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Basics of Hypothesis Testing

Contents

Introduction The Criminal Trial Problem Testing Components of the Criminal Trial Problem Setting Up A Statistical Testing Framework Basic Structure of a Hypothesis Test Critical Values & p-Values

Introduction
When studying the characteristics or behavior of phenomena, are our beliefs supported by facts? Hypothesis testing provides a statistical framework to answer We use samples of data to draw inferences about their parent populations

Hypothesis
A statement of what the researcher believes will be the outcome of an experiment or a study e.g. Penetration in cell phone industry is very high

Statistical Hypothesis
a formal structure used to statistically (based on a sample) test the research hypothesis A claim (assumption) about a population parameter e.g. The proportion of adults in this city with cell phones is more than 0.80

The Criminal Trial Problem


The situation: A man is on trial for murder Both the prosecution and the defence present evidence The prosecution presents evidence of the defendants guilt The defence presents evidence of the defendants innocence The jury must evaluate the evidence and return one of two possible verdicts Guilty Not guilty Not guilty means the prosecution has failed to establish guilt beyond a reasonable doubt This is not the same as innocent The burden of proof is on the prosecution; the defendant is presumed innocent until proven guilty

Testing Components of the Criminal Trial Problem Is the defendant guilty of murder?
evidence. This is what the jury has to determine by weighing the

The jury has to evaluate the testing hypothesis, which is: against,

H1 : The defendant is guilty


This is called the Alternative Hypothesis

H0 : The defendant is innocent


This is called the Null Hypothesis

The verdict can be


to convict him Guilty there is enough evidence of the defendants guilt
Reject the Null Hypothesis in favour of the Alternative

Not guilty the evidence does not conclusively establish the defendants guilt

There is insufficient evidence to reject the Null Hypothesis

Is The Jury Always Right?

H0: The defendant is innocent The Trial Situation The Truth The Verdict Not Guilty Innocent Guilty

H1: The defendant is guilty The Hypothesis Test The Truth The Decision Do not reject H0 Reject H0 in favor of H1 Type I Error: False positive
Probability of Type I Error : a

Innocent

Guilty

Correct

Wrong

Type II Error: False negative

Probability of Type II Error : b

Guilty

Wrong

Correct

Relative Severity of Errors


Which is worse:

Convicting an innocent man (Type I Error) Letting a guilty man go free (Type II Error)
What about:

Testing a sample of drinking water for contaminants


H1: Drinking water supplies are contaminated
H0: Drinking water supplies are safe Type I Error: Concluding that the water is contaminated, when it is actually safe Type II Error: Concluding that the water is safe to drink, when it is actually contaminated

Type I & Type II Errors are inversely related Which type of error is easier to minimize? A Type II Error

Setting Up The Statistical Framework

Determine the testing (alternative) hypothesis

Determine the null hypothesis

Randomly sample from the population(s) being studied

Calculate the test statistic

Reject the null hypothesis

NO

Is the test statistic consistent with H0?

YES

Do not reject the null hypothesis

Basic Structure of a Hypothesis Test


The Null Hypothesis

Usually, but not always, contains an = sign Describes a condition in which the status quo is maintained, e.g., innocent until proven guilty The test procedure is used to evaluate evidence against it
The Alternative Hypothesis

This is the real testing hypothesis that describes the belief of the researcher Establishes a disparity of some kind (unequal, greater than, less than, different from) Challenges the status quo
The Level of Significance

Is the maximum tolerable probability of committing a Type I Error, denoted by a Is selected by the researcher before starting, based on risk tolerance Provides the critical values for the test
Basic Distribution

This is the distribution of the test statistic Typical distributions for testing properties of means are Z (standard normal) and Students t Typical distributions for testing variances are c2 and F

The Level of Significance and the Rejection Region

H 0: m = 3 H 1: m < 3 H 0: m = 3 H 1: m > 3

a
Left-tailed test

a
Right-tailed test

a/2

H0: m = 3 Two-tailed H1: m <> 3 test


Rejection Regions

0
Critical Value(s)

Critical Values & p-Values


Critical Values Method

There are two ways to find the results of a hypothesis test

Convert the sample statistic to a test statistic (e.g., Z-, t-, or Fstatistic) with a standard distribution Obtain critical value(s) from this distribution for the Level of Significance If the test statistic falls in the critical region, reject H0 If the test statistic falls in the acceptance region, do not reject H0
p-Value Method

Convert the sample statistic to a test statistic (e.g., Z-, t-, or Fstatistic) with a standard distribution The p-value is the chance of obtaining a test statistic more extreme (greater than or less than) the calculated one, given H0 is true If the p-value is less than the Level of Significance, reject H0 If the p-value is more than the Level of Significance, do not reject H0

Both methods will yield the same conclusion

Questions

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Thank You