Chapter 9 Fundamentals of Hypothesis Testing: One-Sample Tests

9.1 Fundamentals of Hypothesis-Testing Methodology

 Hypothesis testing typically begins with a theory, a claim, or an assertion about a particular
parameter of a population.

The Null and Alternative Hypotheses

 The hypothesis that the population parameter is equal to the company specification is referred
to as the null hypothesis.
 A null hypothesis is often one of status quo and is identified by the symbol H o .
 You use the sample statistic to make inferences about the entire population.
 Whenever a null hypothesis is specified, an alternative hypothesis is also specified, and it must
be true if the null hypothesis is false.
 The null hypothesis, represents the current belief in a situation.
 The alternative hypothesis, is the opposite of the null hypothesis and represents a research
claim or specific inference you would like to prove.
 If you reject the null hypothesis, you have statistical proof that the alternative hypothesis is
correct.
 If you do not reject the null hypothesis, you have failed to prove the alternative hypothesis. The
failure to prove the alternative hypothesis, however, does not mean that you have proven the
null hypothesis.
 The null hypothesis, always refers to a specified value of the population parameter, not a
sample statistic.
 The statement of the null hypothesis always contains an equal sign regarding the specified value
of the population parameter (e.g., grams).
 The statement of the alternative hypothesis never contains an equal sign regarding the specified
value of the population parameter (e.g., grams).

The Critical Value of the Test Statistic

 Even if the null hypothesis is true, the statistic (the sample mean) is likely to differ from the
value of the parameter (the population mean) because of variation due to sampling. If the
sample statistic is close to the population parameter, you have insufficient evidence to reject the
null hypothesis.
 However, if there is a large difference between the value of the statistic and the hypothesized
value of the population parameter, you might conclude that the null hypothesis is false.
 However, the decision-making process is not always so clear-cut. Determining what is “very
close” and what is “very different” is arbitrary without clear definitions.

Regions of Rejection and Nonrejection

 The sampling distribution of the test statistic is divided into two regions, a region of rejection
(sometimes called the critical region) and a region of nonrejection.
 If the test statistic falls into the region of nonrejection, you do not reject the null hypothesis.
  The region of rejection consists of the values of the test statistic that are unlikely to occur if the
null hypothesis is true. These values are much more likely to occur if the null hypothesis is false.
Therefore, if a value of the test statistic falls into this rejection region, you reject the null
hypothesis because that value is unlikely if the null hypothesis is true.
 To make a decision concerning the null hypothesis, you first determine the critical value of the
test statistic. The critical value divides the nonrejection region from the rejection region.
 Determining the critical value depends on the size of the rejection region. The size of the
rejection region is directly related to the risks involved in using only sample evidence to make
decisions about a population parameter.

Risks in Decision Making Using Hypothesis Testing

 A Type I error occurs if you reject the null hypothesis, when it is true and should not be rejected.
A Type I error is a “false alarm.” The probability of a Type I error occurring is a.
 A Type II error occurs if you do not reject the null hypothesis, when it is false and should be
rejected. A Type II error represents a “missed opportunity” to take some corrective action. The
probability of a Type II error occurring is B.
 Traditionally, you control the Type I error by determining the risk level, a (the lowercase Greek
letter alpha) that you are willing to have of rejecting the null hypothesis when it is true. This risk,
or probability, of committing a Type I error is called the level of significance (a).
 Because you specify the level of significance before you perform the hypothesis test, you
directly control the risk of committing a Type I error.
 After you specify the value for a you can then determine the critical values that divide the
rejection and nonrejection regions. You know the size of the rejection region because a is the
probability of rejection when the null hypothesis is true.
 The probability of committing a Type II error is called the B risk.
The probability of making a Type II error depends on the difference between the hypothesized
and actual values of the population parameter.
 If the difference between the hypothesized and actual value of the population parameter is
large, B is small.
 For example, if the population mean is 330 grams, there is a small chance (B) that you will
conclude that the mean has not changed from 368. However, if the difference between the
hypothesized and actual value of the parameter is small, is large. For example, if the population
mean is actually 367 grams, there is a large chance (B) that you will conclude that the mean is
still 368 grams.
 The complement of the probability of a Type I error, (1-a) is called the confidence coefficient.
The confidence coefficient is the probability that you will not reject the null hypothesis, when it
is true and should not be rejected.
 The complement of the probability of a Type II error, (1-B) is called the power of a statistical
test. The power of a statistical test is the probability that you will reject the null hypothesis
when it is false and should be rejected.
  One way to reduce the probability of making a Type II error is by increasing the sample size.
 For example, if the negative consequences associated with making a Type I error are substantial,
you could select a = 0.01 instead of 0.05. However, when you decrease a, you increase B so
reducing the risk of a Type I error results in an increased risk of a Type II error. However, to
reduce B, you could select a larger value for a. Therefore, if it is important to try to avoid a Type
II error, you can select a of 0.05 or 0.10 instead of 0.01.

Hypothesis Testing Using the Critical Value Approach

 The critical value approach compares the computed Zstat test statistic value from Equation (9.1)
to critical values that divide the normal distribution into regions of rejection and nonrejection.
Hypothesis Testing Using the p -Value Approach

 If the p-value is greater than or equal to do not reject the null hypothesis.
 If the p-value is less than reject the null hypothesis.

t Test of Hypothesis for the Mean (pop. sd Unknown)
One-Tail Tests
 Many situations require an alternative hypothesis that focuses on a particular direction.
For example, the population mean is less than a specified value.