One-Way ANOVA

One-way ANOVA
Introduction
Two variables: 1 Categorical variable
(factor/IV), 1 Quantitative variable
(response/DV)
Main Question: Do (the means of) the
quantitative variables depend on which group
(given by categorical variable) the individual is in?
ANOVA looks at differences between
groups.
Note: We usually refer to the sub-populations or

the same population but with different treatments
a e d ANOVA.
Introduction
At its simplest ANOVA tests the following

hypotheses:
H0: The means of all the groups are equal
1 = 2 = 3 = i
Ha: Not all the means are equal

Introduction
Usefulness:
– Similar to t-test
– More versatile than t-test
– Compare one parameter (response variable)

between two or more groups
Introduction
Why Not Just Use t-tests?
– Tedious when many groups are present
– Using all data increases stability
– Large number of comparisons some may

appear significant by chance
Introduction
Examples:
– A a a a ee d ffe e b a c e .
Turnover level differs across the three branches and
management wants to know whether this may be
explained by the extent to which employees are
satisfied with their working environment across the
branches. Fifty employees are randomly selected at
each branch and given a questionnaire measuring
how satisfied they currently are with the working
e e .
Introduction
– Researchers investigate the effects of control type
on firm performance. The research question is
whether a real difference exists in performance
between owner- and manager-controlled firms
(McKean and Kania, 1978).
– Investigators want to investigate whether
demographic factors (e.g. age groups, races,
education level, annual income level, and
employment status) and investment experience
(novice, intermediate, advance) have influence on
retirement planning intention.
Introduction
The researchers investigate the effects of

ad e de e e c (b e, ee ,
and brown) in ad viewers responses to the
ad (Simpson, Sturgen, and Tanguma)
Introduction
What can we conclude from the examples?

ANOVA Assumptions
There are Three basic assumptions used in
ANOVA:
The populations from which the samples
were taken are normally distributed.
Homogeneity of variance
Random sampling.
Notation for ANOVA
n = number of individuals all together

i = number of groups
x = mean for entire data set is
Group i has
ni = # of individuals in group i
xij = value for individual j in group i
xi = mean for group i
si = standard deviation for group i
How ANOVA works
ANOVA measures two sources of variation in the data and
compares their relative sizes
variation BETWEEN groups

for each data value look at the difference between its group
mean and the overall mean
( xi - x ) 2
variation WITHIN groups
for each data value we look at the difference between that
value and the mean of its group
( xij - xi ) 2
How ANOVA works
The ANOVA F-statistic is a ratio of the Between Group Variation divided
to the Within Group Variation:
Between MSG
F
Within MSE
This compares the variation between groups (group means to overall mean)
to the variation within groups (individual values to group means). This is
a e e a e A a f Va a ce.
A large F is evidence against H0, since it indicates that there is more

difference between groups than within groups.
Note: it is easier to look at the P-value to indicate whether the H0 is

rejected or not If the P-value is less than or equal to a, reject H0. If the P-
value is greater than a, fail to reject H0.
How ANOVA works
Step 1: The null hypothesis is
H0 : 1 2 3
• Step 2: The alternative hypothesis is

H a : not all of the i are equal
• Step 3: The significance level is =?

(usually is set to one of the values {0.01, 0.05, 0.1}
How ANOVA works
Step 4: Calculate the F-statistic:
Mean Square Group MSG

F or
Mean Square Error MSE
MSG, MSE and the F-statistic are found in the

ANOVA table when the analysis is run on the SPSS
How ANOVA works
Step 5: Find the P-value
Step 6. Reject or fail to reject H0 based on the
P-value.
Step 7. State your conclusion.
How ANOVA works
Le e e test:
H0: σ12 = σ22 = σ32 = σi2 → Homogeneity of
variance
Ha: σ12 σ22 σ32 σi2
– Homogeneity fulfilled Eq al ariance a med
– Homogenei rejec ed Eq al ariance no a med
Note:
•ANOVA is still robust even when the homogeneity assumption is not fulfilled,
as long as the sample sizes are roughly equal or the deviation is only of a
moderate level. As a rule of thumb, if the largest std.dev < (2 x the smallest
std.dev) then we need not to be concerned about this assumption.
•Equal variance assumed or not assumed will affect to Post Hoc test methods
(p.20)
How to perform ANOVA in SPSS?
Post Hoc Test: The results from the ANOVA do not
indicate which of the three groups differ from one another.
To locate the source of this difference we use a post hoc
test (commonly Tukey test and the more conservative is
Scheffé test; equal variance is assumed in these tests).
– Click Post Hoc and check Tukey box, click Continue button.
– Last, click OK button and wait a moment while SPSS analyzes the
data.
Note:
• Tukey performs all of the pairwise comparisons between groups.
• Scheffe performs simultaneous joint pairwise comparisons for all
possible pairwise combinations of means. Can be used to examine all
possible linear combinations of group means, not just pairwise
comparisons.
If equal variance is not assumed, some post

hoc tests could be used:
– Tamhane's T2. Conservative pairwise
comparisons test based on a t-test.
– Dunnett's T3. Pairwise comparison test based
on the Studentized maximum modulus.
– Games-Howell. Pairwise comparison test that
is sometimes liberal.
– Dunnett's C. Pairwise comparison test based
on the Studentized range.
One IV or Factor
Is F-value significant?
Yes No
Are there more than 2 Stop

groups?
Yes No
Do Post Hoc Stop

comparison
This is how
the data set
is shown
The number of sample

in each region
H e e e
result
P-value for Le e e Test

Ho: σ1 = σ2 = σ3
Ha: At least one σ is different than
the others
Result of ANOVA
P-Value for ANOVA

Ho: 1 = 2 = 3
Ha: At least one is
different than the others
Conclusion: There is a difference in

e ee b a fac ac
regions.
South region is significantly

different from others
Test yourself
What is ANOVA?
Why do we use ANOVA?
What are ANOVA assumptions?
How to test ANOVA assumptions?
What do we do when the equal variance is
not fulfilled?
What does it mean when the F value in
ANOVA result is statistically significant?
What does the post hoc test answer?
References
Agresti, A. (2007) Ch 12: Comparing group: Analysis of Variance
(ANOVA) method, Retrieved on 26/04/2012, from
http://www.stat.ufl.edu/~aa/sta6127/ch12.pdf.
Bloomfield, R., O Ha a M., a d Saa G. (2007) How Noise Trading
Affects Markets: An Experimental Analysis , A a ab e a SSRN:
http://ssrn.com/abstract=994379 or
http://dx.doi.org/10.2139/ssrn.994379.
Cianci, A. and Bierstaker, J. 2009. "The Effect of Client Importance
and Performance Feedback on Auditors' Technical and Ethical
Judgments." Managerial Auditing Journal, Vol. 24 Iss: 5, pp.455 474.
Ghozali, I. (2005) Multivariate analysis application with SPSS,
Diponegoro University Publishing, Semarang.
Ho, R. (2006) Handbook of univariate and multivariate data analysis and
interpretation with SPSS, Taylor & Francis Group, Boca Raton, FL.
McKean, J. R., and Kania, J. J. (1978) A I d a ac
owner- a a e c a d f ef a ce , Journal of
Business, Vol. 51 No. 2, pp. 327-342.
Murray, J. (2010) Analysis of Variance – Homework and Exam,
Retrieved on 27/04/2012, from
http://www.murraylax.org/bus735/fall2010.
Pruim, R. (nd) ANOVA: Analysis of Variance, Retrieved on
30/04/2012, from
http://www.calvin.edu/~rpruim/courses/m243/F03.

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One-way ANOVA

Note: We usually refer to the sub-populations or

At its simplest ANOVA tests the following

Ha: Not all the means are equal

– More versatile than t-test

– Compare one parameter (response variable)

– Tedious when many groups are present

– Using all data increases stability

– Large number of comparisons some may

The researchers investigate the effects of

What can we conclude from the examples?

n = number of individuals all together

variation BETWEEN groups

A large F is evidence against H0, since it indicates that there is more

Note: it is easier to look at the P-value to indicate whether the H0 is

• Step 2: The alternative hypothesis is

• Step 3: The significance level is =?

Mean Square Group MSG

MSG, MSE and the F-statistic are found in the

If equal variance is not assumed, some post

Are there more than 2 Stop

Do Post Hoc Stop

The number of sample

P-value for Le e e Test

P-Value for ANOVA

Conclusion: There is a difference in

South region is significantly

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