Examples of parameters are population mean or proportion The parameter must be identified before analysis
9-3
What is a Hypothesis?
Hypothesis: A statement about the value of a population parameter developed for the purpose of testing. Examples of hypotheses made about a population parameter are:
The mean monthly income for systems analysts is Rs 15,000. Twenty percent of all juvenile offenders are caught and sentenced to prison.
9-4
Hypothesis testing: A procedure, based on sample evidence and probability theory, used to determine whether the hypothesis is a reasonable statement and should not be rejected, or is unreasonable and should be rejected.
9-5
Hypothesis Testing
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e le c t I d e n o r m a
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l a t e
e c i s io n a r r iv e
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r e j e c R t en j ue lc l t
a c c e p
9-6
Definitions
Null Hypothesis H0: A statement about the value of a population parameter. Alternative Hypothesis H1: A statement that is accepted if the sample data provide evidence that the null hypothesis is false. Level of Significance: The probability of rejecting the null hypothesis when it is actually true. Type I Error: Rejecting the null hypothesis when it is actually true.
9-7
Definitions
Type II Error: Accepting the null hypothesis when it is actually false. Test statistic: A value, determined from sample information, used to determine whether or not to reject the null hypothesis. Critical value: The dividing point between the region where the null hypothesis is rejected and the region where it is not rejected.
9-8
A test is one-tailed when the alternate hypothesis, H1 , states a direction, such as:
H0 : The mean income of females is less than or equal to the mean income of males. H1 : The mean income of females is greater than males.
Sampling Dis tribution for the Statis Z for a tic One -Taile Te .05 Le l of Significance d st, ve
r a l i t r b u i o n : = 0 , 2 = 1
0 . 4
. 3
. 2
. 1
f (
. 0
0 1 2 3 4
9-10
A test is two-tailed when no direction is specified in the alternate hypothesis H1 , such as:
H0 : The mean income of females is equal to the mean income of males. H1 : The mean income of females is not equal to the mean
income of the males.
Sam pling Dis tribution for the Statistic Z for a Two-Taile Te t, .05 Le l of Sig d s ve nificance
r a l i t r b u i o n : = 0 , 2 = 1
0 . 4
. 3
. 2
f ( x
. 1
. 0
-4 -3 -2 -1
(continued)
Refers to the status quo Always contains the = sign May or may not be rejected
e.g.: The average number of TV sets in U.S. homes is less than 3 ( H1 : < 3 )
Challenges the status quo Never contains the = sign May or may not be accepted Is generally the hypothesis that is believed (or needed to be proven) to be true by the researcher
Is X = 20 likely if = 50?
No, not likely! REJECT Null Hypothesis
Take a Sample
( X = 20 )
= 50
If H0 is true
Level of Significance,
Is designated by
, (level of significance)
Is selected by the researcher at the beginning Provides the critical value(s) of the test
Rejection Regions 0
Critical Value(s)
/2
Type I Error
Type II Error
Fails to reject a false null hypothesis The probability of Type II Error is The power of the test is ( 1 )
(continued)
Result Probabilities
H0: Innocent Jury Trial The Truth Verdict Innocent Innocent Guilty Correct Error Error Do Not Reject H0 Reject H0 Hypothesis Test The Truth Decision H0 True H0 False 1- Type I Error ( ) Type II Error ( ) Power (1 - )
Guilty
Correct
Increases when the difference between hypothesized parameter and its true value decrease Increases when
Significance level
decreases
Sample size
Choice depends on the cost of the errors Choose smaller Type I Error when the cost of rejecting the maintained hypothesis is high
A criminal trial: convicting an innocent person The Exxon Valdez: causing an oil tanker to sink
Choose larger Type I Error when you have an interest in changing the status quo
A decision in a startup company about a new piece of software A decision about unequal pay for a covered group
Convert sample statistic (e.g.: X ) to test statistic (e.g.: Z, t or F statistic) Obtain critical value(s) for a specified from a table or computer
If the test statistic falls in the critical region, reject H0 Otherwise do not reject H0
Convert Sample Statistic (e.g. X ) to Test Statistic (e.g. Z, t or F statistic) Obtain the p-value from a table or computer
p-value: Probability of obtaining a test statistic more extreme ( or ) than the observed sample value given H0 is true Called observed level of significance Smallest value of that an H0 can be rejected If p-value If p-value
H0 : 3 H1 : < 3
(continued)
7. Collect data 8. Compute test statistic and p-value 10. Express conclusion
-1.645 100 households surveyed Computed test stat =-2, p-value = .0228
Assumptions
Population is normally distributed If not normal, requires large samples Null hypothesis has or sign only
Z test statistic
Z=
X X
X = / n
Rejection Region
H0: 0 H1: Reject H < 0
0
Reject H0
0
Z Must Be Significantly Below 0 to reject H0
Z 0
Small values of Z dont contradict H0 Dont Reject H0 !
368 gm.
368 >
Z =1
.95
.04
.05
.06
=. 05
1.6 .9495 .9505 .9515 1.7 .9591 .9599 .9608 1.8 .9671 .9678 .9686
1.9 .9738 .9744 .9750
0 1.645 Z
Test Statistic:
X Z= 1.50 = n
0 1.645 Z
1.50
Decision:
p -Value Solution
p-Value is P(Z 1.50) = 0.0668
Use the alternative hypothesis to find the direction of the rejection region. P-Value =.0668 1.0000 - .9332 .0668
0
From Z Table: Lookup 1.50 to Obtain .9332
1.50
Z
Z Value of Sample Statistic
p -Value Solution
(p-Value = 0.0668) ( = 0.05) Do Not Reject.
(continued)
= 0.05
1.50
1.645
368 gm.
Test Statistic:
0 1.96 1.50
p-Value Solution
(p Value = 0.1336) ( = 0.05) Do Not Reject.
p Value = 2 x 0.0668 Reject Reject
= 0.05
1.50
1.96
t Test: Unknown
Assumption
X t= S/ n
368 gm.
is not given
368 >
Test Statistic:
0 2.4377 t35
1.80
p -Value Solution
(p Value is between .025 and .05) ( = 0.01). Do Not Reject.
p Value = [.025, .05] Reject
= 0.01
2.4377 Test Statistic 1.80 is in the Do Not Reject Region
1.80
t35
Proportion
Success (possesses a certain characteristic) and Failure (does not possesses a certain characteristic)
Proportion
(continued)
When both np and n(1-p) are at least 5, pS can be approximated by a normal distribution with mean and standard deviation
ps = p
ps =
p(1 p) n
p ( 1 p) n
pS p
Test Statistic:
=
.05 .04
= 1.14
Decision:
Do not reject at = .05 We do not have sufficient evidence to reject the companys claim of 4% response rate.
Conclusion:
0 1.96 Z 1.14
p -Value Solution
(p Value = 0.2542) ( = 0.05). Do Not Reject.
p Value = 2 x .1271 Reject Reject
= 0.05
1.14
1.96
9-10
A test is two-tailed when no direction is specified in the alternate hypothesis H1 , such as:
H0 : The mean income of females is equal to the mean income of males. H1 : The mean income of females is not equal to the mean
income of the males.
Sam pling Dis tribution for the Statistic Z for a Two-Taile Te t, .05 Le l of Sig d s ve nificance
r a l i t r b u i o n : = 0 , 2 = 1
0 . 4
. 3
. 2
f ( x
. 1
. 0
-4 -3 -2 -1
9-12
Testing for the Population Mean: Large Sample, Population Standard Deviation Known
When testing for the population mean from a large sample and the population standard deviation is known, the test statistic is given by:
X z= / n
9-13
EXAMPLE 1
The processors of Fries Catsup indicate on the label that the bottle contains 16 gms of catsup. A sample of 36 bottles is selected hourly and the contents weighed. Last hour a sample of 36 bottles had a mean weight of 16.12 gms with a standard deviation of .5 gms. At the .05 significance level is the process out of control?
9-14
EXAMPLE 1
continued
Step 1: State the null and the alternative hypotheses: Step 2: State the decision rule:
Step 3: Compute the value of the test statistic:
H0 : = 16
H1: 16
Step 4: Decide on H0 : H0 is not rejected because 1.44 is less than the critical value of 1.96 = [1612 16] / [.5 / 36] = 144 z . .
9-15
p-Value: the probability, assuming that the null hypothesis is true, of getting a value of the test statistic at least as extreme as the computed value for the test. If the p-value is smaller than the significance level, H0 is rejected. If the p-value is larger than the significance level, H0 is not rejected.
9-16
One-Tailed Test: p-Value = P{z absolute value of the computed test statistic value} Two-Tailed Test: p-Value = 2P{z absolute value of the computed test statistic value} From EXAMPLE 1, z= 1.44, and since it was a two-tailed test, then p-Value = 2P {z 1.44} = 2(.5-.4251) = .1498. Since .1498 > .05, do not reject H0.
9-17
Testing for the Population Mean: Large Sample, Population Standard Deviation Unknown
Here is unknown, so we estimate it with the sample standard deviation s. As long as the sample size n 30, z can be approximated with:
X z= s/ n
9-18
EXAMPLE 2
A retail chain store issues its own credit card. The credit manager (CM) , wants to find out if the mean monthly unpaid balance is more than 400. The level of significance is set at .05. A random check of 172 unpaid balances revealed the sample mean to be 407 and the sample standard deviation to be 38. Should CM conclude that the population mean is greater than 400, or is it reasonable to assume that the difference of 7 (407-400) is due to chance?
9-19
EXAMPLE 2
continued
Step 1:H : 400 H1: > 400 0 Step 2: H0 is rejected if z>1.645 Step 3: = [407 400] / [38 / 172] = 2.42 z Step 4: H0 is rejected. CM can conclude that the mean unpaid balance is greater than 400.
9-20
Assume the parameters for the two populations are: , , , and 1 2 1 2 For large samples the test statistic is:
z=
X1 X 2 s1 s2 + n1 n2
2 2
9-21
When 1 and 2 are unknown but the sample sizes are greater than or n1 and n2 equal to 30, the test statistic is
z=
X1 X 2 s1 s2 + n1 n2
2 2
9-24
Proportion: A fraction or percentage that indicates the part of the population or sample having a particular trait of interest. The sample proportion is denoted by p where
9-25