Hypothesis Testing

“Statistical method for testing difference between two samples is known as hypothesis
testing”.

Procedure for hypothesis Testing:-

Step 1:- State the null hypothesis (H0) and alternate hypothesis (H1). The null hypothesis
(H0) refers to a hypothesized numerical value or range of value of the population parameter.
Theoretically hypothesis testing requires that the null hypothesis be considered true until it is
proved false on the basis of results observed from the sample data.

H0
 0


Where  is population mean and 0 represents hypothesized parameter value.

An alternative hypothesis H1 is the logical opposite of the null hypothesis that is an alternative
hypothesis must be true when the null hypothesis is found to be false.

H1 H1 H1
 0  0  0
  

Step 2:- State the level of significance, (α) for the test. The level of significance, usually by
(α) is specified before the samples are drawn, so that the results obtained should not influence
the choice of the decision maker. It is specified in terms of the level of probability of null
hypothesis H0 being wrong.

Step 3:- Establish critical or rejection Region: - Sample space of the experiment which
corresponds to the area under the sampling distribution curve of the test statistic is divided
into 2 mutually exclusive. These regions are called the acceptance region and the rejection or
critical region.
If the value of test statistic falls into the acceptance region, the null hypothesis is accepted
otherwise it is rejected. The rejection consists of all values of the test statistic that are likely
to occur if null hypothesis is true.

On the other hand, these values are not likely to occur if null hypothesis is false. The value of
the sample statistics that separates the regions of acceptance and rejection is called value.

Decision Rule: - Concerning null hypothesis are as follows:-

 Prob (H0 is true) ≤ α Reject H0

 Prob (H0 is true) > α Fail to reject H0

Step 4:- Calculate the suitable Test Statistic: - Calculate by the distribution of sample
statistic by using formula:-

Value of sample statistics  Value of hypothesized Population Parameter

Test Statistic 
S tan dard error of sample statistic

x  0 x  0
Z 
x  n

The choice of a probability distribution of a sample statistic is guided by the sample size (n)
and the value of population Standard deviation.

Step 5:- Reach a conclusion: - Compare the calculated value of the test statistic with the
critical value. The decision rule for null hypothesis is as follow:-

Z cal  Z table H 0 Fail to Re ject

Z cal  Z table Re ject H 0

Error Hypothesis: - A decision taken in any problem of hypothesis testing on the basis of
random sample may be wrong or correct. Wrong is define as error hypothesis testing.

TYPE I: - When wrong TYPE II: - When wrong

decision is true Null decision is not true then
hypothesis is rejected Null hypothesis is accepted
Error in Hypothesis Testing:-

Decision Population Condition

H0 (True) H0 (false)
Accept H0 Correct decision With Type II error
confidence
Reject H0 Type I error Correct decision

Two tailed test: -

When the hypothesis about population mean is rejected only for value of falling into one of
the tails of sampling distribution, then it is known as one tailed test.

If it is right tail then it is called right tailed test and if it is left tailed then it is called left tailed
test.

The types of tests used depend upon the way the hypothesis is formulated.

(i) Null and alternate Hypothesis stated as :-

H0 H1
 0  0
 And 
Impels that any deviation of the calculated value of test statistic from a hypothesized value µ 0
leads to rejection of the null hypothesis. Hence, it is necessary to keep the rejection region on
both tails of sampling distribution of the test statistic. This type of test is called two tailed
test.

One Tailed Test

(i) Null and Alternate Hypothesis stated as :-

H0 H1
 0 &  0 [ R  tailed test]
 
H0 H1
 0 &  0 [ L  tailed test]
 

Imply that the value of sample statistic is either higher or lower than the hypothesized value
(µ0). This leads to the rejection of null hypothesis for significant deviation from the specified
value (µ0) in one direction of the curve of sampling distribution.

Thus the entire rejection region corresponding to the level of significance α % is in only one
tail of the sampling distribution of the statistic.
 H0 H1 H0 H1
(A)  0 &  0 [ L  tailed test] (B)  0 &  0 [ R  tailed test]
   

T-Test:- Hypothesis testing for population parameters with small samples (T- Distribution)
given by:- W.S.Gossett.

It is used when sample size is small (n<30) or less and the population S.D is unknown. The
T- statistic is defined as:-

Case: -1 One Sample T -Test

X 
Z  N
S

Where S =
(X  X ) 2

n 1

Properties of T-Test:-

(i) The variable of t- distribution ranges from (    t   )

(ii) Like the standard normal distribution the t- distribution is symmetrical and has
a mean Zero.
(iii) The variance of the t- distribution is greater than one, but approaches one as
the no. of degrees of freedom and therefore the sample size become large.

Use of T-Test:-

(i) To test the significance of the mean of a small random sample from a normal
population.
(ii) To test the significance of the difference between the mean of 2 samples taken
from a normal population.
 (iii) To test the significance of an observed coefficient of correlation including partial
and rank correlation.
(iv) To test the significance of an observed regression coefficient.

Case2: To test the significance of the difference between the mean of 2 samples
(Independent Test) OR Unpaired T- Test.

X  n1n2
Z
S n1  n2  2

Where S =
(X 1  X 1 )2   ( X 2  X 2 )2
n1  n2  2

Case3: To test the significance of the difference between the mean of 2 samples
(dependent Test) OR Paired T-Test.

d
Z N
S

Where S =
(X  X ) 2

n 1

Z-Test

Hypothesis Testing for large samples: - Means [n>30] is based on the assumption that the
population from which the sample is drawn has a normal distribution.

Hypothesis testing for single population mean: If Standard deviation is known then:-

X 
Z 

N

To test the significance of the difference between the mean of 2 samples having same
population Standard Deviation

X1  X 2
Z 
S .E
p p
S .E  
n1 n2
To test the significance of the difference between the mean of 2 samples having different
population Standard Deviation

X1  X 2
Z 
S .E

1  2
S .E  
n1 n2

F-Test

Variance Test Ratio: - An F-test is any statistical test in which the test statistic has an F-
distribution under the null hypothesis. It is most often used when comparing statistical
models that have been fitted to a data set, in order to identify the model that best fits the
population from which the data were sampled. Exact “F-tests” mainly arise when the models
have been fitted to the data using least squares. The name was coined by George W.
Snedecor, in honour of Sir Ronald A. Fisher. Fisher initially developed the statistic as the
variance ratio in the 1920s

L arg er Variance
F (vari ance Test Ratio) 
Smaller Variance

When Individual Series is given When all data is given

n1 12
S12 
(X 1  X1 ) 2
S 2

n1  1
1
n1  1
 ( X 2  X 2 )2 n2 22
S12  S 2

n2  1
1
n2  1
 Chi-Square Test for goodness of fit

 2 - Test is a measure of probabilities of association between the attributes. It gives us an

idea about the divergence between the observed and expected frequencies.

Conditions for applying the chi- square test:-

(i) Each of the observation constituting the sample for this test should be independent of
other.
(ii) The excepted frequency of any item or cell should not be less than 5.
(iii) The total no. of observation used in this must be large (n>30).
(iv) This test is used only for drawing inference by testing hypothesis.
(v) It is wholly dependent on the degree of freedom.
(vi) The frequencies used in  2 -test be absolute and not relative in terms.

Working rule for  2 test:-

Step 1:- Set up the hypothesis that no association exist between the attributes.

Step 2:- Calculate  2 by the following:-

 2

 O
i  Ei 
2

Ei

Oi= observed frequency

Ei= Expected frequency
Step 3:- Find from the table the value of  2 for a given value of the level of significance α
and for the degree of freedom V.

Step 4:- Compare the value  2 with the tabulated value of  2 .

If  cal   tab they fail to reject null hypothesis H0.

2 2

If  cal   tab then reject null hypothesis H0.

2 2

Step 5:- Calculate the expected frequencies for each cell.

Row total X Column total

E
Grand total

Step 6:- Calculate the degree of freedom:-

V or Degree of freedom = (No. of rows - 1) (No. of column-1)

Degree of freedom = (r-1) (c-1).