Z-TEST MANUAL

NIMRA IFTIKHAR ROLL #15

ABDUL WAHEED ROLL # 16
 Z - TEST HISTORY
•Z TEST WAS FIRST USED BY ERICH LEHMAN IN 1986, HE USED TO TEST THE
EQUALITY OF HYPOTHETICAL MEAN TO A PRE DEFINED MEAN OF NORMAL
DISTRIBUTION AFTER THE DISCOVERY OF NORMAL DISTRIBUTION BY
GAUSS.
•THE NAME Z TEST COMES FROM THE Z- SCORE OF THE NORMAL
DISTRIBUTION. , WHICH IS A BELL-SHAPED CURVE WITH A MEAN OF ZERO
AND A STANDARD DEVIATION OF ONE.
•THE Z-TEST HAS BEEN USED IN MANY DIFFERENT FIELDS, INCLUDING
MEDICINE, PSYCHOLOGY, ECONOMICS, AND ENGINEERING. IT IS A WIDELY
USED TOOL FOR HYPOTHESIS TESTING AND IS AN IMPORTANT PART OF THE
STATISTICAL TOOLKIT OF MANY RESEARCHERS AND ANALYSTS.
 DEFINITION OF Z TEST

• Z TEST IS A STATISTICAL TEST USED TO TEST AN ALTERNATIVE

HYPOTHESIS AGAINST A NULL HYPOTHESIS.
• Z TEST IS ANY STATISTICAL HYPOTHESIS USED TO DETERMINE
WHETHER TWO SAMPLE MEANS ARE DIFFERENT WHEN
VARIANCE ARE KNOWN AND SAMPLE IS LARGER THAN 30.
• A Z TEST IS USED TO DETERMINE WHETHER TWO POPULATION
MEANS ARE DIFFERENT WHEN THE VARIANCES ARE KNOWN
AND THE SAMPLE SIZE IS LARGE.
 Z SCORES
• STANDARD DEVIATION VALUES ARE
ALSO KNOWN AS “ Z SCORES “
• Z SCORE IS DEFINED AS THE NUMBER
OF STANDARD UNITS ANY SCORE OR
VALUE IS FROM THE MEAN.
• Z SCORE STATES HOW MANY
STANDARD DEVIATIONS THE
OBSERVATION X FALLS FROM THE
MEAN AND IN WHICH DIRECTION –
PLUS OR MINUS.
 DIFFERENCE BETWEEN Z TEST AND T TEST
•THE Z-TEST AND T-TEST ARE BOTH STATISTICAL TESTS USED TO DETERMINE
WHETHER THERE IS A SIGNIFICANT DIFFERENCE BETWEEN TWO
POPULATION MEANS. HOWEVER, THERE ARE SOME KEY DIFFERENCES
BETWEEN THE TWO TESTS.
•THE T-TEST IS USED WHEN THE POPULATION STANDARD DEVIATION IS NOT
KNOWN AND MUST BE ESTIMATED FROM THE SAMPLE DATA. IN CONTRAST,
THE Z-TEST IS USED WHEN THE POPULATION STANDARD DEVIATION IS
KNOWN.
•THEREFORE, THE Z-TEST IS TYPICALLY USED WHEN THE SAMPLE SIZE IS
LARGE (N > 30) AND THE POPULATION STANDARD DEVIATION IS KNOWN. IN
THIS CASE, THE Z-TEST IS MORE POWERFUL THAN THE T-TEST AND CAN
DETECT SMALLER DIFFERENCES BETWEEN THE SAMPLE MEANS.
 CONTINUE:

•ON THE OTHER HAND, THE T-TEST IS USED WHEN THE SAMPLE SIZE
IS SMALL (N < 30) OR THE POPULATION STANDARD DEVIATION IS
UNKNOWN. IN THESE CASES, THE T-TEST IS MORE APPROPRIATE
BECAUSE IT USES THE SAMPLE STANDARD DEVIATION TO ESTIMATE
THE POPULATION STANDARD DEVIATION.
•IT'S IMPORTANT TO NOTE THAT BOTH TESTS ASSUME THAT THE
POPULATION DISTRIBUTION IS NORMAL OR APPROXIMATELY
NORMAL. IF THE POPULATION DISTRIBUTION IS NOT NORMAL,
OTHER TESTS MAY BE MORE APPROPRIATE.
Z TEST FORMULA
 WHEN TO USE Z- TEST
• COMPARE THE SAMPLE OR A SINGLE GROUP WITH THAT OF THE POPULATION WITH
RESPECT TO THE PARAMETER, MEAN. THIS IS ONE-SAMPLE Z-TEST FOR MEANS. FOR
EXAMPLE, WHETHER THE STUDENT OF A PARTICULAR SCHOOL HAS BEEN SCORING MARKS
IN MATHEMATICS WHICH IS STATISTICALLY SIGNIFICANT THAN THE OTHER SCHOOLS
• COMPARE TWO GROUPS WITH RESPECT TO THE POPULATION PARAMETER, MEAN. THIS IS
TWO-SAMPLES Z-TEST FOR MEANS. FOR EXAMPLE, YOU WANT TO COMPARE CLASS X
STUDENTS FROM DIFFERENT SCHOOLS AND DETERMINE IF STUDENTS OF ONE SCHOOL
ARE BETTER THAN OTHERS BASED ON THEIR SCORE OF MATHEMATICS.
• COMPARE HYPOTHESIZED PROPORTION OF THE POPULATION TO THAT OF POPULATION
THEORITICAL PROPORTION. FOR EXAMPLE, WHETHER THE UNEMPLOYMENT RATE OF A
GIVEN STATE IS DIFFERENT THAN THE WELL-ESTABLISHED RATE FOR THE CCOUNTRY
• COMPARE THE PROPORTION OF ONE POPULATION WITH THE PROPORTION OF OTHER
PROPORTION. FOR EXAMPLE, WHETHER THE EFFICACY RATE OF VACCINATION IN TWO
DIFFERENT POPULATION ARE STATISTICALLY SIGNIFICANT OR OTHERWISE.
 DIFFERENT TYPES OF Z- TESTS
• In hypothesis testing the z critical value divides the distribution graph into
acceptance and the rejection regions. If the test statistics falls in the rejection
region than the null hypothesis can be rejected otherwise it is accepted.
One sample Z test:
• A one sample is used to check if there is a difference between the sample mean
and the population mean when the population standard deviation is known.
 CONT..

Two sample Z test:

Two sample z test is used to check if there is a difference between the means
of two samples. It can be used in the same way as one sample test however it
will be used to compare the means of two samples.
Z test can be divided into one tailed and two tailed Z test.
One tailed Z test:
A one tailed test results from an alternate hypothesis which specifies a
direction. i.e when the alternate hypothesis states that the parameter is bigger
or smaller than the value specified in the null hypothesis.
 CONT..
• Left tailed Z test:
• It is used when the alternative hypothesis states that the true value of the
parameter specified in the null hypothesis is less than the null hypothesis claims.
• Right tailed Z test :
• It is used when the alternative hypothesis states that the true value of the
parameter specified in the null hypothesis is greater than the null hypothesis
claims.
 CONT..
• One tailed Z test:
Two tailed test results from an
alternative hypothesis which
does not specify a direction i.e
when the alternate hypothesis
states that the null hypothesis is
wrong.
 MANUALLY USING THE FORMULA
• MAKE A NULL HYPOTHESIS
• ALSO MAKE AN ALTERNATIVE HYPOTHESIS
• ESTABLISH THE LEVEL OF SIGNIFICANCE
• CALCULATING THE STATISTICAL TEST
• STATISTICAL DECISION TO REJECT OR ACCEPT THE NULL HYPOTHESIS
• COMPARE COMPUTED TEST STATISTIC AGAINST A CRITICAL/TABLED
VALUE
• INTERPRET THE RESULTS
STATE THE NULL AND ALTERNATE
HYPOTHESIS
 ESTABLISH THE LEVEL OF SIGNIFICANCE

• PROBABILITY OF REJECTING A NULL HYPOTHESIS H0 WHEN H0 IS ASSUMED TO

BE TRUE.
• P IS PREDEDERMINED VALUE
• TYPICALLY WE SET THE SIGNIFICANCE LEVEL AT 10%, 5% AND 1%
P = 0.05
P = 0.01
P = 0.001
CALCULATING THE STATISTICAL TEST
 COMPARE COMPUTED TEST STATISTIC
AGAINST A CRITICAL/TABLED VALUE
• CRITICAL VALUE IS A CUT OFF VALUE BETWEEN ACCEPTANCE ZONE AND
REJECTION ZONE. WE COMPARE OUR TEST SCORE TO THE CRITICAL VALUE AND
IF THE TEST SCORE IS GREATER THAN THE CRITICAL VALUE THAN WE REJECT
THE NULL HYPOTHESIS. BUT IF THE TEST SCORE IS LESS THAN THE CRITICAL
VALUE THAN WE ACCEPT THE NULL HYPOTHESIS.
 STATISTICAL DECISION TO REJECT OR ACCEPT
THE NULL HYPOTHESIS

• LEFT TAILED TEST:

• IF THE Z STATISTIC IS LESS THAN Z CRITICAL VALUE THAN WE REJECT A NULL
HYPOTHESIS.
• RIGHT TAILED TEST:
• IF THE Z STATISTIC IS GREATER THAN Z CRITICAL VALUE THAN WE REJECT A
NULL HYPOTHESIS.
• TWO TAILED TEST:
• IF THE Z STATISTIC IS GREATER THAN Z CRITICAL VALUE THAN WE REJECT A
NULL HYPOTHESIS.
 INTERPRET THE RESULTS

•IF THE NULL HYPOTHESIS IS REJECTED, CONCLUDE THAT

THERE IS A SIGNIFICANT DIFFERENCE BETWEEN THE
POPULATION MEANS.
•IF THE NULL HYPOTHESIS IS NOT REJECTED, CONCLUDE THAT
THERE IS NOT ENOUGH EVIDENCE TO SUPPORT A DIFFERENCE
BETWEEN THE POPULATION MEANS.
 ADVANTAGE OF Z TEST
•POWER: THE Z-TEST IS A POWERFUL STATISTICAL TEST THAT CAN DETECT EVEN SMALL
DIFFERENCES BETWEEN THE POPULATION MEANS WHEN THE SAMPLE SIZE IS LARGE AND THE
POPULATION STANDARD DEVIATION IS KNOWN.
•SIMPLICITY: THE Z-TEST IS A RELATIVELY SIMPLE TEST TO PERFORM AND INTERPRET, AS IT ONLY
REQUIRES THE SAMPLE MEANS, SAMPLE STANDARD DEVIATIONS, AND SAMPLE SIZES.
•WIDE APPLICABILITY: THE Z-TEST CAN BE USED TO COMPARE THE MEANS OF ANY TWO
POPULATIONS, AS LONG AS THE POPULATION STANDARD DEVIATION IS KNOWN AND THE SAMPLE
SIZES ARE LARGE ENOUGH.
•VALIDITY: THE Z-TEST IS A VALID TEST, AS LONG AS THE ASSUMPTIONS OF NORMALITY AND
HOMOGENEITY OF VARIANCES ARE MET.
•EFFICIENCY: THE Z-TEST REQUIRES LESS COMPUTATIONAL RESOURCES AND IS MORE EFFICIENT
THAN OTHER STATISTICAL TESTS, SUCH AS THE BOOTSTRAP METHOD OR PERMUTATION TEST.
 DEMERITS OF Z
TEST
• Z test always require a known standard deviation which is not always possible.
• Z test cannot be conducted with a smaller sample size (less than 30)