HYPOTHESIS TESTING

Presented by: CHANDRA SHEKAR B.M. Research Scholar Dept. of commerce, Bangalore University.

Under the Guidance of DR. K. NIRMALA Faculty, Dept. of commerce, Bangalore University.
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CONTENTS
Meaning of Hypothesis Hypothesis Testing Related Terminologies Type I vs. Type II Error Level of Significance Acceptance Region and Rejection Region Critical Value

WHATS AN HYPOTHESIS
HYPOTHESIS An educated guess or the best answer to a question, based on the most reliable facts available; a guess that will be TESTED

In statistics, it is a claim or statement about a property of a population

It is a proposition the validity of which needs to be tested

WHATS THIS ALL ABOUT?

HYPOTHESIS TESTING It is a standard procedure for testing a claim about a property of a population

 STEPS IN HYPOTHESIS TESTING

1. Given a Proposition, state the Null Hypothesis and Alternate (Research) hypothesis in operational terms 2. Select the Appropriate statistical test 3. Select the desired level of significance 4. Compute the appropriate statistic from the sample data 5. State the conclusion of a hypothesis test in simple, non nontechnical terms. terms.

NULL HYPOTHESIS VS. ALTERNATIVE HYPOTHESIS NULL HYPOTHESIS Statement about the value of a population parameter

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

STEP 1: Given a Proposition, state the Null Hypothesis and Alternate (Research) hypothesis in operational terms

PROPOSITION : Changes in production process will result in better product ( Increase life of Tyres Tyres) ) Given: Given : Mean life of old Tyres = 40 40, ,000 000km km Mean life of New Tyres = 41 41, ,200 200km km NULL HYPOTHESIS H0 = Change in production process will not change life of TYRES

H0 : = 40,000 km
ALTERNATE HYPOTHESIS H1 = Change in production process will change (improve) life of TYRES

H1 : > 40,000 km

STEP 2 : SELECT THE APPROPRIATE STATISTICAL TEST

PARAMETRIC TESTS & NON PARAMETRIC TEST

(Assumes Parameters such as mean, SD etc)

(Do not assumes Parameters )

Z-TEST T TEST F-TEST ANOVA etc

CHI-SQUARE TEST MC NEMAR TEST RANK SUM TEST etc

STEP 3 : SELECT THE DESIRED LEVEL OF SIGNIFICANCE

Denoted by The probability that the test statistic will fall in the critical region when the null hypothesis is actually true. true . Common choices are 0.05, 0.01 and 0.10

STEP 4 : COMPUTE THE APPROPRIATE STATISTIC

FROM THE SAMPLE DATA

The test statistic is a value computed from the sample data, and it is used in making the decision about the rejection of the null hypothesis hypothesis. .

z=

x - x

Test statistic for mean

zcal = 3.2

STEP 5 : DECISION & STATE THE CONCLUSION OF

HYPOTHESIS TEST IN SIMPLE, NONNON-TECHNICAL TERMS.

Acceptance Region

Reject H0

= 0.05

0 1.64 3.2

z (Table value) = 1.64

zCal = 3.2

DECISION

As seen above the computed value of z=3.2 falls in the rejection region. Thus we reject the null hypothesis that u=40,0000 kms and alternate

hypothesis is accepted H1 : > 40,000 km

ALTERNATE HYPOTHESIS

H1 = CHANGE IN PRODUCTION PROCESS WILL CHANGE (IMPROVE) LIFE OF TYRES

REJECTION REGION / CRITICAL REGION

Set of all values of the test statistic that would cause a rejection of the null hypothesis

Critical Regions

5%

5%

CRITICAL VALUE
Any value that separates the critical region (where we reject the null hypothesis) from the values of the test statistic that do not lead to a rejection of the null hypothesis

Reject H0

Fail to reject H0

Critical Value ( z score )

P-VALUE
The P-value (or p-value or probability value) is the probability of getting a value of the test statistic that is at least as extreme as the one representing the sample data, assuming that the null hypothesis is true. The null hypothesis is rejected if the

P-value is very small, such as 0.05 or less.

TwoTwo -tailed Test H0: = is divided equally between the H1: two tails of the critical region
Means less than or greater than

Values that differ significantly from H0

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