HYPOTHESIS TESTING

Lecture-4
BBA-6
KUBS
Course Instructor: Sheeba Farhan

Whats this all about?

Hypothesis
An educated guess
A claim or statement about a
property of a population

The goal in Hypothesis Testing is to

analyze a sample in an attempt to
distinguish between population
characteristics that are likely to
occur and population characteristics
that are unlikely to occur.

What is Hypothesis
A Hypothesis is the statement or an
assumption about relationships between
variables. Or
A Hypothesis is a tentative explanation for
certain behaviors, phenomenon or events that
have occurred or will occur.

The Basics
Null Hypothesis vs. Alternative
Hypothesis
Type I vs. Type II Error
vs.

Null Hypothesis vs. Alternative

Hypothesis
Null Hypothesis
Statement about
the value of a
population
parameter
Represented by H0
Always stated as
an Equality

Alternative Hypothesis
Statement about the
value of a population
parameter that must be
true if the null
hypothesis is false
Represented by H1
Stated in on of three
forms

>

<

Type I and Type II Errors

Reality
Effect does Effect
not exist
Exists
Effect does
not Exist

Correct
Decision

Type 2
Error

Conclusion
Effect Exists Type 1
Error

Correct
Decision

Type I and Type II Errors

Decision

True State of Nature

We decide to
reject the
null hypothesis
We fail to
reject the
null hypothesis

The null
hypothesis is
true

The null
hypothesis is
false

Type I error
(rejecting a true
null hypothesis)

Correct
decision

Correct
decision

Type II error
(rejecting a false
null hypothesis)

Forming Conclusions
Every hypothesis test ends with the
experimenters (you and I) either
Rejecting the Null Hypothesis, or
Failing to Reject the Null Hypothesis

As strange as it may seem, you

never accept the Null Hypothesis.
The best you can ever say about the
Null Hypothesis is that you dont
have enough evidence, based on a
sample, to reject it!

Criteria for Hypothesis Construction

It should be empirically testable, whether it
is right or wrong.
It should be specific and precise.
The statements in the hypothesis should not
be contradictory.
It should specify variables between which
the relationship is to be established.
It should describe one issue only.

The Seven Steps

1) Describe in words the population
characteristic about which hypotheses
are to be tested
2) State the null hypothesis, Ho
3) State the alternative hypothesis, H1 or
Ha

4) Display the test statistic to be used

The Seven Steps

5) Identify the rejection region
Determine the critical value associated
with , the level of significance of the
test
6) Compute all the quantities in the test
statistic, and compute the test statistic
itself

The Seven Steps

State the conclusion. That is,
decide whether to reject the null
hypothesis, Ho, or fail to reject the
null hypothesis. The conclusion
depends on the level of significance
of the test. Also, remember to state
your result in the context of the
specific problem.

What is hypothesis testing about?

Using an inferential procedure to examine the
credibility of a hypothesis about a population

We start with a research question, develop

specific hypotheses to test, collect the data
and then use statistical analysis to test them
But what exactly is this analysis we use?

Types of Hypothesis Tests

Large Sample Tests, Population Mean
(known population standard
deviation)

Large Sample Tests, Population

Proportion (unknown population
standard deviation)
Small Sample Tests, Mean of a
Normal Population

Inferential Statistics
Inferential statistics to make
judgments of the probability that an
observed difference between groups
is a dependable one or one that
might have happened by chance.
There are two main methods used in
inferential statistics:
Estimation &
Hypothesis testing

Inferential Reasoning
Population: group under
investigation
Random
Selection

Inference

Sample: a smaller group

representing the population
A sample that has been
randomly selected should be
representative of the
population

Types of Research Hypotheses

Nondirectional Research
Hypothesis: reflects a difference
between groups, but the direction
of the difference is not specified
(two-tailed test)
H1: X Y
Directional Research Hypothesis:
reflects a difference between
groups, and the direction of the
difference is specified (one-tailed
test)
H1: X > Y
H1: X < Y

z = -1.96
p = .025

z = 1.96
p = .025

z = 1.645
p = .05

Rejecting the Null Hypothesis

Alpha Level (): the level of significance set by
the researcher. It is the confidence with which
the researcher can decide to reject the null
hypothesis.
Significance Level (p): the probability value
used to conclude that the null hypothesis is an
incorrect statement
If p > cannot reject the null hypothesis
If p reject the null hypothesis

THANKYOU FOR LISTENING