HYPOTHESIS TEST FOR TWO VARIANCES

Often it is necessary to test whether two independent populations have the same variability. One
important reason to test for the difference between the variances of two populations is the need to
determine whether the pooled variance t test is appropriate .

One of the assumptions of any method that pools sample variances is that the samples arise from
populations with homogeneous variances. Before proceeding with a test that pools variances, it is
recommended that you test for the assumption of homogeneous variances

The difference between two variances can be studied using another sampling called the F
distribution. Just as with the t-test, you calculate a value for F using information from your
samples, and compare this F statistic to the sampling distribution (table) to determine if the value
falls within the zone of acceptance, or in the critical region for rejection of the hypothesis that the
variances are equal.

The test for the difference between the variances of two independent populations is based
on the ratio of the two sample variances. If each population is assumed to be normally
distributed, then the ratio follows the F Distribution.

The F distribution is very closely related to the chi-square distribution, and provides us with
important information when we compare the variance of two independent random samples from a
normally distributed population. To perform your F-test, all you require is knowledge of the
variance of both samples, as well as the sample size

Problem:

Given the data in the table below, what is the critical value of the statistic for a 1-tailed
hypothesis test to determine if the variance of the parts produced by Machine A is greater than the
variance of the parts produced by Machine B with 5% significance? Please use at least 3 decimal
places for all answers.

Solution: for solving the above problem go through the steps given below.

Step: 1 Enter the data into the excel spreadsheet as shown below.
 Step: 2 To perform the F – test for equal variance we have to go for Data analysis pack.
For that Tools>Data Analysis.

Click here to Enter Data

Analysis took pack

Step:3 After entering into Data analysis Click on F – Test Two – Sample for Variances to
perform F – Test.

Step: 4 Enter the data in their respective places.

Enter the data range for the first

sample
Click here to show
labels in the first row

Enter the data range for the

second sample
Enter  Value in terms of
decimals as given
Variable 1 Range
Enter the reference for the first column or row of data you want to analyze.
Variable 2 Range
Enter the reference for the second column or row of data you want to analyze.
Labels
Select if the first row or column of your input range contains labels. Clear this check box
if your input range has no labels; Microsoft Excel generates appropriate data labels for
the output table.
Alpha
Enter the confidence level for the test. This value must be in the range 0...1. The alpha
level is a significance level related to the probability of having a type I error (rejecting a
true hypothesis).

Step: 5 specify the output range where you want to see the output of the test.

Output Range
Enter the reference for the upper-left cell of the output table. Excel automatically
determines the size of the output area and displays a message if the output table will
replace existing data.
New Worksheet Ply
Click to insert a new worksheet in the current workbook and paste the results starting at
cell A1 of the new worksheet. To name the new worksheet, type a name in the box.
New Workbook
Click to create a new workbook and paste the results on a new worksheet in the new
workbook
Step: 6 Output of the problem is

EXPLANATION OF THE OUTPUT

The column E from E4 to cell E6 gives the Descriptive details about the Machine A and the
column- F from F4 to cell F6 gives the Descriptive details about the Machine B.

Machine A: -
Cell E4 gives the mean (average) value of the sample 1 (Machine A).
Cell E5 gives the Variance value of the sample 1 (Machine A).
Cell E6 gives the Number of Values (observations) in the sample 1 (Machine A).

Machine B:-
Cell F4 gives the mean (average) value of the sample 2 (Machine B).
Cell F5 gives the Variance value of the sample 2 (Machine B).
Cell F6 gives the Number of Values (observations) in the sample 2 (Machine B).

d.f. (Degrees of freedom): -

Cell E7 gives the degrees of freedom for sample 1 (Machine A). It can be calculated as
n – 1 = Number of observations – 1 = 12 – 1 = 11.
Cell F7 gives the degrees of freedom for sample 1 (Machine B). It can be calculated as
n – 1 = Number of observations – 1 = 7 – 1 = 6.

F: -
Cell E8 gives the computed F – value. It can be computed by the above (in the Introduction)
given formula (manually).

P (T<=t) one-tail : -
Cell E9 gives the p – value of one-tail for the above F – statistic. With the help of this p – value
one-tail we can interpret the hypothesis when related to one-tail.

t – Critical one-tail: -
Cell E10 gives the Critical (Tabulated) F value for one-tail.
Step: 7 Interpretation of the data.

Finally, we have to interpret the results by comparing the Calculate F – Value with p – value
depending upon the given problem whether it may be one-tail (or) two-tail. Generally, we
compare with two-tail if anything not specified. If the p – value is less than the  value then we
can say that there is no significant difference between the samples. Otherwise we can say that
there is significant difference between the samples.