TESTING A POPULATION CORRELATION COEFFICIENT

After computing the correlation coefficient r from the sample, it must be interesting to know whether
there is a sufficient evidence to conclude that the population correlation coefficient p is significant. In
other words, the resulting relationship is statistically valid. We wanted to know whether the sample data
do not really affect the truth about the whole population. So, we perform a test and make a decision
based on given level of significance. A hypothesis testing for p can be one-tailed or two-tailed.

Examples:

1) A researcher investigated the relationship between family income and savings. Using the data from 15
families, the computed r between income and savings was found to be 0.76. Is the computed r
significant at 0.05 level of significance? Can we conclude that the relationship really exists?

Solution:

H0: There is no significant relationship between family income and savings (r=0).

H1: There is a significant relationship between family income and saving (r≠0
Since the computed value of t > 2.179, we rejected the null hypothesis. Therefore, there is a significant
relationship between family income and savings.

2) Consider the data in the previous example. Test the significance of the correlation coefficient
r=0.8819 at a = 0.05

Solution:

H0: p = 0 → Since the alternative hypothesis is of type ≠, we perform the two-tailed test.

H1 : p ≠ 0

a = 0.05 → Level of significance

n = 14

n – 2 = 14 -2 → degrees of freedom

= 12

Since t > + 2.179, then we reject the null hypothesis H 0. Therefore, at 5% level of significance, there is
enough evidence to conclude that there is a significant correlation between the Math and Physics
scores of the students.
3) The table below shows data pertaining to a family’s monthly income x ( in thousand of pesos) and the
number of children y. What kind of relationship between x and y do these data show? Is this significant
at a = 0.01?
Since t > -2.896 and falls within the non-rejection region, then we accept the null hypothesis H 0.
Therefore, at 1% level of significance, there is no significant negative correlation between the family’s
income and number of children. Thus, the family’s monthly income and the number of children do not
have significant relationship.