HYPOTHESIS TESTING IN THE SOCIAL SCIENCES

By contrast, in the social sciences, investigators often resort to secondary analysis; statistical methods are employed to analyse data because social phenomenon are rarely, if ever, amenable to laboratory-type experiments. Hypotheses are tested using statistical techniques in order to infer conclusions about a population from information obtained from a subset (or sample) of that population. Statistical inference (based on laws of probability) is then used to test whether a particular observed phenomenon is due to chance. For example, we might wish to test whether the observation that men's wages on average are significantly higher than women's wages is not a random event characteristic of a particular sample of the men and women we surveyed. To test this we would formulate a null hypothesis that the true mean wages of men and women are equal. To err on the conservative side, null hypotheses generally assume there is no relationship between the factors being observed; the logic being that it is a lesser mistake to fail to find a relationship than to assert falsely that there is one. In our example, this would mean we assume there is no difference in pay attributable to sex. If the statistical evidence is strong enough, however, we reject the null hypothesis and accept the alternativethat the differences are not due to chance. We could then discuss why this might be the case. This is where the controversy would arise. Hypothesis testing may allow the researcher to find a connection between observed phenomena, but a simple correlation does not necessarily identify or explain the causes or dynamics of that relationship. In other words, it would be premature to conclude that sex discrimination is the cause, even if we have concluded that wages are materially different. To test the discrimination theory, a new hypothesisand a new means of testing itwould have to be devised. Of course it is one thing to posit a hypothesis and quite another to devise a meaningful test of it. In this example, while it may be easy enough to prove a correlation between sex and pay, it would be much more complicated to demonstrate how the difference is put into effect; the project would likely involve a series of additional hypotheses relating to specific, measurable indicators of discrimination and other factors that could affect wages. In econometrics, the branch of economic statistics that most often deals with hypothesis testing, an investigator might assume some relationship between variables for purposes of statistical testing. For example, a tax on corporate income might be posited to be passed on to consumers in the form of higher prices. One way of testing this hypothesis would be to test the hypothesis that prices are correlated with the tax. Other common hypotheses tested are that the quantity of a good demanded depends on the price of the good. Another repeatedly confirmed hypothesis is that variation in the money supply in an economy is associated with variation in the price level of the economy. In all of these cases correlation is easily shownthat is to say, all of these hypotheses have been largely confirmed. Again, the drawback in this type of analysis is that while hypothesis tests can establish correlation between variables, they cannot explain how and why systems function as they do. For example, does a change in the money supply lead to a change in

prices? Or, conversely, does a change in prices lead to a change in the money supply? Does some other variable, or variables, lead to a change in both the money supply and the price level? Differing reasonable explanations abound. Thus, while certain confirmed hypotheses might exhibit substantial predictive power, in order to gain a more complete understanding of any subject, empirical testing must be embedded in a larger context of historical and theoretical reasoning about the world. Much of the research in the social sciences (and various business applications) relies on statistical methods that allow the researcher to make general statements about a population from information derived from a sample. These statistical methods then allow the researcher to separate the effects of systematic variation of a variable from mere chance effects. As mentioned, this technique is especially useful in the social sciences because many phenomena cannot be isolated or controlled in a laboratory-type setting, as in the physical sciences. Many tests of economic hypotheses, for example, take the form of testing parameters of linear regression models. To illustrate, suppose an economic relation is hypothesized to take the form where Y is supposed to represent observations of the dependent variable and X is supposed to represent observations of explanatory (or causal) variables. The quantity B is a coefficient that expresses the relationship between the independent variables and the hypothesized dependent variables, while e is a vector of residual terms that are assumed to be independent of one another (or random). Hypothesis tests could then be formulated by placing restrictions on one or more of the coefficients and testing whether certain variables (alone or in concert) have an effect on Y. Thus, one might hypothesize that consumption expenditures are related to income, or wages, wealth, and certain other variables. We could then posit the null hypothesis that, for example, consumption is not a function of income, holding other variables constant (i.e., that the coefficient for B is zero) Then, if the null hypothesis is rejected, that would imply that a measurable portion of the variation in consumption expenditures (captured in the parameter B) is explained by the variation in income.