Testing Hypotheses:

Two-Sample Tests
Chapter 9
Statistics for Management
Levin and Rubin

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 Basics
• Hypotheses based on one group
• A two-sample case involves comparing a
parameter between two distinct groups, such as
males versus females.
A two-sample hypothesis test might be to analyze
the difference in the mean cholesterol level
between men and women. Or, to determine if
the percentage of job success is different
between men and women.

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Different Parameters

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Testing Hypothesis about Difference between
Two Population Means (Two Sample Tests of
Hypothesis)

( x1  x2 )  D0 ( x1  x2 )
z or z
 12  22  12  22
 
n1 n2 n1 n2

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Mary Jo Fitzpatric is the Vice President for Nursing Services at St.
Luke’s Memorial Hospital. Recently she noticed in the job
posting for nurses that those that are unionised seem to offer
higher wages. She decided to investigate and gathered the
following sample information.

Group Mean Sample Standard Sample

Wage Deviation Size
Union $20.75 $2.25 40
Nonunion $19.80 $1.90 45

Would it be reasonable for her to conclude that there is

significant difference in earning between union and non-
union nurses? Use the .01 significance level.

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 Example
• A manpower-development statistician is asked to
determine whether the hourly wages of semiskilled
workers are the same in two cities. The results of
the survey are presented in the following table:

Hourly Wage Rate

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 Solution
Step 1:
This is a two-tailed test. The hypothesis is stated below. The
significance level is 0.05 (given)
H0: μ1 = μ2 versus H1: μ1 ≠ μ2
Step 2:
Since this is a test of the means and the degrees of freedom (n1 + n2
- 2) is in excess of 30, a z test is appropriate. The critical
values are ± 1.96 (from a z table).

Step 3:

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Step 4: Sketch the distribution, locate the critical values and the
test statistic.

Step 5: Decide! Since the test statistic values lies within the
rejection region then there is sufficient statistical evidence
based on this sample to reject H0.
The test for a difference between parameters does not have to
be zero, it can be non-zero. For example:

H0: μ1 - μ2 ≤ 0.10 versus H1: μ1 - μ2 > 0.10

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 Problem: 9-3
• Two research laboratories have independently
produced drugs that provide relief to arthritis
sufferers. The first drug was tested on a group of
90 arthri­tis sufferers and produced an average of
8.5 hours of relief, and a sample standard
deviation of 1.8 hours. The second drug was
tested on 80 arthritis sufferers, producing an
average of 7.9 hours of relief, and a sample
standard deviation of 2.1 hours. At the 0.05 level
of significance, does the second drug provide a
significantly shorter period of relief?
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 Problem: 9-6
• Notwithstanding the Equal Pay Act of 1963, in
1993 it still appeared that men earned more than
women in similar jobs. A random sample of 38
male machine­tool operators found a mean
hourly wage of $11.38, and the sample standard
de­viation was $1.84. A random sample of 45
female machine-tool operators found their mean
wage to be $8.42, and the sample standard
deviation was $1.31. On the basis of these
samples, is it reasonable to conclude (at a =
0.01) that the male operators are earning over
$2.00 more per hour than the female operators?

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 Testing Hypothesis about Difference
between Two Population Proportion
1.Null Hypothesis: H0: (p1 - p2)=D or p1 = p 2
2.Alternate Hypothesis H1: (p1 - p2)>D (p1 - p2)<D
[p1 > p2 p1 < p2] ..one-tailed test
Alternate Hypothesis H1: (p1 - p2) ≠D
[p1 ≠ p2 ] .. two-tailed test
3. Test Statistics:

Rejection Region z > zα or z < -zα (one tailed test)

z > zα/2 or z < -zα/2 (
two tailed test)
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Testing Hypothesis about Difference between
Two Population Proportion: Pooled
When population parameters ‘p’ and ‘q’ are unknown:
1. Null Hypothesis: H0: p1 = p2 [p1 -
p2 = 0]
2. Alternate Hypothesis H1: p1 > p2 p1 < p 2
..one-tailed test
Alternate Hypothesis H1: p1 ≠ p2 two-tailed test
x1  x2
pˆ 
3. Pooled proportion: n1  n2

( pˆ1  pˆ 2 )
z
4. Test Statistics: 1 1
pˆ qˆ[  ]
n1 n2
5. Rejection Region z > zα or z < -zα (one tailed test)
z > zα/2 or z < -zα/2(two tailed test) 12
 Example:
1. According to a report by the American Cancer Society, more men
than women smoke and twice as many smokers die prematurely than
nonsmokers. In random samples of 200 males and 200 females, 62 of
the males and 54 of the females were smokers. Is there sufficient
evidence to conclude that the proportion of male smokers higher
from the proportion of female smokers when α = .01?
2. A financial analyst wants to compare the turnover rates, in percent,
for shares of oil related stocks versus other stocks. She selected 32
oil-related stocks and 49 other stocks. The mean turnover of oil
related stocks is 31.4 percent and the standard deviation 5.1 percent.
For the other stocks, the mean rate was computed to be 34.9 percent
and the standard deviation 6.7 percent. Is there a significant
difference in the turnover rates of the two types of stock?

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 Problem: 9-22
• A coal-fired power plant is considering two different
systems for pollution abatement. The first system has
reduced the emission of pollutants to accept­able levels
68 percent of the time, as determined from 200 air
samples. The sec­ond, more expensive system has
reduced the emission of pollutants to ac­ceptable levels
76 percent of the time, as determined from 250 air
samples. If the expensive system is significantly more
effective than the inexpensive sys­tem in reducing
pollutants to acceptable levels, then the management of
the power plant will install the expensive system. Which
system will be installed if management uses a
significance level of 0.02 in making its decision?

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 Problem: 9-23
• A group of clinical physicians is performing tests on patients to
determine the effectiveness of a new antihypertensive drug. Patients
with high blood pressure were randomly chosen and then randomly
assigned to either the control group (which received a well-
established antihypertensive) or the treatment group (which received
the new drug). The doctors noted the per­centage of patients whose
blood pressure was reduced to a normal level within 1 year. At the
0.01 level of significance, test appropriate hypotheses to determine
whether the new drug is significantly more effective than the older
drug in reducing high blood pressure.

Proportion That
Group Number of Patients
Improved
Treatment 0.45 120
Control 0.36 150 15
 Test for difference between
Means: small sample size
• For small samples sizes, we must
estimate a 'pooled' estimate (a.k.a. a
weighted average) of the variances for the
two groups. This estimate is:

• and then, the estimated standard error is:

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 Tests for Difference Between Two Means:
Small Sample Size
1. Null Hypothesis H0: µ1=µ2
2. Alternative Hypothesis H1: µ1 > µ2 or µ1 < µ2
(one tailed test)
H1: µ1 ≠ µ2 (two-tailed
test)
2 ( n1  1) s12  ( n 2  1) s 22
3. Pooled Estimator: s p 
( n1  1)  ( n 2  1)
x1  x 2
4. Test Statistics: t 
ˆ x1  x2
x1  x 2
t 
1 1
sp 
n1 n2

df  ( n1  n2  2)
5. Rejection Region t > tα or t < -tα(one tailed test)
t > tα/2 or t < -tα/2(two tailed test)
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 Example:
• A company wishes to test when the sensitivity achieved
by a new program is significantly higher than achieved
under the legacy program. The following information is
available from test results.
Sensitivity

Mean Standard Sample

Deviation Size
Proposed 92 15 12
P.M.O. 84 19 15
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 Solution
Step 1:
This is a one-tailed test. The hypothesis is stated below. The
significance level is 0.05 (given) H0: μ1 ≤ μ2 versus H1: μ1 > μ2

Step 2:
Since this is a test of the means and neither n1 or n2 is in
excess of 30, a t test is appropriate. The critical value is
1.708 (from a t table with 25 degrees of freedom).

Step 3:

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Step 4:
Sketch the distribution, locate the critical values and the test
statistic.

Step 5:
Decide! Since the test statistic values lies within the retention
region then there is no sufficient statistical evidence based on
this sample to reject H0.

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 Example:
Five vice presidents and four market research analysts of a
large industry were asked to estimate what they consider to
be the optimal market share for the company. Their
responses are given in the following table. Do the data
suggest that corporate vice presidents and market research
nalysts tend to disagree when estimating their firm’s optimal
market share? Test at a 5% level of significance.
Vice Presidents 22.5 25.0 30.0 27.5 20.0
Market Analysts 21.0 17.5 17.0 20.0

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 Problem: 9-8
• A credit-insurance organization has developed a
new high-tech method of training new sales
personnel. The company sampled 16 employees
who were trained the original way and found
average daily sales to be $688 and the sample
standard deviation was $32.63. They also
sampled 11 employees who were trained using
the new method and found aver­age daily sales
to be $706 and the sample standard deviation
was $24.84. At a = 0.05, can the company
conclude that average daily sales have in­
creased under the new plan?

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 Problem: 9-9
• A large stock-brokerage firm wants to determine how
successful its new ac­count executives have been at
recruiting clients. After completing their training, new
account execs spend several weeks calling prospective
clients, trying to get the prospects to open accounts with
the firm. The following data give the numbers of new
accounts opened in their first 2 weeks by 10 randomly
chosen female account execs and by 8 randomly chosen
male ac­count execs. At a = 0.05, does it appear that the
women are more effective at generating new accounts
than the men are?
Number of New Accounts
Female account execs 12 11 14 13 13 14 13 12 14 12
Male account execs 13 10 11 12 13 12 10 12

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 Paired Difference Test: Dependent
Samples
Paired Difference Test: Dependent Samples
1. Null Hypothesis H0:µ1 - µ2 =µd=D0=0
2. Alternative Hypothesis H1: µd > 0 or µd < 0
(one tailed test)
H1: µd ≠ 0 (two-tailed test)
x  0
3. Test Statistics t
s n
4. Rejection Region t > tα or t < -tα (one tailed test)
t > tα/2 or t < -tα/2 (two tailed
test)

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 Problem: 9-15
• Jeff Richardson, the receiving clerk for a chemical-products
distributor, is faced with the continuing problem of broken
glassware, including test­tubes, petri dishes, and flasks. Jeff has
determined some additional ship­ping precautions that can be
undertaken to prevent breakage, and he has asked the Purchasing
Director to inform the suppliers of the new measures. Data for 8
suppliers are given below in terms of average number of broken
items per shipment. Do the data indicate, at a = 0.05, that the new
measures have lowered the average number of broken items?

Supplier 1 2 3 4 5 6 7 8
Before 16 12 18 7 14 19 6 17
After 14 13 12 6 9 15 8 15

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 Problem: 9-17
• Aquarius Health Club has been advertising a rigorous
program for body conditioning. The club claims that after
1 month in the program, the aver­age participant should
be able to do eight more push-ups in 2 minutes than he
or she could do at the start. Does the random sample of
10 program par­ticipants given below support the club's
claim? Use the 0.025 level of sig­nificance.

Participant 1 2 3 4 5 6 7 8 9 10

Before 38 11 34 25 17 38 12 27 32 29
After 45 24 41 39 30 44 30 39 40 41

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 Another way to look at
hypothesis testing (more common)
• In typical hypothesis testing, the analyst does not go
through the procedures manually. Instead, they use a
computer and a statistical analysis software package (such
as SAS, SPSS, Minitab, etc.)
• Instead of drawing the distribution and determining the
location of the test statistic value (within the rejection or
retention region), the computer calculates the area under
the normal curve in excess of the test statistic value. This
area is called the probability value or p-value
• So, you do not have to determine the location of the test
statistic to make your decision on H0. You can simply
look at the p-value and decide.
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 Benefits
• Saves time since all computer statistics packages
compute the p-value, and

• Not all people share your personal level of risk

assessment. That is, you might use an alpha
value of 0.05 but someone else might use a
higher/lower value. You might reject H0 using α
= 0.05 but someone else might retain H0 at a
different level of risk.
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Decision rule using p-values

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