HYPOTHESIS TESTING

Traditional Method of Hypothesis Testing

1 A hypothesis is a conjecture which may or may not be true. In statistics, a hypothesis is

conjecture about a parameter obtained from population.
2 Hypothesis Testing is therefore a decision making process for evaluating claims about a
population.
3 Traditional Hypothesis Testing involves two steps:
• Understand the definitions used in hypothesis testing
• State the null and alternative hypothesis

4 The symbol for the null hypothesis is Ho . It states that there is no difference between a
population parameter and a specific value or that there is no difference between two
parameters. So in stating the null hypothesis mathematically, there must always be an equal sign.

5 The symbol for alternative hypothesis is H1 . It states that there is a difference between a
parameter and a specific value or there is a difference between two parameters.

6 The alternative hypothesis serves as basis in identifying whether the test is right-tailed, left-tailed
or two-tailed.

7 Stating the hypothesis involves mathematically stating the null and alternative hypotheses
together.

8 Test is Right-tailed if the alternative hypothesis states that there can be an increase only
For example, if the mean lifetime of car batteries (population) is 3 years and a chemist wants to
check whether an additive he invented is really capable of increasing battery life, then, the
hypotheses are:

Ho: μ ≤ 3 and H1: μ > 3

The alternative hypothesis states that the car additive will increase the mean lifetime of batteries
beyond 3 years.
The null hypothesis states that the lifetime will be 3 years or less, meaning, no increase.

The test is right tailed because the chemist only desires to check if there is an increase.

9 Test is Left-tailed if the alternative hypothesis states that there can be a decrease only
For instance, say that a contractor wants to test whether a new equipment will reduce labor cost.
If the mean labor cost is 40% of the material cost, the hypotheses will be:

Ho: μ ≥ 40 and H1: μ < 40

Since the contractor is interested only in whether the labor cost will decrease as stated in the
alternative hypothesis, the test is left-tailed.

The null hypothesis states the mean labor cost remains at the same or more.

10 Test is two-tailed if the alternative hypothesis states that there can be an increase or decrease

Suppose a medical laboratory wants to determine whether its new drug has a side effect of
changing pulse rate. If the mean pulse rate for a population is 70 beats per minute, then the
hypotheses are:
 Ho: μ = 70 and H1: μ ≠ 70

Inasmuch as laboratory wants to determine whether the drug will increase or decrease (side
effect of changing) pulse rate, test is two tailed, as stated in the alternative hypothesis.
rate will either increase or decrease
The null hypothesis states that the drug will not affect pulse rate.

11 Accepting the null hypothesis means rejecting the alternative hypothesis while rejecting the null
hypothesis means accepting the alternative hypothesis.

Inasmuch as only data from samples are worked on and not the actual population data, the
decision on whether the null hypothesis is accepted or rejected is simply based on probability.
Even if computations are made, these do not absolutely prove anything. The sample mean and
population mean, in most cases, cannot really be equal. The difference may be because these are
really different or because of chance.

Consider the example in item #10.

To test whether or not the new drug will increase or decrease the pulse rate, the researcher will
of course take a sample composed of persons from the population. Then the new drug will be
taken by these persons for some period of time. Finally, their pulse rates will the measured, and
the mean pulse rate computed.

If the sample mean is 71, one might conclude that there is a change. However is the difference of
one (1) beat significant or not. Might it not be that due to chance; that it so happened that the
pulse rate of persons making up the sample have a mean of 71?
The null hypothesis can therefore be either true or false.

If the null hypothesis is actually true but the researcher rejects it because of the resulting
number, this is called a type I error.

On the other hand, if the null hypothesis is actually false but the researcher accepts it, this is a
type II error.

12 The maximum probability of committing a type I error is called level of significance, α.

(The probability of committing a type II error is designated β)

It is the researcher who decides what level of significance is used depending on the seriousness
of committing a type I error.

The most commonly used significance level are 0.10, 0.05, and 0.01. With these, when the null
hypothesis is rejected, a 0.10 level of significance means that there is a 10% chance that a type I
error will be committed; 0.05, 5% chance; 0.01, 1% chance.
13 In a normal distribution curve, this probability corresponds to the area of the tail.
The corresponding tail areas are as shown.

Note that for the two-tailed test, the tail area is divided into 2

14 The boundary between the critical and non-critical region is called critical value (C.V.)

To find C.V. in the z - distribution table, locate the area equal to or nearest to:
• Area = 0.5 - α for right-tailed or left-tailed tests;
• Area= 0.5- α /2 for two-tailed test

C.V. is read by adding the corresponding row value and column value in the
table.
Note that there in a right-tailed test critical value is + C.V.; for a left-tailed test, -C.V.; for a two-
tailed test, + C.V. and -C.V.

To find C.V. in the t - distribution table:

Find the degree of freedom, d.f.
Identify whether the test is one-tailed or two-tailed and locate the column heading for the
significance level desired
The intersection of the d.f. row and significance level column is the C.V.

15 To test the hypothesis, convert the sample mean to a corresponding z or t value, whichever is
appropriate. The converted value becomes the test value.

When the test value falls in the critical region, the null hypothesis must be rejected.
Otherwise, it is accepted.
16 The z-test is used to test for the mean of a large sample (n≥30) or when the population is
normally distributed and σ is known.
X −µ
Use z = to convert the sample mean
σ/ n

Where: X = sample mean (or observed mean)

μ = hypothesized population mean
σ = population standard deviation
if it is unknown but n≥30, use s the sample standard deviation
n = sample size

17 The t-test is for the mean of a small sample (n<30), σ is unknown and the population is normally
or nearly normally distributed.

X −µ
Use t = to convert the sample mean. Also, d.f. = n – 1 is needed
s/ n

Where: X = sample mean (or observed mean)

μ = hypothesized population mean
s = sample standard deviation in lieu of σ which is unknown
n = sample size
d.f. = degree of freedom

18 There are five steps involved in solving hypothesis problems:

• State the hypotheses and identify the claim
• Find the critical value(s)
• Compute the test value
• Decide whether to reject or accept the null hypothesis
• Summarize the results

P-value Method of Hypothesis Testing

19 The P-value or probability value is the area of the tail corresponding to the test value, z or t
obtained as follows:
• Right-tailed or left-tailed test
P-value = 0.5 - area corresponding to test value from table
• two-tailed test
½ P-value = 0.5 - area corresponding to test value from table
20 Inasmuch as the significance level α is also equal to a corresponding tail area, it is evident that:

• For a right-tailed or left-tailed test

Accept the null hypothesis if the P-value is greater than α
P-value > α
otherwise, reject it.

• For a two-tailed test

Accept the null hypothesis if the ½ P-value is greater than ½ α

½ P-value > ½ α or P-value > α

otherwise, reject it.

Examples… Hypothesis Testing

21 A researcher reports that the average annual salary of civil engineers abroad is more than US
$42,000.
A sample of 30 civil engineers working abroad was found to have a mean salary of US $43,260.
The standard deviation of the population is US $5,230.

Test the claim using a 0.05 significance level.

Solution:
• State the hypothesis and identify the claim

Ho: μ ≤ 42,000 and H1: μ > 42,000 (claim)

• Find the critical value(s)

α = 0.05
Since this is a right-tailed test,
area = 0.5 - α
 area = 0.5 – 0.05
area = 0.45 (area to be identified in the table)
Inasmuch as n=30, and standard deviation of the population is known, refer to the
z-distribution table.

From the table, the closest value to 0.45 is 0.4505 which is found in the row 1.6 and
column 0.05
C.V. = 1.6 + 0.05
C.V. = + 1.65
X −µ
• Determine the test value using z =
σ/ n
X = 43,260
μ = 42,000
σ = 5,230
n = 30

43260 − 42000
z=
5230 / 30

z = 1.32 test value

• Decide on whether to accept or reject the null hypothesis

The test value z = 1.32 does not exceed C.V. = +1.65

Inasmuch as test value is not in the rejection region, the null hypothesis must be
ACCEPTED (while the alternative hypothesis is rejected)

• Summarize the results

There is not enough evidence to support the claim that civil engineers abroad earn more
than US $42,000 a year.
22 A job placement agency claims that the average starting salary of civil engineers abroad is US
$24,000. A sample of 10 civil engineers abroad show that their mean salary is US $ 23,450 and a
standard deviation of $400. Is there enough evidence to believe the agency considering a 0.05
significance level?

Solution:
• State the hypothesis and identify the claim

Ho: μ = 24,000 (claim) and H1: μ ≠ 24,000

• Find the critical value(s)

α = 0.05
n = 10
Inasmuch as n<30, refer to the t-distribution table
Note that this is a two-tailed test,
d.f. = n – 1
d.f. = 10- 1
d.f. = 9
 From the table, the intersection of the row of d.f = 9 and column α = 0.05
of the two-tail α is 2.262
Thus,
C.V. = + 2.262 and C.V. = -2.262

X −µ
• Determine the test value using t =
s/ n
X = 23,450
μ = 24,000
s = 400
n = 10

23450 − 24000
t=
400 / 10

t = -4.35 test value

• Decide on whether to accept or reject the null hypothesis

The test value t= -4.35 is less than C.V. = - 2.262

Reject the null hypothesis because the test value is in the rejection region

• Summarize the results

There is enough evidence to reject the claim that the average starting salary of civil
engineers abroad is US$ 24,000.

23 Use the P-value Method to test Problem #1

Solution:
• State the hypothesis and identify the claim

Ho: μ ≤ 42,000 and H1: μ > 42,000 (claim)

X −µ
• Determine the test value using z =
σ/ n
X = 43,260
μ = 42,000
σ = 5,230
n = 30

43260 − 42000
z=
5230 / 30

z = 1.32 test value

• Find the P-value
From the z-distribution table, when z = + 1.32 , area = 0.4066
Note that the value 0.4066 is the intersection of row 1.3 and column .02
P-value = tail area
P-value = 0.5 – 0.4066
P-value = 0.093

• Make a decision
Significance level, α = 0.05

Inasmuch as (P-value= 0.093) > (α=0.05)

accept the null hypothesis

• Summarize the results

There is not enough evidence to support the claim that civil engineers abroad earn more
than US $42,000 a year.