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Hypothesis Test - 1

The document discusses key concepts in hypothesis testing including: type I and II errors and how significance levels affect them, power of a test, rejection of the null hypothesis using critical values or p-values, and the steps involved in conducting hypothesis tests on means for both large and small samples, including tests for a single mean, difference between two means, and examples of each.

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Shahadat Hossain
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44 views27 pages

Hypothesis Test - 1

The document discusses key concepts in hypothesis testing including: type I and II errors and how significance levels affect them, power of a test, rejection of the null hypothesis using critical values or p-values, and the steps involved in conducting hypothesis tests on means for both large and small samples, including tests for a single mean, difference between two means, and examples of each.

Uploaded by

Shahadat Hossain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Test of Significance

Outline

• Introduction
• Type I and Type II errors
• Power of a Test
• Rejection of Null Hypothesis
• Steps of Hypothesis Testing
• Hypothesis test for the mean (Large and Small
Sample)
Introduction
• There two types of statistical inferences, Estimation and
Hypothesis Testing.
• Hypothesis: A hypothesis is a claim (assumption) about one or
more population parameters.
– The population mean of monthly cell phone bill of
University students is: μ = Tk. 500.
– The average number of children in a family in Dhaka city is
equal to two; μ = 2.
• It is always about a population parameter, not about a sample
statistic.
• Sample evidence is used to assess the probability that the claim
about the population parameter is true.
Introduction
• Goal: Make statement(s) regarding unknown population
parameter based on sample data.
• Elements of a hypothesis test:
– Null hypothesis - Statement regarding the value(s) of unknown
parameter(s). (will always contain an equality).
– Alternative hypothesis - Statement contradictory to the null
hypothesis (will always contain an inequality).
– Test statistic - Quantity based on sample data and used to test
the null hypothesis (z or t statistic).
– Rejection region - Values of the test statistic for which we
reject the null in favor of the alternative hypothesis.
Introduction
Hypothesis Testing Process:

Assume the
population
mean age is 50.
(Null Hypothesis)
Population
The Sample
Mean is 20
No, not likely!

REJECT
Null Hypothesis Sample
Type I and II Errors
The size of α , the rejection region, affects the risk of making
different types of incorrect decisions.
Type I Error
α = P(Type I error) = P(reject H0 when H0 is true)
– Considered a serious type of error
– It is also called level of significance of the test
Type II Error
β =P(Type II error) = P(Fail to reject H0 when H0 is false)

• Goal: Keep α, β reasonably small


Type I and II Errors
Power of a Test

• β = probability of a Type II error


β = P(fail to reject H0 | H0 false)

• 1 – β = “Power”
= probability of avoiding a Type II error
1– β = P(reject H0 | H0 false)
Rejection of Null Hypothesis
There are two approach to decide whether or not null
hypothesis is rejected.
1. Rejection Region/Critical value Approach.
2. p- value approach
Rejection Region/Critical value Approach
• Divide the distribution into rejection and non-rejection
regions
• Rejection region(s) is designated by α , (level of
significance). Typical values are .01, .05, or .10.
• α is selected by the researcher at the beginning.
• α provides the critical value(s) of the test.
Rejection of Null Hypothesis
Rejection Region / critical value approach:
Level of significance = α Non-rejection region
Represents
H0: μ = 12 α /2 α /2 critical value

H1: μ ≠ 12
Two-tail test 0

H0: μ =12 α Rejection


H1: μ > 12 region is
Upper-tail test 0 shaded

H0: μ = 12
α
H1: μ < 12
Lower-tail test 0
Rejection of Null Hypothesis
Critical Value Approach:

Critical Value for a z Test:


Alternative Hypothesis Rejection Region for Test

or

OR
Steps to Hypothesis Testing

1. State the H0 and H1 clearly


2. Identify the test statistic (two-tail, one-tail, and Z
or t distribution
3. Find the decision rule (critical value)based on
the specified level of significance (the level of
significance depends on the type of risk).
When do we use a two-tail test?
when do we use a one-tail test?

• A two-tail is used when the researcher has no idea which direction


the study will go, interested in both direction.
Example: testing a new technique, a new product, a new theory
because we don’t know the direction.

• One-tail test is used when the researcher is interested in the


direction.
Example: The soft-drink company puts a label on cans claiming
they contain 1.5 liter. A consumer assume that each can contains
at least 1.5 liter and tries to find evidence to the contrary. That
is, he/she examines the evidence for less than 1.5 liter.
.
Test of Hypothesis for the Mean:

σ known σ unknown
(large sample) (small sample)
The test statistic is: The test statistic is:

Testing the Difference between Two Means:


Variances are equal
Example (Large Sample): One Mean
The daily yield for a chemical plant has averaged 880 tons
for several years. The quality control manager wants to
know if this average has changed. She randomly selects 50
days and records an average yield of 871 tons with a
standard deviation of 21 tons.
Example (Large Sample): One Mean
What is the critical value of z that
cuts off exactly α/2 = .01/2 = .005 in the tail of the z
distribution?
For our example, z = -3.03
falls in the rejection region
and H0 is rejected at the
1% significance level.

Rejection Region: Reject H0 if z > 2.58 or z < -2.58.


Tabulated Z value
• For different level of Alpha Z value can be
calculated from Standard Normal distribution
Table
α α/2 zα/2
One Tail
Two Tails
.10 .05 1.645

.05 .025 1.96

.02 .01 2.33

.01 .005 2.575


Example (Large Sample): One Mean

• A homeowner randomly samples 64 homes similar to her own


and finds that the average selling price is $252,000 with a
standard deviation of $15,000. Is this sufficient evidence to
conclude that the average selling price is greater than $250,000?
Use α = .01.
Example (Large Sample): One Mean
What is the critical value of z that cuts off exactly α= .01
in the right-tail of the z distribution?

Rejection Region:
Reject H0 if z > 2.33.

Comment: z = 1.07 does not fall in the rejection region and H0


is not rejected. There is not enough evidence to indicate that μ
is greater than $250,000.
Example (Large Sample):
Difference between Two Means
The following information are given based on the
average daily intakes of dairy products for Men and
Women. Is there a difference in the average daily
intakes of dairy products for men versus women? Use
α= .05.
Avg. Daily Intakes Men Women
Sample size 50 50
Sample mean 756 762
Sample Std Dev 35 30
Example (Large Sample):
Difference between Two Means
Hypothesis:
Example (Large Sample):
Difference between Two Means
Critical value / Rejection Region (α= .05. ):
Reject H0 if z > 1.96 or z < -1.96.

Comment: At 5% level of significance since calculated z is


less than the critical value, thus we do not reject H0. i.e.,
there is no significant difference between men and women
for the average daily intakes of dairy products.
Example
A sprayer system is designed so that the average time
for the sprayers to activate after being turned on is no
more than 15 seconds. A test of 6 systems gave the
sample mean = 19.167 and standard deviation=7.387. Is
the system working as specified? Test using α = .05.
Example

Rejection Region: Reject H0 if t > 2.015.


Example (Small Sample):
Difference between Two Means
• Two training procedures are compared by measuring the time
that it takes trainees to assemble a device. A different group
of trainees are taught using each method. Is there a
difference in the two methods? Use α = 0.01.

Time to Assemble Method 1 Method 2


Sample size 10 12
Sample mean 35 31
Sample Std Dev 4.9 4.5
Example (Small Sample):
Difference between Two Means
Hypothesis:

Equality of Variances Checking

Test Statistic
Example (Small Sample):
Difference between Two Means
Test Statistic

Critical Value:

Comment: At 1% level of significance since calculated t is


less than the critical value, thus we do not reject H0. i.e.,
there is no significant difference between the two methods.

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