Hypothesis Testing II

BMS1024 MANAGERIAL STATISTICS
BMS1024
MANAGERIAL
STATISTICS
Hypothesis Testing II:
Two-Sample Tests
Two-Sample Tests Overview
Two Sample Tests
Independent
Population
Means
Means,
Related
Populations
Independent
Population
Variances
Group 1 vs.
Group 2
Same group
before vs. after
treatment
Variance 1 vs.
Variance 2
Examples
Independent
Population
Proportions
Proportion 1 vs.
Proportion 2
Two-Sample Tests
Independent
Population Means
1
and
2
known
1
and
2
unknown
Goal: Test hypothesis or form
a confidence interval for the
difference between two
population means,
1

2

The point estimate for the
difference between sample
means:
X
1
X
2
Two-Sample Tests
Independent Population Means
Independent
Population Means
1
and
2
known
1
and
2
unknown
Different data sources
Independent: Sample selected
from one population has no
effect on the sample selected
from the other population
Use the difference between 2
sample means
Use Z test, pooled variance t
test, or separate-variance t test
Two-Sample Tests
Independent
Population Means
1
and
2
known
1
and
2
unknown
Use a Z test statistic
Use s to estimate unknown ,
use a t test statistic
Two-Sample Tests
Independent
Population Means
1
and
2
known
1
and
2
unknown
Assumptions:

Samples are randomly and
independently drawn

population distributions are
normal

Two-Sample Tests
Independent
Population Means
1
and
2
known
1
and
2
unknown
When
1
and
2
are known and both
populations are normal, the test
statistic is a Z-value and the
standard error of X
1
X
2
is
2
2
2
1
2
1
X X
n
2 1
+ =

Two-Sample Tests
Independent
Population Means
1
and
2
known
1
and
2
unknown
( ) ( )
2
2
2
1
2
1
2 1
2 1
n
X X
Z
+

=
The test statistic is:
Two-Sample Tests
Lower-tail test:

H
0
:
1
>
2

H
1
:
1
<
2

i.e.,

H
0
:
1

2
> 0
H
1
:
1

2
< 0
Upper-tail test:

H
0
:
1

2
H
1
:
1
>
2
i.e.,

H
0
:
1

2
0
H
1
:
1

2
> 0
Two-tail test:

H
0
:
1
=
2
H
1
:
1

2
i.e.,

H
0
:
1

2
= 0
H
1
:
1

2
0
Two Independent Populations, Comparing Means
Two-Sample Tests
Two Independent Populations, Comparing Means
Lower-tail test:

H
0
:
1

2
> 0
H
1
:
1

2
< 0
Upper-tail test:

H
0
:
1

2
0
H
1
:
1

2
> 0
Two-tail test:

H
0
:
1

2
= 0
H
1
:
1

2
0
o o/2 o/2 o
-z
o
-z
o/2
z
o
z
o/2
Reject H
0
if Z < -Z
a
Reject H
0
if Z > Z
a
Reject H
0
if Z < -Z
a/2

or Z > Z
a/2

Two-Sample Tests
Independent
Population Means
1
and
2
known
1
and
2
unknown
Assumptions:

Samples are randomly and
independently drawn

Populations are normally
distributed

Population variances are
unknown but assumed equal
Two-Sample Tests
Independent
Population Means
1
and
2
known
1
and
2
unknown
Forming interval estimates:

The population variances
are assumed equal, so use
the two sample standard
deviations and pool them to
estimate

the test statistic is a t value
with (n
1
+ n
2
2) degrees
of freedom
Two-Sample Tests
Independent
Population Means
1
and
2
known
1
and
2
unknown
The pooled standard
deviation is:
( ) ( )
1) n ( ) 1 (n
S 1 n S 1 n
S
2 1
2
2 2
2
1 1
p
+
+
=
Two-Sample Tests
Where t has (n
1
+ n
2
2) d.f., and
( ) ( )
|
|
.
|
\
|
+

=
2 1
2
p
2 1
2 1
n
1
n
1
S
X X
t
( ) ( )
1) n ( ) 1 (n
S 1 n S 1 n
S
2 1
2
2 2
2
1 1
2
p
+
+
=
Independent
Population Means
1
and
2
known
1
and
2
unknown
Two-Sample Tests
You are a financial analyst for a brokerage firm. Is there a
difference in dividend yield between stocks listed on the
NYSE & NASDAQ? You collect the following data:
NYSE NASDAQ
Number 21 25
Sample mean 3.27 2.53
Sample std dev 1.30 1.16
Assuming both populations are approximately normal with equal
variances, is there a difference in average yield (o = 0.05)?
Two-Sample Tests
( ) ( ) ( ) ( )
1.5021
1) 25 ( 1) - (21
1.16 1 25 1.30 1 21
1) n ( ) 1 (n
S 1 n S 1 n
S
2 2
2 1
2
2 2
2
1 1
2
p
=
+
+
=
+
+
=
( ) ( ) ( )
040 2
25
1
21
1
5021 1
0 53 2 27 3
1 1
2 1
2
2 1
2 1
.
.
. .
n n
S
X X
t
p
=
|
.
|
\
|
+

=
|
|
.
|
\
|
+

=
Two-Sample Tests
H
0
:
1
-
2
= 0 i.e. (
1
=
2
)
H
1
:
1
-
2
0 i.e. (
1

2
)
o = 0.05
df = 21 + 25 - 2 = 44
Critical Values:
t
0.05/2,44
~ t
0.05/2,40
~ 2.021
Test Statistic: 2.040
t
0
2.021 -2.021
.025
Reject H
0
Reject H
0
.025
Decision: Reject H
0
at = 0.05
2.040
Conclusion: There is evidence
of a difference in the mean
yields.
Two Population Proportions
Goal: Test a hypothesis for the difference
between two independent population proportions,
p
1
p
2

Assumptions:
n
1
p
1
> 5 , n
1
(1-p
1
) > 5
n
2
p
2
> 5 , n
2
(1-p
2
) > 5
The point estimate for the difference is
2 1
. .
p p
Since you begin by assuming the null hypothesis is true,
you assume p
1
= p
2
and pool the two sample (p) estimates.
2 1
2 1
n n
X X
+
+
= p
The pooled estimate for
the overall proportion is:
where X
1
and X
2
are the number of
successes in samples 1 and 2
( )
|
|
.
|
\
|
+

|
.
|
\
|
=
. .
2 1
2 1 2 1
1 1
) 1 (
n n
p p
p p p p
Z
The test statistic for p
1
p
2
is a Z statistic:
2
2
2
1
1
1
2 1
2 1
n
X
,
n
X
,
n n
X X
= =
+
+
=
. .
p p p
where
Hypothesis for Population Proportions
Lower-tail test:

H
0
: p
1
> p
2

H
1
: p
1
< p
2

i.e.,

H
0
: p
1
p
2
> 0
H
1
: p
1
p
2
< 0
Upper-tail test:

H
0
: p
1
p
2
H
1
: p
1
> p
2
i.e.,

H
0
: p
1
p
2
0
H
1
: p
1
p
2
> 0
Two-tail test:

H
0
: p
1
= p
2
H
1
: p
1
p
2
i.e.,

H
0
: p
1
p
2
= 0
H
1
: p
1
p
2
0
Hypothesis for Population Proportions
Lower-tail test:

H
0
: p
1
p
2
> 0
H
1
: p
1
p
2
< 0
Upper-tail test:

H
0
: p
1
p
2
0
H
1
: p
1
p
2
> 0
Two-tail test:

H
0
: p
1
p
2
= 0
H
1
: p
1
p
2
0
o o/2 o/2 o
-z
o
-z
o/2
z
o
z
o/2
Reject H
0
if Z < -Z
o
Reject H
0
if Z > Z
o
Reject H
0
if Z < -Z
o/2

or Z > Z
o/2

Two Population Proportions: Example
Is there a significant difference between the
proportion of men and the proportion of women
who will vote Yes on Proposition A?

In a random sample of 72 men, 36 indicated they
would vote Yes and, in a sample of 50 women, 31
indicated they would vote Yes

Test at the .05 level of significance
H
0
: p
1
p
2
= 0 (the two proportions are equal)
H
1
: p
1
p
2
0 (there is a significant difference
between proportions)
The sample proportions are:
Men:
Women:
549
122
67
50 72
31 36
2 1
2 1
.
n n
X X
p = =
+
+
=
+
+
=
The pooled estimate for the overall proportion is:
50 . 0
72
36
1
= =
.
p
62 . 0
50
31
2
= =
.
p
The test statistic for p
1
p
2
is:
( )
( ) ( )
31 1
50
1
72
1
549 1 549
0 62 50
1 1
1
2 1
2 1 2 1
.
) . ( .
. .
n n
p) ( p
p p p p
z
=
|
.
|
\
|
+

=
|
|
.
|
\
|
+

|
.
|
\
|
=
. .
Critical Values = 1.96
For o = .05
.025
-1.96

1.96

.025
-1.31

Decision: Do not reject H
0

Conclusion: There is no evidence of a
significant difference in proportions who
will vote yes between men and women.
Reject H
0
Reject H
0
Topic Recap
( )
|
|
.
|
\
|
+

|
.
|
\
|
=
. .
2 1
2 1 2 1
1 1
) 1 (
n n
p p
p p p p
Z
( ) ( )
|
|
.
|
\
|
+

=
2 1
2
p
2 1
2 1
n
1
n
1
S
X X
t
Hypothesis Testing
(Two Sample Tests)
Mean Proportion
1

2
known
1

2
unknown
Apply the Z-test
statistic (mean)
Apply the t-test
statistic (mean)
Apply the Z-test
statistic (proportion)
( ) ( )
2
2
2
1
2
1
2 1
2 1
n
X X
Z
+

=
At the end of this lesson, you should be
able to:
Compare two independent samples
Perform Z test for the differences in two
means (sigma known)
Perform pooled variance t test for the
differences in two means (sigma unknown)
Compare two population proportions
Perform Z-test for two population proportions

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