ANALYSIS OF VARIANCE

► This is a technique used when sample

information is available from three or more
populations.

► The analysis of variance technique originated

in agricultural research.

► It is one of the widely used techniques in

managerial decision making and social
science research .
► Assumptions in ANOVA:

1. Each sample is drawn randomly from a

normal population

2. The variance of these populations are all

equal and

3. Every sample is drawn independently of the

other.
► If the null hypothesis H0 is true and
all the means are equal, it implies
that we have drawn a sample from a
single population with mean µ and
variance δ².
► The fundamental principle of
ANOVA is to test the differences
among the mean.
► We have two estimates of the population
variance:

1. based on variance between sample

2. based on variance within sample

By applying F test we have

F = estimate of population variance
between samples / estimate of
population variance within a samples
► We have a computed value of F to be
compared with the table value of F at α
level of significance, for given degrees of
freedom and accordingly a decision to
accept or reject the null hypothesis is taken.

► One way Analysis of variance:

► This is the simplest problem in which we
consider a single factor having several
categories of levels which could potentially
affect the variable of interest.
► Multivariate analysis:
► These methods are extensions of the uni-
variate and bi-variate analysis.
► Multivariate analysis revealed the
relationships, interdependence and the
relative importance of the underlying
characteristics and thus add value to the
information.
► More complex than the univariate.
► Use of computer software will be better to
use for analysis of data.
 Theory of Attributes
Difference between Correlation and
Association (Attribute):
Correlation Association
1. To measure degree 1. To measure presence
of relation or absence oif a
2. Quantitative particular attribute
measurements 2. Yes / No type data
3. Two or more than
two variables
 ► Notations and Terminology
► “A” and “B” to represent the presence of
the attribute.
► “α” and “β” to represent the absence of the
attribute.
► Thus, α = not A and β = not B
► For example:
► If A represents males than α represents
female. And if B represents Literate then β
represents illiterates.
 ► Notations and Terminology
► The combinations of different attributes is
denoted by (AB), (A β), (αB) and (α β).

► Example:
(AB) = mean number of literate males ,
(αB) = Literate females
( ) = class frequencies Thus, (A) = number of
individuals possessing attribute A
and (AB) = number of individuals possessing
attribute A and B
► Class frequencies: The no. of
observations assigned to any class is
termed for the frequency of the class.

► Thus, (B) denotes the No. of B’s ;

(A β) the no. of A β’s etc.
► Order of the classes and class frequency
N
(A) (B) Freq of first order
(α ) (β) Freq of first order
(AB) (αB) Freq of the second order
(Aβ) (αβ) Freq of the second order
► Number of frequencies = 3ⁿ
i.e. for one attribute No. of freq = 3
for two attributes, total freq = 3² = 9and they
are in the order 1+4+4 = 9
► Ultimate class frequencies

For two attributes

(A) = (AB) + (A β)
α = (αB) + (αβ)

The total no. of classes of ultimate order is

determined by the formula 2 ⁿ, where n
stands for the no. of attributes studied.
For 2 attributes = 4
► Following table gives the details of the
distribution of attributes


A α TOTAL
► B (AB) (α B) (B)
► β (A β) (α β (β)
►
TOTAL
(A) (α) N
► From this table the certain relationship can
be described:
(A) = (AB) + (Aβ)
α = (αB) + (αβ)
 Methods of studying association

► Comparison of observed and expected

frequencies
► Properties method
► Yule’s coefficient of association
► Coefficient of colligation
► Coefficient of contingency
1. Comparison of Observed and Expected method:
► In this method the actual observations is compared
with the expectations. (i.e. product of the probability)

► If the actual observations is equal to the

expectations, the attributes are called as independent

► If the actual observations is more than the

expectations, the attributes are called as positively
associated and

► If the actual observations is less than the

expectations, the attributes are called as negatively
associated
Symbolically, attributes A and B are:

► Independent if, (AB) = (A) x (B) / N

(actual observation) (expectation)

► Positively associated if (AB) > (A) x (B) / N

(actual observation) (expectation)

► Negatively associated if (AB) < (A) x (B) / N

(actual observation) (expectation)
► The same is true for attributes α and B, α
and β and A and β
► Thus, attributes α and β shall be called:

1. Independent if (αβ) = (α) x (β) / N

2. + ve associated if (αβ)> (α) x (β) / N
3. - ve associated if (αβ)< (α) x (β) / N
Example:
As from the following data find out whether attributes
(AB),(αB), (Aβ) and (αβ) are independent,
associated or disassociated?
N=100, (A) = 40, (B) = 80, (AB) = 30

Solution: apply the criteria for independence i.e. attributes

(AB) shall be called independent if, (AB) = (A) x (B) /
N = 40x80/100 = 32,

Thus actual observation i.e. given (AB) = 30, then

30<32 i.. Less than the expectation and hence the
attributes are negatively associated.
► For finding out the nature of association
between the attributes (A β), (αB), (αβ)

► A α Total


► B 30 50 80
► β 10 10 20
►
40 60 100
TOTAL
► From the table Attributes A and β shall be
independent if
(Aβ) = (A) x (β) / n = 40x20/100=800/100=8
► But the actual observation (i.e. (Aβ) = 10 > 8 and
hence attributes A and β are positively associated

► From the table Attributes α and B shall be

independent if
(αB) = (α) x (B) / N = 60x80/100 = 48
► But the actual observation (i.e. (αB) = 50 > 48
and hence attributes α and B are positively
associated.
► From the table Attributes α and β shall be
independent if

(αβ) = (α) x (β) / N = 60x20/100=1200/100=12

► But the actual observation (i.e. (αβ) = 10 <12 and

hence attributes α and β are negatively associated
i.e. disassociated