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investigator has collected a sample data, not a census.

likelihood or statistical methods that the data reveal “ True

Difference” not sampling error.

2) We evaluate the importance of a statistical significant difference by

measuring the significance of any change.

1) Sampling Theory Approach:

This approach is based on objective view of probability

available sampling data

alternative hypothesis testing procedures since the mid 1950

1) it is an extension of Classical Approach but goes beyond classical

approach, that it is also consider as the “Subjective Probability

Estimate”

2) the subjective estimate one based on the general experience rather

than on the data collected.

The Logic of Hypothesis Testing:

1) the null hypothesis:

• It is a statement that no difference exists between the

parameters of the population, measurement of a sample and the

statistics ( is a measure from a recently drawn sample of the

population ) being compared to it.

• The investigator usually tests, to determine whether there has

been no change in the population or whether a real difference

exists.

2. Why not state that any difference between the sample

statistics and The population parameter; is due to same

reasons.

3. The positive hypothesis can never take valid grounds

for accepting hypothesis.

2. It is argued that Null hypothesis is never be proved and therefore can

not be accepted.

3. statistical Testing only give a chance to

• Reject

• Fail to reject the hypothesis

• Accept means fail to reject

Statistical significance:

hypothesis on the basis of sampling information. Since any sample will

almost vary, somewhat from its population. We must measure whether these

differences are statistically significant or insignificant.

“ the difference does not represent random sampling fluctuations.”

CASE STUDY

Problem Statement:

customers.

with a “standard deviation” of 10 days.

2. The company measures the “rate of payment” in terms of the “average

age of receivables outstanding”.

3. Suppose the controller has all of the customer’s account analyzed and

finds the average is now 51 days.

It is a fact that the population average has moved from 50 to 51. while it is

of statistical significance. Whether it is of practical significance is another

question.

“If the controller judges, that this variation has no real importance, then it is

of little practical significance.

This example can be further explained to show how these concepts are used

to test statistical significance.

1. the null hypothesis states that the population parameter of 50 days has

not changed.

2. a second alternative hypothesis holds, that there has been a change in

average days outstanding: the sample statistics of 54 indicates the

population value probability is no longer 50.

3. the alternative hypothesis is the logical opposite of the null

hypothesis.

4. the null hypothesis H0 is : there has been no change from the 50 days

average age of account outstanding.

5. the alternative hypothesis HA may take several forms. The alternate

may take the form of “not the same” or “ greater than” or “less than”

form.

6. the average age of accounts has changed from 50 days.

7. the average age of receiving outstanding accounts has increased

( decreased from 50 days.

Two Tail Test :

• It is non directional test: tests two possibilities.

• One possibility is “the average could be more than 50 days or it could

be less than 50 days.

• To test this hypothesis “the regions of rejection are divided in to two

tails of the distribution”.

One Tail Test:

• It is one directional Test:

• It places the entire responsibility of an unlikely outcome into the tail

specified by the alternative hypothesis.

• Hypothesis for example may be expressed as

Null Ho : µ = 50 days

Alternative HA : µ ≠ 50 days ( not the same case)

Or

HA : µ > 50 days ( greater than case)

Or HA : µ < 50 days ( less than case)

• Take no corrective actions if the analysis shows that one can not reject

the null hypothesis.

• Not to reject rather than accept the null hypothesis

• It is also argued that null hypothesis can never be proved and

therefore can not be accepted.

• Statistical testing only gives a chance to

a) reject,

b) fail to reject the hypothesis

• it is also common in research circles that Accept the null hypothesis

rather than fail to reject.

Type I Error

( α ) is committed when a null hypothesis is rejected. The α value is called

the level of significance and is the probability of rejecting the null

hypothesis.

Type II Error

Β is when one fails to reject the false null hypothesis.

• If we reject a null hypothesis ( finding a significant statistical

differences) then we are accepting alternative hypothesis.

• In either case accepting or rejecting a null hypothesis we can make in

corrective decisions.

• A null hypothesis can be accepted when it should have been rejected,

when it should have been accepted.

• Two decisions can be made in this regard.

“One may accept or reject the null

hypothesis, thereby accepting the

alternative”

Two of these situations result correct decision, the other two

lead to decision error.

Statistical Significance

Our difficulty with working on data generated from a sample is that

“whether our finding will generalize the population from which the data is

collected.”

Another fact is

“That a difference between the population and

the sample has occurred even the probability

sampling procedure have been followed.”

Or

“There is always the possibility that

sampling error has occurred”.

If this happens the sample will not generalize the population and finding will

be invalid, then what to do to prove

“the confidence level that we provide an indication that our findings can be

generalized to the population. If we are not certain about that , we need

statistical techniques to establish that findings exists in the population and

how much risk we can take to infer that our findings based on the sample

will be found in the population .

1. how confident we are, that our findings can be generalized?

2. how much risk can we take to infer this.

The more important is that statistical significance can be employed only in

relation to samples that have been drawn using probability sample.

This refers that two variables are not related in the population. For

example in the case study or gym visitors, there is no relationship

between genders and visiting the gym in the population from which

the sample was drawn.

2. establish the level of statistical significance that you find better or

acceptable.

a) A measure of degree of risk:

That you might reject the null hypothesis explaining that there

is a relationship in the population, when you should have

supported it that there is no relationship in the population.

Are expressed as probability levels that is the probability of

rejecting the null hypothesis when you should be confirm right.

c) The convention among social researchers:

The maximum level of significance that is accepted is P < 0.05

which explains that there are five chances in hundred that you

could have a sample that shows a relationship existence.( you

would reject the null hypothesis.

Chi- Square)

4. there are two types of error that can be made when we use statistical

significant techniques.

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