TOPIC 8 One Population Hypothesis Testing

Introduction
Hypothesis testing is a procedure based on sample data and probability theory to determine whether there is enough statistical evidence in favor of a certain belief about a parameter.

6 Steps of Hypothesis Testing Procedure

S.1 State null & alternative hypotheses

A pair of competing statistical hypotheses consists of Null Hypothesis (H0): A statement about the value of a population parameter. Alternative Hypothesis (H1): A statement that is accepted if the sample data provide evidence that the null hypothesis is false.

S.1 State null & alternative hypotheses S.2 Select the significance level S.3 Formulate a decision rule S.4 Compute the test statistic S.5 Make a conclusion of the test S.6 Make the related decision

one-tail test (directional test) Three possible statistical h hypotheses th to test a population mean

EXAMPLE 1:
Three possible statistical h hypotheses th to test a population proportion

H0 : H1 : H0 : H1 :

0 > 0 0 < 0

H0 : H1 : H0 : H1 :

0 > 0 0 < 0

For each of the following pairs of null and alternative hypotheses, determine whether the pair would be appropriate for a hypothesis test. If a pair is deemed inappropriate, explain why. a) b) c) d) e) H0 : > 90 ; H1 : 90 H0 : 75 ; H1 : > 85 H0 : x = 58 ; H1 : x 58 H0 : 0.48 ; H1 : > 0.52 H0 : p 0.65 ; H1 : > 0.65

two-tail test (Nondirectional test)

H0 : = 0 H0 : = 0 H1 : 0 H1 : 0

EXAMPLE 2:
For each of the following statements, formulate appropriate null and alternative hypotheses. a) The average college student spends no more than RM500 per semester at the universitys bookstore. bookstore The proportion adult drinks 2 cups of coffee per day is more than 0.62. The average SAT score for entering freshmen is at least 1200. The proportion candidate passing on the qualifying exam differs from 0.33.

S.2 Select the significance level

significance level () measure the prob. of rejecting H0 when it is true in practice, significance level is set at 1% (0.01), 5% (0.05) and 10% (0.10)

b) c)

d)

S.3 Formulate a decision rule

Decision Rule : A statement of the specific conditions under which the H0 is rejected. Critical C iti l Value V l : - the dividing point between the region where the H0 is rejected and the region where it is not rejected

Critical Value : - it is determined by the type of alternative hypothesis, sampling distribution of the test statistic and level of significance () Rejection Region : The rejection region is a range of values such that if the test statistic falls into that range, the H0 is rejected in favor of the H1.

One-tail Test: (right tail) Decision Rule : Reject Reje t H0 if Z > 2.3263

Level of Significance, =0.01 Sampling distribution of the test statistic Z

One-tail Test: (left tail)

Level of Significance, =0.10 Sampling distribution of the test statistic Z Decision Rule : Reject H0 if Z < -1.2816

Rejection Region ( = 0.01) 2.3263 Critical Value: Z

Rejection R j i Region ( = 0.10) -1.2816 Critical Value: -Z

Two-tail Test:

Level of Significance, =0.05 Sampling distribution of the test statistic Z Rejection Region (/2 = 0.025) 1.96 Critical Value: Z/2

Decision Rule for Z-Test and t-Test

Alternative Hypothesis > < Reject H0 if Z -Test Z > Z Z < -Z Z > Z/2 or Z < -Z/2 t -Test t > t , n-1 t < -t , n-1 t > t/2 , n-1 or t < -t/2, n-1

Rejection Region (/2 = 0.025) -1.96 Critical Value: -Z/2

Decision Rule: Reject H0 if Z > 1.96 or Z < -1.96

S.4 Compute the test statistic

Test Statistic A value, determined from sample information, determine info mation used sed to dete mine whether hethe or not to reject the H0.

Type of Inference Testing the when 2 known Testing the when 2 unknown Testing the

Test Statistic
Z= x n

t=
Z=

x s n
p (1 ) n

S.5 Make a conclusion of the test

If the test statistic falls in the rejection region, H0 is rejected. If the th t test t statistic t ti ti d does not tf fall ll i in th the rejection region, H0 is not rejected.
Failure to reject a null hypothesis DOES NOT constitute proof that it is true. Therefore, we never say that we accept the null hypothesis

S.6 Make the related decision

If H0 is rejected, we conclude that there is enough statistical evidence to infer that the H1 is true. If H0 is not rejected, we conclude that there is not enough statistical evidence to infer that the H1 is true.

Types of Errors
2 types of errors may occur when deciding whether to reject H0 based on the stat. value. a) Type I error (): Reje t H0 when Reject hen it is i true. t e b) Type II error (): Do not reject H0 when it is false. The Type I error can be directly controlled. It is actually the level of significance.

Do not reject H0 H0 is true H0 is false Correct decision yp II error Type ()

Reject H0 Type I error () Correct decision (1 )

Power of a test (1-): It represents the probability of rejecting the null hypothesis when it is false.

EXAMPLE 3: Following a major earthquake, the city engineer must determine whether the stadium is structurally sound for an upcoming athletic event. If the null hypothesis is the the stadium is structurally sound, and the alternative hypothesis is the stadium is not structurally sound, which type of error (Type I or Type II) would the engineer least like to commit?

Testing the Population Mean when the Population Variance is Known

EXAMPLE 4: When a machine is set properly, it produces nails having a mean length of 1.325 inches, with a standard deviation of 0.0396 inches. For a sample of 80 nails, the mean length is 1.3229 inches. Using the 0.05 level of significance, examine whether the machine is adjusted properly.

Testing Hypotheses and Confidence Interval Estimators

Confidence interval estimator can be used to conduct the two-sided alternative tests of hypotheses at the level fh th t th l l of f significance i ifi If the hypothesized value under null hypothesis falls into the (1 )100% confidence interval estimate, H0 is not rejected

Refer to EXAMPLE 4:
The 95% confidence interval estimate of is LCL = 1.3142, UCL = 1.3316 We have 95% confident that the population mean length between 1.3142 l th is i somewhere h b t 1 3142 and d 1.3316 1 3316 inches. Since = 1.325 falls within the interval estimate, we conclude at 5% that the mean length do not differ from 1.325 inches.
The conclusion is the same as that reached at the level of significance

Testing the Population Mean when the Population Variance is Unknown

EXAMPLE 5: A scrap metal dealer claims that the mean of his cash sales is no more than $80, but an Internal Revenue Service agent believes the dealer is untruthful. Observing a sample of 20 cash customers, the agent finds the mean purchase to be $85, with a standard deviation of $21.

Assuming population is approximately normal distributed, and using the 0.05 level of significance, is the agents suspicion confirmed?

Testing the Population Proportion

EXAMPLE 6: A simple random sample of 300 items is selected from a large shipment, shipment and testing reveals that 4% of the sampled are defective. At the 0.10 level of significance, can we conclude that less than 7% of the items in the shipment are defective?

Making Decision Using p-value Approach

The p-value of a test is the lowest level of significance at which the null hypothesis can be rejected. The calculation of p-value depends on the type of alternative hypothesis, and the sampling distribution of the test statistics Decision Rule: If the p-value is smaller than the significance level (), H0 is rejected.

Calculation of the p-value

p-value
Example 4: 2 P(Z > |Z*|) = 2 P(Z > 0.47) (two tail test) = 0.6384 Example 5: P(t > t*) = P(t > 1.065) (right tail test) = 0.1502 (from Excel) Example 6: P(Z < Z*) = P(Z < -2.04) = 0.0207 (left tail test) Z* or t* is the value of the test statistic

Making Decision Using p-value

Example 4: Example 5: Example 6: