5th unit

Hypothesis - types, characteristics, source,

formulation of hypotheses, errors in hypotheses.
Parametric and Non-Parametric Tests- t-test, z-test,
ftest, u-test, K-W Test (problems on all tests) Statistical
analysis- Bivariate and Multivariate Analysis- ANOVA-
one-way and two-way classification
(theory only).
 Hypothesis
• Statistical Hypothesis:
A statistical hypothesis is a claim (assumption or belief) about
an unknown population parameter value.

Types of Hypothesis:
• Null Hypothesis
• Alternative Hypothesis
 Hypothesis
• Null Hypothesis
The hypothesis which is being tested for possible rejection is
called Null Hypothesis. It is denoted by Ho.

• Alternative Hypothesis
The hypothesis which is accepted when the null hypothesis is
rejected is called Alternative Hypothesis. It is denoted by H1.
 Procedural Steps of Testing Hypothesis

1. State the null and alternative hypothesis

2. State the level of significance
3. Establish a critical region (Rejection Region)
4. Select the suitable test static
5. Formulate a decision rule
 Steps in Testing of Hypothesis
Step 1: State null & alternative hypothesis:
Example:
Ho : There is no difference between the average scores of boys & girls
H1 : The average score of boys differ significantly when compared to the
score of girls.

Ho : There is no difference between the sales figures of three different

stores
H1 : There is a significant difference between the sales figures of three
different stores.
 Steps in Testing of Hypothesis

Step 2: State the level of significance:

It is the predicted upper limit for the probability of rejection
of the Null hypothesis when it is actually true. It is denoted by
‘Alpha’.
The predicted values of ‘Alpha’ are:
0.05 or 0.01
i.e. 5% or 1%
 Steps in Testing of Hypothesis

Step 3: Establish a Critical Region

The normal distribution curve there will be acceptance &

critical region and both the regions are mutually exclusive.
The critical region is the range of sample statistic values
within which if values of sample static falls then null
hypothesis is rejected.
 Steps in Testing of Hypothesis
Step 4: Select the suitable test statistic
The test static are classified into two types:
1. Parametric Tests
2. Non-parametric Tests

Parametric Test: They are more powerful because there the data are derived
from interval & ratio measurements
Non-parametric Test: They are used to test hypothesis with nominal & ordinal
data.

Sample Size Population Parameter Population Parameter

known Unknown
n>30 Normal distribution Normal distribution
n<=30 Normal distribution T-distribution
 Steps in Testing of Hypothesis
Step 5: Formulate a Decision Rule
Here compare the calculated value of the test static with
the critical value (standard table value)
1. Accept H0 if the test static value falls within area of
acceptance.
2. Reject otherwise.

The conclusion reached by hypothesis testing must be

expressed in terms of the marketing research problem.
 Errors in Testing of Hypothesis
Decision Actual Actual
(H0 is true) (H0 is false)

Accepting H0 Correct decision Wrong decision

(Type II Error)

Rejecting H0 Wrong decision Correct decision

(Type I Error)
 Errors in Testing of Hypothesis
• Type I Error:
Rejecting H0 when it is actually true is called Type I Error.

• Type II Error:
Accepting H0 when it is actually false is called Type II Error.
 Parametric & Non-parametric Test

• Parametric Test:
Hypothesis-testing procedures that assume that the variables
of interest are measured on at least an interval scale or an
ratio scale.

• Non-parametric Test:
Hypothesis-testing procedures that assume that the variables
are measured on a nominal or ordinal scale.
 Hypothesis Tests

Parametric Tests Non-parametric Tests

One Sample Two Sample One Sample Two Sample

•t-test •Chi-square
•z-test •K-S
•Runs
•Binomial
Independent Sample Paired Samples

Independent Samples Paired Samples

•Two-Group •Paired
t-test t-test •Chi-square •Sign
•z-test •Mann-Whitney •Wilcoxon
•Median •McNemar
•K-S •Chi-square
 Parametric Tests
• T-test: A univariate hypothesis test using the t
distribution , which is used when the standard
deviation is unknown and the sample size is
small.
Example:
One sample t-test
Independent sample t-test
Paired sample t-test
 Parametric Tests
• Z-test: A univariate hypothesis test using the
standard normal distribution.
Example:
One sample z-test
Two independent sample z-test

• F-test: A statistical test of the equality of the

variances of two populations. Here F-statistic is
compared as the ratio of two sample variances.
 Non-Parametric Tests
Rank Sum Tests:
• Mann-Whitney U-test: A statistical test for a variable
measured on an ordinal scale, comparing the difference in the
location of two populations based on observations from two
independent sample.

• Kruskal-Wallis test (H-test):This test is conducted in a way

similar to the U test. This test is used to test the null
hypothesis that ‘k’ independent random samples come from
identical universes against the alternative hypothesis that the
means of these universes are not eqqual.