Module 4

Hypothesis
Usually considered as the principal instrument
in research
Main function is to suggest new experiments
& observation
Hypothesis testing enables to make
probability statements about population
parameter
Simply means a mere assumption or some
supposition to be proved or disproved.
 Hypothesis may be defined as a proposition or a
set of proposition set forth as an explanation for
the occurrence of some specified group of
phenomena either asserted merely as a
provisional conjecture to guide some
investigation or accepted as highly probable in
the light of established facts.
Research Hypothesis is a predictive statement,
capable of being tested by scientific methods,
that relates an independent variable to some
dependent variable.
 Hypothesis capable of being objectively
verified and tested.
hypothesis states what we are looking for and
it is a proposition which can be put to test to
determine its validity.
 Characteristics of hypothesis

i. Should be clear and precise

ii. Should be capable of being tested.
iii. Should state relationship between variables
iv. Should be limited in scope and must be specific
v. Should be stated as far as possible in most simple
terms so that the same is easily understandable by all
concerned.
vi. Should be consistent with most known facts
vii. Should be amenable to testing within a reasonable
time.
viii. Must explain the facts that gave rise to the need for
explanation
The role of hypothesis in a research study

Guides the direction of study

Specifies what data are relevant and

irrelevant for the purpose of research.

Provides the framework for data analyses

and organising the conclusions that result.

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 Number of variables
Univariate data analysis: a type of analysis that
assesses the statistical significance of a hypothesis
about a single variable
Bivariate data analysis: a type of analysis and
hypothesis testing used in the simultaneous
investigation of two variables using tests of differences
or measures of association between two variables at a
time

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 Multivariate data analysis
Statistical methods that allow the
simultaneous investigation of more than two
variables
eg: predicting sales volumes on the basis of
advertising expenditure and other variables
such as gross national product (GNP) and
number of people in the sales area

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Types of hypothesis
1. Hypotheses based on Empirical Uniformities.

Univariate and descriptive in nature, states

that something is the case, that some group
of individuals, objects, events or incidents
has certain property or characteristic.

Eg: All software professionals lead a

sedentary (inactive) life.

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2. Hypotheses based on association between Variables

Bivariate and explanatory in nature, states that

something is associated with some other thing;
that something is greater than some other
thing;
that some group of individuals, objects, events
or incidents have more of a certain property as
compared to some other group; that speaks of
the frequency of occurrence of something as
compared to some other thing.

Eg: Men make better managers than women.

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3. Hypotheses based on cause and effect
relationship

Bivariate and deterministic in nature,

states that something is causally related to
some other thing;
that something is a determinant of some other
thing;

Eg: Cigarette smoking causes cancer.

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 Basic Concepts concerning testing of
Hypothesis
a) Null hypothesis and Alternative hypothesis:

Null Hypothesis (denoted H 0):

is the statement being tested in a test of
hypothesis.
Alternative Hypothesis (H 1):
is what is believe to be true if the null
hypothesis is false.
 Null Hypothesis: H0
Must contain condition of equality

=, , or
Test the Null Hypothesis directly
Reject H 0 or fail to reject H 0
Statement regarding the value(s) of unknown parameter(s).
Typically will imply no association between explanatory and
response variables in our applications (will always contain an
equality)
Alternative Hypothesis: H1
Must be true if H0 is false
, <, >
opposite of Null

Statement contradictory to the null hypothesis

(will always contain an inequality)

Example:

H0 : = 30 versus H1 : > 30
 Null Hypothesis vs. Alternative
Hypothesis
Null Hypothesis Alternative Hypothesis

Statement about the Statement about the

value of a population value of a population
parameter parameter that must
Represented by H0 be true if the null
Always stated as an hypothesis is false
Equality Represented by H1
=, Stated in on of three
forms
>
<

 In the choice of null hypothesis, the following
considerations are usually kept in view:
a) Alternative hypothesis is usually the one which one wishes
to prove and the null hypothesis is the one which one
wishes to disprove. Thus, a null hypothesis represents the
hypothesis we trying to reject, and alternative hypothesis
represents all other possibilities.
b) If the rejection of a certain hypothesis when it is actually
true involves great risk, it is taken as null hypothesis
because then the probability of rejecting it when it is true
is (the level of significance) which is chosen very small.
c) Null hypothesis should always be specific hypothesis i.e., it
should not state about or approximately a certain value.
b) The level of significance:

very important concept in the context of hypothesis testing

Always some percentage (usually 5%) which should be chosen with
great care, thought and reason.
In case we take the significance level at 5%, then this implies that
Ho will be rejected when the sampling result (i.e, observed
evidence) has a less than 0.05 probability of occurring if Ho is true.
In other words, the 5% level of significance means that researcher
is willing to take as much as a 5% risk of rejecting the null
hypothesis when it (Ho) happens to be true.
So significance level is the maximum value of the probability of
rejecting Ho when it is true and is usually determined in advance
before testing the hypothesis.
c) Decision rule or test of hypothesis:
Is a rule we make for accepting or rejecting hypothesis.

d) Type I and Type II errors:

If we may reject Ho when Ho is true (Type I) and if we
may accept Ho when in fact Ho is not true (Type II).
Type I error means rejection of hypothesis which
should have been accepted and Type II error means
accepting the hypothesis which should have been
rejected.
Type I error is denoted by (alpha) known as error,
also called the level of significance of test; and Type II
error is denoted by (beta) known as error
 Type I and Type II Errors
True State of Nature
The null The null
hypothesis is hypothesis is
true false

Type I error
We decide to Correct
(rejecting a true
reject the decision
null hypothesis)
Decision

null hypothesis

Type II error
We fail to Correct (rejecting a false
reject the decision null hypothesis)
null hypothesis

 Decision

Accept Ho Reject Ho

Ho (true) Correct Type I error

decision ( error)

Ho (false) Type II error Correct

( error) decision
 Alpha vs. Beta

is the probability of Type I error

is the probability of Type II error
The experimenters (you and I) have the
freedom to set the -level for a
particular hypothesis test. That level is
called the level of significance for the
test. Changing can (and often does)
affect the results of the testwhether
you reject or fail to reject H0.
 Alpha vs. Beta, Part II
It would be wonderful if we could force
both and to equal zero.
Unfortunately, these quantities have
an inverse relationship. As
increases, decreases and vice versa.
The only way to decrease both and
is to increase the sample size. To
make both quantities equal zero, the
sample size would have to be infinite
you would have to sample the entire
population.
Type I and II Errors:
The size of , the rejection region, affects the risk of making
different types of incorrect decisions.
Type I Error
Rejecting a true null hypothesis when it should NOT be rejected
Considered a serious type of error
The probability of Type I Error is
It is also called level of significance of the test
Type II Error
Fail to reject a false null hypothesis that should have been
rejected
The probability of Type II Error is
Decision Actual Situation
Hypothesis Legal System
Testing
H0 True H0 False Innocence Not innocence
No Type II No Error Type II Error
Do Not (not guilty, found (guilty, found not
Error Error
Reject H0
( 1 ) ( ) not guilty)
( 1 )
guilty)
( )
Type I No Type I Error No Error
(Not guilty, (guilty, found
Error Error
Reject H0 ( ) (1 )
found guilty)
( )
guilty)
(1 )
 Type I and Type II errors cannot happen at the same
time
1. Type I error can only occur if H0 is true
2. Type II error can only occur if H0 is false
3. There is a tradeoff between type I and II errors. If
the probability of type I error ( ) increased, then
the probability of type II error ( ) declines.
4. When the difference between the hypothesized
parameter and the actual true value is small, the
probability of type two error (the non-rejection
region) is larger.
5. Increasing the sample size, n, for a given level of ,
reduces
e) Two-tailed and One-tailed tests:
A two-tailed test rejects the null hypothesis if, say,
the sample mean is significantly higher or lower
than the hypothesized value of the mean of the
population.
Such a test is appropriate when the null
hypothesis is some specified value and the
alternative hypothesis is a value not equal to the
specified value of the null hypothesis.
 A one-tailed test would be used when we are
to test, say, whether the population mean is
either lower than or higher than some
hypothesized value.
If we consider mean lower than hypothesized
value, it is a left-tailed test (i.e, one rejection
region only on the left tail)
If we consider mean higher than hypothesized
value, it is a right-tailed test (i.e, one rejection
region only on the right tail)
 Procedure for Hypothesis Testing
1. Making a formal statement
2. Selecting a significance level
3. Deciding the distribution to use
4. Selecting a random sample and computing
an appropriate value.
5. Calculation of the probability
6. Comparing the probability
 State Ho as well as Ha

Specify the level of

significance(or the value)

Decide the correct sampling

distribution

Sample a random sample(s)and

workout an appropriate value
from sample data.

Calculate the probability that

sample result would diverge
as widely as it has from
expectations, if Ho were true

Is this probability equal to or

smaller than value in case of
one-tailed test and /2 in case
of two-tailed test.

Yes No
Reject Ho Accept Ho
Thereby run the risk of Thereby run some risk of
committing Type I error committing Type II error
 Tests of Hypothesis
Classified as:
a) Parametric tests or standard tests
b) Non-parametric tests or distribution-free
test of hypothesis
 Parametric and nonparametric tests of
significance

Parametric test of significance - to estimate at least one population

parameter from sample statistics
Assumption: the variable we have measured in the sample is
normally distributed in the population to which we plan to
generalize our findings

Nonparametric test - distribution free, no assumption about the

distribution of the variable in the population
 Parametric and nonparametric
hypothesis tests
These are two major groupings of statistical procedures
depending on the underlying assumptions about the
data to be analysed
When the data are interval or ratio-scaled and the
sample size is large, parametric statistical procedures
are appropriate
Assumption is that the data in the study are drawn
from populations with normal (bell-shaped)
distributions and / or normal sampling distributions

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 Example
For eg, if the researcher has two measures
(either interval-scaled or ratio-scaled), such as
GNP and industry sales volume, it is
appropriate to use parametric tests to make a
comparison of the intervals.
Among the possible statistical tests are Z test,
t-test, correlation analysis or ANOVA

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 Nonparametric or distribution-free
statistical procedures
When researchers do not make this assumption of
normality, nonparametric statistical procedures are used
It is any test that uses nominal or ordinal-scaled data.
When the data are either ordinal or nominal, we do not
make the assumption that the sampling distribution is
normal. Thus nonparametric statistics are referred to as
distribution-free.
Among the possible statistical tests are X2 test, Wilcoxon
matched-pairs signed-ranks test, Mann-Whitney test,
Kolmogorov-Smirnov test, Kruskal-Wallis test for several
independent samples and Spearman rank-order correlation
coefficient

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 parametric test, of course, is a test that
requires a parametric assumption, such as
normality. A nonparametric test does not rely
on parametric assumptions like normality.
a nonparametric test protects against some
violations of assumptions and not others. The
two sample t-test requires three assumptions,
normality, equal variances, and independence.
The non-parametric alternative, the Mann-
Whitney-Wilcoxon test, does not rely on the
normality assumption,
What does the critical region mean?

also known as the alpha region.

It is the set of all outcomes which, if they
occur, cause the H0 to be rejected and the H1
accepted.
For instance, if we have calculated that the critical region at
a 95% confidence level is between 10 and 20, then we can
be 95% confident that the true mean lies within that region.

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 The critical region CR, or rejection region RR, is a set of
values of the test statistic for which the null hypothesis is
rejected in a hypothesis test.
That is, the sample space for the test statistic is
partitioned into two regions; one region (the critical
region) will lead us to reject the null hypothesis Ho, the
other will not.
So, if the observed value of the test statistic is a member
of the critical region, we conclude "Reject Ho"; if it is not
a member of the critical region then we conclude "Do not
reject Ho".

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 1. Test of hypothesis concerning
population mean
Test concerning mean of one population
To test Ho: = o against
a) H1: > o
b) H1: < o
c) H1: = o

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 A sample of size n (n>30) is taken from the
population with unknown mean and known
SD
Let x be the sample mean
Critical value z=(x- )
(/n)

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 Case a) H1: > o
This is right tailed test.
The decision rule is: If z> z (the tabled value), the
test is significant. There is significant difference
between the sample mean and the hypothetical
mean and hence we reject Ho at (1- )100%
confidence level
If z< z (the tabled value), the test is not significant.
There is no significant difference between the
sample mean and the hypothetical mean and hence
and we fail to reject Ho at (1- )100% confidence
level

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Right-tailed test (critical region is the
blue region (.5 - .05=.45) [1.65]

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 Case b) H1: < o
This is left tailed test.
The rule is: If z -z (the tabled value), the test is
significant. There is significant difference between
the sample mean and the hypothetical mean and
hence we reject Ho at (1- )100% confidence level
If z>- z (the tabled value), the test is not significant.
There is no significant difference between the
sample mean and the hypothetical mean and hence
and we fail to reject Ho at (1- )100% confidence
level

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43
 Case c) H1: = o
This is two tailed test.
The rule is: If absolute value of z, ie. IzI > z/2 (the tabled
value), the test is significant. There is significant difference
between the sample mean and the hypothetical mean and
hence we reject Ho at (1- )100% confidence level
If IzI < z/2 (the tabled value), the test is not significant. There
is no significant difference between the sample mean and the
hypothetical mean and hence and we fail to reject Ho at (1-
)100% confidence level

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Testing of Hypotheses .5-(.05/2)= .475 (1.96)

Critical Region &

Area of Rejection
Critical Region &
Area of Rejection

Area of
Acceptance
(95%)

.025 - 1.96 1.96 .025

CRITICAL
VALUES
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 To save time and effort, the table below relates critical
z values to alpha levels and type of test (whether one-
tailed or two-tailed).
Alpha Tails Critical Z
0.05 two plus or minus 1.96 (.5-[.05/2])
0.05 right 1.645 (.5-.05)
0.05 left -1.645
0.01 two plus or minus 2.58 (.5-[.01/2])
0.01 right 2.33
0.01 left -2.33

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 Practice 1
A sample of 100 students is taken from the
students of a college with heights having
standard deviation 10 cm. The mean height of
the sample of students was found to be 168.8
cm. Can we accept the assumption that the
mean height of the students of the college is
170 cm? Significance level= 0.05

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 Solution 1
=10
x = 168.8
n=100
To test Ho: = 170 against H1: = 170
This is a 2-tailed test
= 0.05, then z/2 = 1.96
Applying the formula, z= -1.2
Here IzI < z/2 and hence we accept the assumption
that the mean height of the students of the college is
170 cm

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 Practice 2
A sample of 400 observations were taken from
a population with standard deviation of 15. If
the mean of the sample is 27, test whether
the hypothesis that the mean of the
population is less than 24 is true.
= 0.05

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 Solution 2

To test Ho: = 24 against H1: <24

=15 = 0.05
x = 27 so, z =1.64
n=400
Applying the formula, z= (27-24) /(15/20)=4
This is a left-tailed test. If z>-z, the test is not
significant. We accept Ho at 95% CL.
Hence, mean is accepted to be 24.

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 2. Test of hypothesis concerning
population proportions
Test concerning one population proportion
To test Ho: p= po against (read po as p not)
a) H1: p> po
b) H1: p< po
c) H1: p= po

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 Given a sample of size n from the population.
x is the number of items having a particular
characteristic
Sample proportion p=x/n
Formula to calculate z is
z= (p- po)/ po(1- po)/n

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 Practice
In a survey of 70 business firms, it was found
that 45 are planning to expand their capacities
next year. Does the sample information
contradict the hypothesis that 70% of the
firms are planning to expand next year?

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 Solution
To test H0: p= 0.7 against H1: p=0.7
This is a 2-tailed test. At = 0.05, z= 1.96
n=70, x=45
p= x/n = 45/70 = 0.64
z= (p- po)/ po(1- po)/n
= (0.64-0.70)/(0.7x0.3)/70
= -0.06/0.05 = -1.2
IzI= 1.2 is < z /2 (ie. 1.96)
Test is not significant and we accept Ho at 95% CL. There is no reason
to doubt the hypothesis that 70% of the companies are going to
expand their capacities.

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