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On

TESTS OF HYPOTHESIS

Submitted To:

Submitted By:

Simi Mam

Sumeet Singh

MBA (Gen)

Roll. No.= 89

Sec = B

Contents

1 Introduction 3

2 Decision Errors: 5

3 Decision Rules: 5

Tests:

2

7 Importance: 14

8 Criticism: 14

Introduction:

decisions using experimental data. In statistics, a result is called

statistically significant if it is unlikely to have occurred by

chance. The phrase "test of significance" was coined by Ronald

Fisher: "Critical tests of this kind may be called tests of

significance, and when such tests are available we may

discover whether a second sample is or is not significantly

different from the first.

analysis, in contrast to exploratory data analysis. In frequency

probability, these decisions are almost always made using null-

hypothesis tests; that is, ones that answer the question

Assuming that the null hypothesis is true, what is the

probability of observing a value for the test statistic that is at

least as extreme as the value that was actually observed? One

use of hypothesis testing is deciding whether experimental

results contain enough information to cast doubt on

conventional wisdom.

3

Statistical hypothesis testing is a key technique of frequentist

statistical inference, and is widely used, but also much

criticized. The main alternative to statistical hypothesis testing

is Bayesian inference.

which, if they occur, will lead us to decide that there is a

difference. That is, cause the null hypothesis to be rejected in

favour of the alternative hypothesis. The critical region is

usually denoted by C.

parameter. This assumption may or may not be true. The best

way to determine whether a statistical hypothesis is true would

be to examine the entire population. Since that is often

impractical, researchers typically examine a random sample

from the population. If sample data are consistent with the

statistical hypothesis, the hypothesis is accepted; if not, it is

rejected.

1. Null hypothesis. The null hypothesis, denoted by H0, is

usually the hypothesis that sample observations result

purely from chance.

2. Alternative hypothesis. The alternative hypothesis,

denoted by H1 or Ha, is the hypothesis that sample

observations are influenced by some non-random cause.

4

For example, suppose we wanted to determine whether a coin

was fair and balanced. A null hypothesis might be that half the

flips would result in Heads and half, in Tails. The alternative

hypothesis might be that the number of Heads and Tails would

be very different. Symbolically, these hypotheses would be

expressed as

H0: P = 0.5

Ha: P ≠ 0.5

10 Tails. Given this result, we would be inclined to reject the

null hypothesis and accept the alternative hypothesis.

Decision Errors:

rejects a null hypothesis when it is true. The probability of

committing a Type I error is called the significance level.

This probability is also called alpha, and is often denoted

by α.

accepts a null hypothesis that is false. The probability of

committing a Type II error is called Beta, and is often

denoted by β. The probability of not committing a Type II

error is called the Power of the test.

5

Decision Rules:

rejecting the null hypothesis. In practice, statisticians describe

these decision rules in two ways - with reference to a P-value or

with reference to a region of acceptance.

hypothesis is measured by the P-value. Suppose the test

statistic is equal to S. The P-value is the probability of

observing a test statistic as extreme as S, assuming the

null hypothesis is true. If the P-value is less than the

significance level, we reject the null hypothesis.

range of values. If the test statistic falls within the region

of acceptance, the null hypothesis is accepted. The region

of acceptance is defined so that the chance of making a

Type I error is equal to the significance level.

region of rejection. If the test statistic falls within the region

of rejection, the null hypothesis is rejected. In such cases, we

say that the hypothesis has been rejected at the α level of

significance.

6

These approaches are equivalent. Some statistics texts use the

P-value approach; others use the region of acceptance

approach. In subsequent lessons .

distribution, is called a one-tailed test.

mean is less than or equal to 10. The alternative hypothesis

would be that the mean is greater than 10. The region of

rejection would consist of a range of numbers located located

on the right side of sampling distribution; that is, a set of

numbers greater than 10.

7

2. Two-Tailed Test: A test of a statistical hypothesis, where

distribution, is called a two-tailed test.

mean is equal to 10. The alternative hypothesis would be

that the mean is less than 10 or greater than 10. The region

of rejection would consist of a range of numbers located

located on both sides of sampling distribution; that is, the

region of rejection would consist partly of numbers that were

less than 10 and partly of numbers that were greater than 10

Hypothesis Tests:

researcher states a hypothesis to be tested, formulates an

analysis plan, analyzes sample data according to the plan, and

accepts or rejects the null hypothesis, based on results of the

analysis.

hypothesis. The hypotheses are stated in such a way that

8

they are mutually exclusive. That is, if one is true, the

other must be false; and vice versa.

hypothesis. It should specify the following elements.

a. Significance level. Often, researchers choose

significance levels equal to 0.01, 0.05, or 0.10; but

any value between 0 and 1 can be used.

b. Test method. Typically, the test method involves a

from sample data, the test statistic might be a mean

score, proportion, difference between means,

difference between proportions, z-score, t-score, chi-

square, etc. Given a test statistic and its sampling

distribution, a researcher can assess probabilities

associated with the test statistic. If the test statistic

probability is less than the significance level, the null

hypothesis is rejected.

computations called for in the analysis plan.

a. Test statistic. When the null hypothesis involves a

equations to compute the test statistic.

Test statistic = (Statistic - Parameter) / (Standard error of statistic)

9

where Parameter is the value appearing in the null

hypothesis, and Statistic is the point estimate of Parameter.

As part of the analysis, you may need to compute the

standard deviation or standard error of the statistic.

Previously, we presented common formulas for the standard

deviation and standard error.

categorical data, you may use a chi-square statistic as the

test statistic. Instructions for computing a chi-square test

statistic are presented in the lesson on the chi-square

goodness of fit test.

b. P-value. The P-value is the probability of observing a

assuming the null hypothesis is true.

hypothesis. Typically, this involves comparing the P-value

to the significance level, and rejecting the null hypothesis

when the P-value is less than the significance level.

10

Common test statistics

In the table below, the symbols used are defined at the bottom

of the table. Many other tests can be found in other articles.

and σ known.

mean in relation to the standard

One-sample

deviation of the mean). For

z-test

non-normal distributions it is

possible to calculate a

minimum proportion of a

population that falls within k

standard deviations for any k

(see: Chebyshev's inequality).

11

Normal population and

Two-sample

independent observations and

z-test

σ1 and σ2 are known

t-test and σ unknown

(Normal population of

Paired t-test differences or n > 30) and σ

unknown

pooled t-test, n1 + n2 > 40) and independent

equal observations and σ1 = σ2 and

variances* σ1 and σ2 unknown

[5]

unpooled t- n1 + n2 > 40) and independent

test, unequal observations and σ1 ≠ σ2 and

variances* σ1 and σ2 unknown

[6]

proportion z- and it is a SRS (Simple

test Random Sample).

Two-

and n2 p2 > 5 and n2(1 − p2) >

proportion z-

5 and independent

test, pooled

observations

proportion z- and n2 p2 > 5 and n2(1 − p2) >

test, 5 and independent

unpooled observations

12

One of the following

One-sample

least 5

chi-square

test

• All expected counts are > 1

and no more that 20% of

expected counts are less than 5

*Two-

Arrange so > and reject

sample F test

for equality H0 for F > F(α / 2,n1 −

of variances 1,n2 − 1) [7]

Type I error (rejecting standard proportion, unless

a null hypothesis when deviation specified otherwise

it is in fact true) • s2 = sample • p0 = hypothesized

• n = sample size variance population proportion

• n1 = sample 1 size • s1 = sample 1 • p1 = proportion 1

• n2 = sample 2 size standard • p2 = proportion 2

• = sample mean deviation • min{n1,n2} =

• μ0 = hypothesized • s2 = sample 2 minimum of n1 and n2

population mean standard • x1 = n1p1

deviation

• μ1 = population 1 • x2 = n2p2

mean • t = t statistic

• χ2 = Chi-squared

• μ2 = population 2 • df = degrees of statistic

mean freedom

σ = population • = sample

•

mean of

• F = F statistic

standard deviation

differences

• σ2 = population • d0 =

variance hypothesized

population

mean

difference

• sd = standard

deviation of

differences

In general, the subscript 0 indicates a value taken from the null hypothesis, H0, which

should be used as much as possible in constructing its test statistic.

13

Importance:

whole of statistics and in statistical inference. For example,

Lehmann (1992) in a review of the fundamental paper by

Neyman and Pearson (1933) says: "Nevertheless, despite

their shortcomings, the new paradigm formulated in the 1933

paper, and the many developments carried out within its

framework continue to play a central role in both the theory

and practice of statistics and can be expected to do so in the

foreseeable future".

Criticism:

testing" has what is actually a rather strange goal of

detecting the existence of a "real" difference between two

populations. In practice a difference can almost always be

found given a large enough sample, the typically more

relevant goal of science is a determination of causal effect

size. The amount and nature of the difference, in other

14

words, is what should be studied. Many researchers also feel

that hypothesis testing is something of a misnomer. In

practice a single statistical test in a single study never

"proves" anything.

bearing on the practical significance at the observed effect

size. A statistically significantly not be relevant in practice

due to other, larger effects of more concern, whilst a true

effect of practical significance may not appear statistically

significant if the test lacks the power to detect it. Appropriate

specification of both the hypothesis and the test of said

hypothesis is therefore important to provide inference of

practical utility.

15

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