Hypothesis and Hypothesis Testing

HYPOTHESIS A statement about the value of a population parameter developed for the purpose of testing.

HYPOTHESIS TESTING A procedure based on sample evidence and probability theory to determine whether
the hypothesis is a reasonable statement.

TEST STATISTIC A value, determined from sample information, used to determine whether to reject the null
hypothesis.

CRITICAL VALUE The dividing point between the region where the null hypothesis is rejected and the region
where it is not rejected.
Important Things to Remember about H0 and H1
 H0: null hypothesis and H1: alternate
hypothesis
 H0 and H1 are mutually exclusive and Inequality
Keywords Part of:
collectively exhaustive Symbol
 H0 is always presumed to be true
Larger (or more) than > H1
 H1 is the research hypothesis
 A random sample (n) is used to “reject H0” Smaller (or less) < H1
 If we conclude 'do not reject H0', this does
not necessarily mean that the null No more than  H0
hypothesis is true, it only suggests that
there is not sufficient evidence to reject H0; At least ≥ H0
rejecting the null hypothesis then, suggests
that the alternative hypothesis may be true. Has increased > H1
 Equality is always part of H0 (e.g. “=” , “≥” ,
“≤”). Is there difference? ≠ H1
 “≠” “<” and “>” always part of H1 Has not changed = H0
 In actual practice, the status quo is set up
as H0 Has “improved”, “is better See left H1
 In problem solving, look for key words and than”. “is more effective” text
convert them into symbols. Some key
words include: “improved, better than, as
effective as, different from, has changed,
etc.”
Signs in the Tails of a Test
 Two-tailed Test
Two-tailed tests -
the rejection
region is in both Rejection Rejection
tails of the Region Region
Acceptance
distribution
Region

One-tailed tests
- the rejection One-tailed Test
region is in only
on one tail of Rejection
the distribution Region Acceptance
Region
 Types of Errors
H 0 is true H 0 is false

Reject H 0 Type I error Correct

P(Type I)=  Decision

Correct Type II error

Do not reject
Decision P(Type II)= 
H0
Type I Error -
Defined as the probability of rejecting the null hypothesis when it is actually true.
This is denoted by the Greek letter “”
Also known as the significance level of a test
Type II Error:
Defined as the probability of “accepting” the null hypothesis when it is actually false.
This is denoted by the Greek letter “β”
 Hypothesis Setups for Testing a Mean () or a
Proportion ()

MEAN

PROPORTION
 Steps in hypothesis testing

- Define Null hypothesis

- Define Alternative hypothesis
- Calculate Test statistic
- Determine Rejection region
- Compare Value of the test statistic with
Critical Value
- Conclusion
 Testing for a Population Mean with a
Known Population Standard Deviation- Example
EXAMPLE Step 4: Formulate the decision rule.
Jamestown Steel Company manufactures and Reject H0 if |Z| > Z/2
assembles desks and other office equipment . The
weekly production of the Model A325 desk at the Z  Z / 2
Fredonia Plant follows the normal probability
distribution with a mean of 200 and a standard X 
deviation of 16. Recently, new production  Z / 2
methods have been introduced and new  / n
employees hired. The mean number of desks 203.5  200
produced during last 50 weeks was 203.5. The VP  Z .01/ 2
of manufacturing would like to investigate whether 16 / 50
there has been a change in the weekly production 1.55 is not  2.58
of the Model A325 desk, at 1% level of
significance.

Step 1: State the null hypothesis and the

alternate hypothesis.
H0:  = 200
H1:  ≠ 200
(note: This is a 2-tail test, as the keyword
in the problem “has changed”)
Step 5: Make a decision and interpret the result.
Because 1.55 does not fall in the rejection region, H0 is not
Step 2: Select the level of significance. rejected. We conclude that the population mean is not
α = 0.01 as stated in the different from 200. So we would report to the vice
problem president of manufacturing that the sample evidence
does not show that the production rate at the plant has
Step 3: Select the test statistic. changed from 200 per week.
Use Z-distribution since σ is
known
Testing for a Population Mean with a Known Population
Standard Deviation- Another Example
Suppose in the previous problem the vice Step 4: Formulate the decision rule.
president wants to know whether there Reject H0 if Z > Z
has been an increase in the number of
units assembled. To put it another way,
can we conclude, because of the Step 5: Make a decision and interpret the
improved production methods, that the result.
mean number of desks assembled in Because 1.55 does not fall in the rejection
the last 50 weeks was more than 200? region, H0 is not rejected. We conclude that
Recall: σ=16,  =200, α=.01 the average number of desks assembled in
the last 50 weeks is not more than 200
Step 1: State the null hypothesis and the
alternate hypothesis.
H0:  ≤ 200
H1:  > 200
(note: This is a 1-tail test as the
keyword in the problem “an increase”)

Step 2: Select the level of significance.

α = 0.01 as stated in the problem

Step 3: Select the test statistic.

Use Z-distribution since σ is known
 p-value in Hypothesis Testing
EAMPLE p-Value
Recall the last problem where the hypothesis
and decision rules were set up as:
 p-VALUE is the probability of
H0:  ≤ 200
observing a sample value as extreme
as, or more extreme than, the value H1:  > 200
observed, given that the null Reject H0 if Z > Z
hypothesis is true. where Z = 1.55 and Z =2.33

 In testing a hypothesis, we can also Reject H0 if p-value < 

compare the p-value to the 0.0606 is not < 0.01
significance level ().

 Decision rule using the p-value:

Reject null hypothesis, if p< α

Conclude: Fail to reject H0

 Interpreting the p-value
 Describing the p-value
– If the p-value is less than 1%, there is
overwhelming evidence that supports the
alternative hypothesis.
– If the p-value is between 1% and 5%, there is a
strong evidence that supports the alternative
hypothesis.
– If the p-value is between 5% and 10% there is a
weak evidence that supports the alternative
hypothesis.
– If the p-value exceeds 10%, there is no evidence
that supports the alternative hypothesis.
The Power of Statistical Test
The power of a statistical test, given as 1 –  
= P (reject H0 when H0 is false), measures the
ability of the test to perform as required. This
1 –   is called the power of the function. This
means that greater the power of the function
the better would be the decision rule.
There are two types of tail test
1. One-tailed tests - the rejection region is in only
one tail of the distribution
2. Two-tailed tests - the rejection region is in both
tails of the distribution
Steps in Hypothesis Testing using SPSS
 State the null and alternative hypotheses
 Define the level of significance (α)
 Calculate the actual significance : p-
value
 Make decision : Reject null hypothesis, if
p≤ α, for 2-tail test; and
if p*≤ α, for 1-tail test.(p* is p/2 when p is
obtained from 2-tail test)
 Conclusion
Inference About a Population Mean When the
Population Standard Deviation Is Unknown or
When the Sample Size is Small
In practice, the population standard deviation will be
unknown.
Recall that when  is known we use the following
statistic to estimate and test a population mean
x
z
When  is unknown or when n the sample size is

small, we use its point estimator s, and the z-

statistic is replaced then by the t-statistic
 The t - Statistic

x 
t
s n

The t distribution is mound-shaped, The “degrees of freedom”,

(a function of the sample size)
and symmetrical around zero.
determine how spread the
distribution is (compared to the
d.f. = v2 normal distribution)
d.f. = v1
v 1 < v2
0
 Testing  when  is unknown
 Example
– In order to determine the number of workers
required to meet demand, the productivity of
newly hired trainees is studied.

– It is believed that trainees can process and

distribute more than 450 packages per hour
within one week of hiring.

– Can we conclude that this belief is correct,

based on productivity observation of 50
trainees (see file PROD.sav).
 Testing  when  is unknown
 Example – Solution
– The problem objective is to describe the
population of the number of packages
processed in one hour.
– H0: = 450
H1: > 450
– The t statistic
x 
t
d.f. = sn - 1n = 49
 Testing  when  is unknown
 Solution continued (solving by hand)

– The rejection region is From the data we have

t > t,n – 1
t,n - 1 = t.05,49  x i  23,019  i  10,671,357, thus
x 2

 t.05,50 = 1.676. 23,019

x  460.38, and
50
 x
2

s2 
 x 
2
i
i
n  1507.55.
n 1
s  1507.55  38.83
 Testing  when  is unknown
Rejection region
• The test statistic is 1.676 1.89

x  460.38  450
t   1.89
s n 38.83 50

• Since 1.89 > 1.676 we reject the null hypothesis in

favor of the alternative.
• There is sufficient evidence to infer that the mean
productivity of trainees one week after being hired is
greater than 450 packages at .05 significance level.
 Solution using SPSS (use file PROD.sav)
One-Sample Statistics

N Mean Std. Deviation Std. Error Mean

Packages
50 460.38 38.827 5.491

One-Sample Test

Test Value = 450

95% Confidence Interval of
the Difference
Sig. (2- Mean
t df tailed) Difference Lower Upper
Packages
1.890 49 .065 10.380 -.65 21.41
 Inference About a Population
Proportion
 Statistic and sampling distribution
– the statistic used when making inference
about p is: x
p̂  where
n
x  the number of successes.
n  sample size.

– Under certain conditions, [np > 5 and n(1-p) > 5],

p̂
is approximately normally distributed, with  = p
and 2 = p(1 - p)/n.
 Testing and Estimating the
Proportion
 Test statistic for p

p̂  p
Z
p(1  p) / n
where np  5 and n(1  p)  5
 Testing the Proportion
 Example 12.6
– A pharmaceutical company claimed that its
medicine was 80% effective in relieving
allergy. In a sample of 200 persons, who were
given medicine only 150 persons had relief.
Do you thank that the effectiveness is below
80%? Use 0.05 level of significance.