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Statistics - Important Notes

The t-test and z-test are statistical tests used for hypothesis testing. The t-test is used when sample sizes are small (n<=30) and the samples are drawn from a normal population with unknown standard deviation. The z-test is used when sample sizes are large (n>=30) or when the standard deviation is known, regardless of sample size. Seven situations are described that outline when to use the t-test or z-test based on characteristics of the sample and population.

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78 views2 pages

Statistics - Important Notes

The t-test and z-test are statistical tests used for hypothesis testing. The t-test is used when sample sizes are small (n<=30) and the samples are drawn from a normal population with unknown standard deviation. The z-test is used when sample sizes are large (n>=30) or when the standard deviation is known, regardless of sample size. Seven situations are described that outline when to use the t-test or z-test based on characteristics of the sample and population.

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Some Important notes on use of Student’s T-test and Z-test for Hypothesis Testing:

The t-statistic was introduced in 1908 by William Sealy Gosset, a chemist working for
the Guinness brewery in Dublin, Ireland ("Student" was his pen name).

Basic Underlying Assumptions in T-test are:

1) Samples are independent and randomly drawn from a normal population.

2) Sample size is small. (n<=30)

Below are the seven situations which give an idea about when to use T-test or Z-test:

• Situation 1 : Samples are independent and randomly drawn from normal population whose mean
(µ) and standard deviation (σ) are known

Sample size is large i.e. n>=30

Test to be used for Hypothesis testing: Z-test

• Situation 2 : Samples are independent and randomly drawn from normal population whose mean
(µ) and standard deviation (σ) are known

Sample size is small i.e. n<=30

Test to be used for Hypothesis testing: Z-test or T-test

• Situation 3 : Samples are independent and randomly drawn from a normal population whose
mean (µ) is known but standard deviation (σ) is not known

Population size is large

If standard deviation of sample is known then use sample standard deviation as best estimate for
population standard deviation.

Test to be used for Hypothesis testing: Z-test

• Situation 4: Samples are independent and randomly drawn from a Normal population whose
mean (µ) is known but standard deviation (σ) is not known

Population size is small

If standard deviation of sample is known then use sample standard deviation as best estimate for
population standard deviation.

Test to be used for Hypothesis testing: T-test


• Situation 5: Samples are independent and randomly drawn from any population whose standard
deviation (σ) is known and whose sample size is large.

Test to be used for Hypothesis testing: Z-test because of central limit theorem

• Situation 6: Samples are independent and randomly drawn from any population whose standard
deviation (σ) is unknown and whose sample size is large.

Use sample standard deviation to approximate to population standard deviation and use Z-test.

• Situation 7: Samples are independent and randomly drawn from any population whose standard
deviation (σ) is unknown and sample size is small.

In this situation, other test like Wilkokson’s Test is used

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