MODULE 5 HYPOTHESIS

MEANING OF HYPOTHESIS Means an assumption or supposition about the state of affairs of a certain thing In the terminology of statistics , it means an estimation, or a set of inference that is drawn about certain values of a population E.g. for hypothesis: The number of defects in printing per page is 5 The average children per couple India is 3

Confidence interval: The confidence interval is the range into which the true population
parameter will fall, assuming a given level of confidence. If one is 90% confident that the means of the population of incomes of persons in a certain community will be between Rs. 8000 and Rs 24000, then the range is Rs 8000- Rs 24000 Is the confidence interval level.

Confidence level: The confidence level is the probability that a confidence interval will
include the population parameter. The most commonly used levels 90%, 95% & 99%.

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FORMULATION OF HYPOTHESIS

Step 1: Formulate the Hypothesis

The test of the null hypothesis is a one-tailed test, because the alternative hypothesis is expressed directionally. If that is not the case, then a two-tailed test would be required, and the hypotheses would be expressed as:

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Step 2: Select an Appropriate Test

The next step is to compute an appropriate test statistic which is based on the appropriate probability distribution. The test statistic measures how close the sample has come to the null hypothesis and follows a well-known distribution, such as the normal, t, or chi-square. It is used to test whether the null hypothesis set up should be accepted or rejected.

Step 3: Choose a Level of Significance

A decision to accept or reject null hypothesis H0 is made on the basis of the information supplied by the sample data. There is always a chance of making an error. There are two possible types of error: 1. The hypothesis is true but the test rejects it. ( Type I error) 2. The hypothesis is false but the test accepts it ( Type II error) Type I Error ( Rejection Error) Type I error occurs when the sample results lead to the rejection of the null hypothesis when it is in fact true. Type I error is committed by rejecting the null hypothesis when it is true. The probability of type I error () is also called the level of significance. Type II Error ( Acceptance error) Type II error occurs when, based on the sample results, the null hypothesis is accepted when it is in fact false. The probability of type II error is denoted by .

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Step 4: Collect Data and Calculate Test Statistic The total area under a standard normal curve is representing a probability distribution. In the test of hypothesis the level of significance is set up in order to know the probability of making a type I error of rejecting a hypothesis which is true. The region of the standard normal curve that is not covered by the rejected region is called acceptance region. When the test statistic computed to test the hypothesis falls in the acceptance region , it is reasonable to accept the hypothesis.

Step 5 Determine the critical value

The value of the test statistic computed to test the hypothesis is known as critical value. The critical value separates the rejection region from the acceptance region.

Critical value ( z) from the table is also found out at a particular level of significance

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Steps 6 & 7 : Compare the Probability (Critical Value) and Making the Decision
Compare the test statistic with the significance value. If the computed value of the test statistic is less than the critical value, the computed value test statistic fall in the acceptance region. & the null hypothesis is accepted. If the computed value of the test statistic is more than the critical value, the computed value test statistic fall in the rejected region. & the null hypothesis is rejected.

Step 8: Marketing Research Conclusion

The conclusion reached by hypothesis testing must be expressed in terms of the marketing research problem.

Tests of Hypothesis
Hypothesis testing determines the validity of the assumption helps to decide on the basis of a sample data, whether a hypothesis about the population is likely to be true of false Statisticians have developed several tests of hypothesis for the purpose of testing

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Parametric Test
Usually assume certain properties of the parent population from which we draw samples Assumptions like Observations come from normal population Sample size is large Population is normally distributed Sample drawn is random sample Assumptions about the populations parameters like mean, variance must hold good Uses interval scale

Non- Parametric Test

Situations where Researcher can not or does not want to make assumptions Such tests are called non- parametric tests Dont depend on any assumptions about the parameters of the parent population Uses nominal or ordinal scale

z-test
Is based on normal probability distribution Is used for several statistical measures particularly mean

Used generally for comparing the mean of a sample to some hypothesized mean of the
population or when population variance is known

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t- test
Based on t-distribution Appropriate test for judging the significance of difference between two samples in case of small samples when population variance is not known In case of two related samples paired t-test is used for judging the significance of the mean of difference between two related samples

2 test
Is based on chi-square distribution Used for comparing a sample variance to theoretical population variance

F-test
Is based on F-distribution Used to compare the variance of two independent samples Test is also used in the contest of analysis if variance (ANOVA) for judging the significance of more than two sample means at same time

Non-Parametric Tests (Distribution free Tests)

No assumptions are made in case of Non- parametric tests E.g.: while comparing two training methods A and B ,if we dont assume that the scores of the trainees are normally distributed or that the mean score of all trainees taking training would be a certain value

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Rank-Sum test
Rank Sum tests are whole family of tests The rank sum test is an alternative that can be applied when distributional assumptions are suspect. It can be used where t tests can not be applied However, it is not as powerful as the t-test when the distributional assumptions are in fact valid.

Different types of Rank-Sum test

K-W test U test

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