 = .01 1.16
df = 8 - 1 = 7 nd 8
Critical Value(s): Decision:
Reject Reject at  = .01
.01 Conclusion:
There is evidence
-2.998 0 t client’s brand (1) sells
9 - 38 for less
© 2000 Prentice-Hall, Inc.

Z Test for Differences in

Two Proportions

9 - 39
 Z Test for Difference in
© 2000 Prentice-Hall, Inc.
Two Proportions
1. Assumptions
 Populations are independent
 Populations follow binomial distribution
 Normal approximation can be used
 np  3 np 1  p  Does not contain 0 or n

2. Z-Test Statistic for Two Proportions

Z
 p1  p2   1   2  where p 
X1  X 2
1 1 n1  n2
p  1  p     
 n1 n2 
9 - 40
 Hypotheses for
© 2000 Prentice-Hall, Inc.
Two Proportions

Research Questions
Hypothesis No Difference Pop 1 Pop 2 Pop 1  Pop 2
Any Difference Pop 1 < Pop 2 Pop 1 > Pop 2
Ho
Ha 0
H
p1 IIII- ––pII2II ===/000
1 2
pIIII1 ––- IIIIp2<>=00 0
1 2
pIIII1 ––-IIIIp><=0
1 2
2 0 0
1 2 1 2 1 2

Ha p1 - p2 0 p1 - p2 < 0 p 1 - p2 > 0

9 - 41
 Z Test for Two Proportions
© 2000 Prentice-Hall, Inc.
Example
As personnel director, you
want to test the perception
of fairness of two methods
of performance evaluation.
63 of 78 employees rated
Method 1 as fair. 49 of 82
rated Method 2 as fair. At
the .01 level, is there a
difference in perceptions?

9 - 42
 Z Test for Two
© 2000 Prentice-Hall, Inc.
Proportions Solution

X 1 63 X 2 49
p1    .808 p2    .598
n1 78 n2 82

X 1  X 2 63  49
p   .70
n1  n2 78  82

Z
 p1  p2    1   2  
.808  .598   0 
1 1
.70   1  .70   
1 1 
p  1  p       
 n1 n2   78 82 
 2.90
9 - 43
 Z Test for Two
© 2000 Prentice-Hall, Inc.
Proportions Solution
H0: II1 - II2 = 0 Test Statistic:
Ha: II1 - II2  0 Z  2 .90

 = .01
n1 = 78 n1 = 82
Critical Value(s): Decision:
R eject H 0 R eject H 0 Reject at  = .01
.005 .005 Conclusion:
There is evidence of a
-2.58 0 2.58 Z difference in proportions
9 - 44
 Z Test for Two Proportions
© 2000 Prentice-Hall, Inc.
Thinking Challenge
You’re an economist for the
Department of Labor. You’re
studying unemployment rates. MA
In MA, 74 of 1500 people
surveyed were unemployed.
In CA, 129 of 1500 were CA
unemployed. At the .05 level,
does MA have a lower
unemployment rate?
9 - 45
 Z Test for Two
© 2000 Prentice-Hall, Inc.
Proportions Solution*
X MA 74 X CA 129
pMA    .0493 pCA    .0860
nMA 1500 nCA 1500

X MA  X CA 74  129
p   .0677
nMA  nCA 1500  1500

Z
.0493  .0860    0 
 1 1 
.0677   1  .0677     
 1500 1500 
 4.00
9 - 46
 Z Test for Two
© 2000 Prentice-Hall, Inc.
Proportions Solution*
H0: IIMA - IICA = 0 Test Statistic:
Ha: IIpMA - IICA < 0 Z = -4.00
 = .05
nMA = 1500 nCA = 1500
Critical Value(s): Decision:
R eject Reject at  = .05
.05 Conclusion:
There is evidence MA
-1.645 0 Z is less than CA
9 - 47