Hypothesis testing

Many types of organizations use hypothesis testing. Some businesses, for example, use
hypothesis testing for quality control to see if a certain product meets a standard, or to
compare new and old sales methods.

Medical research also often bases inferences on data samples. Imagine, for example, that a
biotech company has manufactured a new drug to alleviate a disease. To determine whether
the medication works, a controlled experiment needs to be conducted. Because it will not be
possible to experiment on every single person who has the disease, a subset of people with
the disease are randomly sampled for testing.

The experimental group and control groups are randomly assigned. The experimental group

receives the treatment, and the control group receives a placebo instead.

Within this sample, one group (the experimental group) receives the treatment, and the

other group (the control group) receives a placebo, or sugar pill, instead of the medication.

The groups are randomly assigned so that any difference in health outcomes can be attributed

to research intervention. 

Tests are set up for both groups, and measurements are taken. When testing differences

between the two groups, researchers decide how far apart the results must be in order to

determine if the health outcomes for the experimental group and the control group are

significantly different.

Researchers collect data from the sample groups and run appropriate statistical tests. Then,

the researchers use these test results to decide if there is a significant difference in the

groups. 

Once the data has been obtained, the researchers will need to make inferences about the

population at large (every single person who has the disease). 

This is called hypothesis testing.

Hypothesis testing begins with the creation of null and alternative hypothesis statements.