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Basic Statistical Concepts

Basic Statistical Concepts

The Prerequisites Checklist page on the Department of Statistics website lists a number of
courses that require a foundation of basic statistical concepts as a prerequisite. All of the
graduate courses in the Master of Applied Statistics program heavily rely on these concepts
and procedures. Therefore, it is imperative — after you study and work through this lesson —
that you thoroughly understand all the material presented here. Students that do not
possess a firm understanding of these basic concepts will struggle to participate
successfully in any of the graduate level courses above STAT 500. Courses such as STAT 501
- Regression Methods or STAT 502 - Analysis of Variance and Design of Experiments require
and build from this foundation. [1]

Review Materials

These review materials are intended to provide a review of key statistical concepts and
procedures. Specifically, the lesson reviews:

populations and parameters and how they differ from samples and statistics,
confidence intervals and their interpretation,
hypothesis testing procedures, including the critical value approach and the P-value
approach,
chi-square analysis,
tests of proportion, and
power analysis.

For instance, with regards to hypothesis testing, some of you may have learned only one
approach — some the P-value approach, and some the critical value approach. It is important
that you understand both approaches. If the P-value approach is new to you, you might have
to spend a little more time on this lesson than if not.

Learning Objectives & Outcomes

Upon completion of this review of basic statistical concepts, you should be able to do the
following:

Distinguish between a population and a sample.

Distinguish between a parameter and a statistic.
Understand the basic concept and the interpretation of a confidence interval.
Know the general form of most confidence intervals.
Be able to calculate a confidence interval for a population mean µ.
Understand how different factors affect the length of the t-interval for the population
mean µ.
Understand the general idea of hypothesis testing -- especially how the basic procedure
is similar to that followed for criminal trials conducted in the United States.

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Be able to distinguish between the two types of errors that can occur whenever a
hypothesis test is conducted.
Understand the basic procedures for the critical value approach to hypothesis testing.
Specifically, be able to conduct a hypothesis test for the population mean µ using the
critical value approach.
Understand the basic procedures for the P-value approach to hypothesis testing.
Specifically, be able to conduct a hypothesis test for the population mean µ using the P-
value approach.
Understand the basic procedures for testing the independence of two categorical
variables using a Chi-square test of independence.
Be able to determine if a test contains enough power to make a reasonable conclusion
using power analysis.
Be able to use power analysis to calculate the number of samples required to achieve a
specified level of power.
Understand how a test of proportion can be used to assess whether a sample from a
population represents the true proportion from the entire population.

Self-Assessment Procedure

1. Review the concepts and methods on the pages in this section of this website.
2. Download and complete the Self-Assessment Exam at the end of this section.
3. Review the Self-Assessment Exam Solutions and determine your score.

Students with a score below 70% suggests that the concepts and procedures that are covered
in STAT 500 have not been mastered adequately. Students are strongly encouraged to take
STAT 500, thoroughly review the materials that are covered in the sections above or take
additional coursework that focuses on these foundations.

If you have struggled with the concepts and methods that are presented here, you will indeed
struggle in any of the graduate level courses included in the Master of Applied Statistics
program above STAT 500 that expect and build on this foundation.

Note: These materials are NOT intended to be a complete treatment of the ideas and methods
used in basic statistics. These materials and the accompanying self-assessment are simply
intended as simply an 'early warning signal' for students. Also, please note that completing
the self-assessment successfully does not automatically ensure success in any of the courses
that use this foundation.

S.1 Basic Terminology

S.1 Basic Terminology

Population and Parameters

Population

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A population is any large collection of objects or individuals, such as Americans,

students, or trees about which information is desired.

Parameter
A parameter is any summary number, like an average or percentage, that describes the
entire population.

The population mean (the greek letter "mu") and the population proportion p are two
different population parameters. For example:

We might be interested in learning about , the average weight of all middle-aged

female Americans. The population consists of all middle-aged female Americans, and the
parameter is µ.
Or, we might be interested in learning about p, the proportion of likely American voters
approving of the president's job performance. The population comprises all likely
American voters, and the parameter is p.

The problem is that 99.999999999999... % of the time, we don't — or can't — know the real
value of a population parameter. The best we can do is estimate the parameter! This is where
samples and statistics come in to play.

Samples and statistics

Sample
A sample is a representative group drawn from the population.

Statistic
A statistic is any summary number, like an average or percentage, that describes the
sample.

The sample mean, , and the sample proportion are two different sample statistics. For
example:

We might use , the average weight of a random sample of 100 middle-aged female
Americans, to estimate µ, the average weight of all middle-aged female Americans.
Or, we might use , the proportion in a random sample of 1000 likely American voters
who approve of the president's job performance, to estimate p, the proportion of all
likely American voters who approve of the president's job performance.

Because samples are manageable in size, we can determine the actual value of any statistic.
We use the known value of the sample statistic to learn about the unknown value of the
population parameter.

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Example S.1.1

What was the prevalence of smoking at Penn State University before the 'no
smoking' policy?

The main campus at Penn State University has a population of approximately 42,000 students.
A research question is "what proportion of these students smoke regularly?" A survey was
administered to a sample of 987 Penn State students. Forty-three percent (43%) of the
sampled students reported that they smoked regularly. How confident can we be that 43% is
close to the actual proportion of all Penn State students who smoke?

Answer

The population is all 42,000 students at Penn State University.

The parameter of interest is p, the proportion of students at Penn State University who
smoke regularly.
The sample is a random selection of 987 students at Penn State University.
The statistic is the proportion, , of the sample of 987 students who smoke regularly.
The value of the sample proportion is 0.43.

Example S.1.2

Are the grades of college students inflated?

Let's suppose that there exists a population of 7 million college students in the United States
today. (The actual number depends on how you define "college student.") And, let's assume
that the average GPA of all of these college students is 2.7 (on a 4-point scale). If we take a
random sample of 100 college students, how likely is it that the sampled 100 students would
have an average GPA as large as 2.9 if the population average was 2.7?

Answer

The population is all 7 million college students in the United States today.
The parameter of interest is µ, the average GPA of all college students in the United
States today.
The sample is a random selection of 100 college students in the United States.
The statistic is the mean grade point average, , of the sample of 100 college students.
The value of the sample mean is 2.9.

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Example S.1.3

Is there a linear relationship between birth weight and length of gestation?

Consider the relationship between the birth weight of a baby and the length of its gestation:

Answer

The dashed line summarizes the (unknown) relationship — — between birth

weight and gestation length of all births in the population. The solid line summarizes the
relationship — — between birth weight and gestation length in our random
sample of 32 births. The goal of linear regression analysis is to use the solid line (the sample)
in hopes of learning about the dashed line (the population).

Next... Confidence intervals and hypothesis tests

There are two ways to learn about a population parameter.

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1) We can use confidence intervals to estimate parameters.

"We can be 95% confident that the proportion of Penn State students who have a
tattoo is between 5.1% and 15.3%."

2) We can use hypothesis tests to test and ultimately draw conclusions about the value of a
parameter.

"There is enough statistical evidence to conclude that the mean normal body
temperature of adults is lower than 98.6 degrees F."

We review these two methods in the next two sections.

S.2 Confidence Intervals

S.2 Confidence Intervals

Let's review the basic concept of a confidence interval.

Suppose we want to estimate an actual population mean . As you know, we can only obtain
, the mean of a sample randomly selected from the population of interest. We can use to
find a range of values:

that we can be really confident contains the population mean . The range of values is called a
"confidence interval."

Example S.2.1

Should using a hand-held cell phone while driving be illegal?

There is little doubt that over the years you have seen numerous confidence intervals for
population proportions reported in newspapers.

For example, a newspaper report (ABC News poll, May 16-20, 2001) was concerned whether or
not U.S. adults thought using a hand-held cell phone while driving should be illegal. Of the
1,027 U.S. adults randomly selected for participation in the poll, 69% thought that it should be
illegal. The reporter claimed that the poll's "margin of error" was 3%. Therefore, the
confidence interval for the (unknown) population proportion p is 69% ± 3%. That is, we can be
really confident that between 66% and 72% of all U.S. adults think using a hand-held cell
phone while driving a car should be illegal.

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General Form of (Most) Confidence Intervals

The previous example illustrates the general form of most confidence intervals, namely:

$\text{Sample estimate} \pm \text{margin of error}$

The lower limit is obtained by:

$\text{the lower limit L of the interval} = \text{estimate} - \text{margin of error}$

The upper limit is obtained by:

$\text{the upper limit U of the interval} = \text{estimate} + \text{margin of error}$

Once we've obtained the interval, we can claim that we are really confident that the value of
the population parameter is somewhere between the value of L and the value of U.

So far, we've been very general in our discussion of the calculation and interpretation of
confidence intervals. To be more specific about their use, let's consider a specific interval,
namely the "t-interval for a population mean µ."

(1-α)100% t-interval for the population mean

If we are interested in estimating a population mean , it is very likely that we would use the t-
interval for a population mean .

t-Interval for a Population Mean

The formula for the confidence interval in words is:

$\text{Sample mean} \pm (\text{t-multiplier} \times \text{standard error})$

and you might recall that the formula for the confidence interval in notation is:
$\bar{x}\pm t_{\alpha/2, n-1}\left(\dfrac{s}{\sqrt{n}}\right)$

Note that:

the "t-multiplier," which we denote as , depends on the sample size through n -

1 (called the "degrees of freedom") and the confidence level through .
the "standard error," which is , quantifies how much the sample means vary from
sample to sample. That is, the standard error is just another name for the estimated
standard deviation of all the possible sample means.
the quantity to the right of the ± sign, i.e., "t-multiplier × standard error," is just a more
specific form of the margin of error. That is, the margin of error in estimating a
population mean µ is calculated by multiplying the t-multiplier by the standard error of
the sample mean.
the formula is only appropriate if a certain assumption is met, namely that the data are
normally distributed.
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Clearly, the sample mean , the sample standard deviation s, and the sample size n are all
readily obtained from the sample data. Now, we just need to review how to obtain the value of
the t-multiplier, and we'll be all set.

How is the t-multiplier determined?

As the following graph illustrates, we put the confidence level $1-\alpha$ in the center of the t-
distribution. Then, since the entire probability represented by the curve must equal 1, a
probability of α must be shared equally among the two "tails" of the distribution. That is, the
probability of the left tail is $\frac{\alpha}{2}$ and the probability of the right tail is
$\frac{\alpha}{2}$. If we add up the probabilities of the various parts $(\frac{\alpha}{2} + 1-
\alpha + \frac{\alpha}{2})$, we get 1. The t-multiplier, denoted , is the t-value such that the
probability "to the right of it" is $\frac{\alpha}{2}$:

It should be no surprise that we want to be as confident as possible when we estimate a

population parameter. This is why confidence levels are typically very high. The most common
confidence levels are 90%, 95% and 99%. The following table contains a summary of the values
of corresponding to these common confidence levels. (Note that the"confidence
coefficient" is merely the confidence level reported as a proportion rather than as a
percentage.)

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Confidence levels
Confidence Coefficient Confidence Level $(1- $(1-\dfrac{\alpha} $\dfrac{\alpha}
$(1-\alpha)$ \alpha) \times 100$ {2})$ {2}$

0.90 90% 0.95 0.05

0.95 95% 0.975 0.025

0.99 99% 0.995 0.005

Minitab® – Using Software

The good news is that statistical software, such as Minitab, will calculate most confidence
intervals for us.

Let's take an example of researchers who are interested in the average heart rate of male
college students. Assume a random sample of 130 male college students were taken for the
study.

The following is the Minitab Output of a one-sample t-interval output using this data.

One-Sample T: Heart Rate

Descriptive Statistics

SE 95% CI for
N Mean StDev
Mean $\mu$

(72.536,
130 73.762 7.062 0.619
74.987)

$\mu$: mean of HR

In this example, the researchers were interested in estimating , the heart rate. The output
indicates that the mean for the sample of n = 130 male students equals 73.762. The sample
standard deviation (StDev) is 7.062 and the estimated standard error of the mean (SE Mean) is
0.619. The 95% confidence interval for the population mean $\mu$ is (72.536, 74.987). We can
be 95% confident that the mean heart rate of all male college students is between 72.536 and
74.987 beats per minute.

Factors Affecting the Width of the t-interval for the Mean

$\mu$
Think about the width of the interval in the previous example. In general, do you think we
desire narrow confidence intervals or wide confidence intervals? If you are not sure, consider
the following two intervals:

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We are 95% confident that the average GPA of all college students is between 1.0 and 4.0.
We are 95% confident that the average GPA of all college students is between 2.7 and 2.9.

Which of these two intervals is more informative? Of course, the narrower one gives us a
better idea of the magnitude of the true unknown average GPA. In general, the narrower the
confidence interval, the more information we have about the value of the population
parameter. Therefore, we want all of our confidence intervals to be as narrow as possible. So,
let's investigate what factors affect the width of the t-interval for the mean .

Of course, to find the width of the confidence interval, we just take the difference in the two
limits:

Width = Upper Limit - Lower Limit

What factors affect the width of the confidence interval? We can examine this question by
using the formula for the confidence interval and seeing what would happen should one of
the elements of the formula be allowed to vary.

What is the width of the t-interval for the mean? If you subtract the lower limit from the upper
limit, you get:

Now, let's investigate the factors that affect the length of this interval. Convince yourself that
each of the following statements is accurate:

As the sample mean increases, the length stays the same. That is, the sample mean plays
no role in the width of the interval.
As the sample standard deviation s decreases, the width of the interval decreases. Since s
is an estimate of how much the data vary naturally, we have little control over s other
than making sure that we make our measurements as carefully as possible.
As we decrease the confidence level, the t-multiplier decreases, and hence the width of
the interval decreases. In practice, we wouldn't want to set the confidence level below
90%.
As we increase the sample size, the width of the interval decreases. This is the factor that
we have the most flexibility in changing, the only limitation being our time and financial
constraints.

In Closing

In our review of confidence intervals, we have focused on just one confidence interval. The
important thing to recognize is that the topics discussed here — the general form of intervals,
determination of t-multipliers, and factors affecting the width of an interval — generally
extend to all of the confidence intervals we will encounter in this course.

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S.3 Hypothesis Testing

S.3 Hypothesis Testing

In reviewing hypothesis tests, we start first with the general idea. Then, we keep returning to
the basic procedures of hypothesis testing, each time adding a little more detail.

The general idea of hypothesis testing involves:

1. Making an initial assumption.

2. Collecting evidence (data).
3. Based on the available evidence (data), deciding whether to reject or not reject the initial
assumption.

Every hypothesis test — regardless of the population parameter involved — requires the
above three steps.

Example S.3.1

Is Normal Body Temperature Really 98.6 Degrees F?

Consider the population of many, many adults. A researcher hypothesized that the average
adult body temperature is lower than the often-advertised 98.6 degrees F. That is, the
researcher wants an answer to the question: "Is the average adult body temperature 98.6
degrees? Or is it lower?" To answer his research question, the researcher starts by assuming
that the average adult body temperature was 98.6 degrees F.

Then, the researcher went out and tried to find evidence that refutes his initial assumption. In
doing so, he selects a random sample of 130 adults. The average body temperature of the 130
sampled adults is 98.25 degrees.

Then, the researcher uses the data he collected to make a decision about his initial
assumption. It is either likely or unlikely that the researcher would collect the evidence he did
given his initial assumption that the average adult body temperature is 98.6 degrees:

If it is likely, then the researcher does not reject his initial assumption that the average
adult body temperature is 98.6 degrees. There is not enough evidence to do otherwise.
If it is unlikely, then:
either the researcher's initial assumption is correct and he experienced a very
unusual event;
or the researcher's initial assumption is incorrect.

In statistics, we generally don't make claims that require us to believe that a very unusual
event happened. That is, in the practice of statistics, if the evidence (data) we collected is
unlikely in light of the initial assumption, then we reject our initial assumption.

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Example S.3.2

Criminal Trial Analogy

One place where you can consistently see the general idea of hypothesis testing in action is in
criminal trials held in the United States. Our criminal justice system assumes "the defendant is
innocent until proven guilty." That is, our initial assumption is that the defendant is innocent.

In the practice of statistics, we make our initial assumption when we state our two competing
hypotheses -- the null hypothesis (H0) and the alternative hypothesis (HA). Here, our
hypotheses are:

H0: Defendant is not guilty (innocent)

HA: Defendant is guilty

In statistics, we always assume the null hypothesis is true. That is, the null hypothesis is
always our initial assumption.

The prosecution team then collects evidence — such as finger prints, blood spots, hair
samples, carpet fibers, shoe prints, ransom notes, and handwriting samples — with the hopes
of finding "sufficient evidence" to make the assumption of innocence refutable.

In statistics, the data are the evidence.

The jury then makes a decision based on the available evidence:

If the jury finds sufficient evidence — beyond a reasonable doubt — to make the
assumption of innocence refutable, the jury rejects the null hypothesis and deems the
defendant guilty. We behave as if the defendant is guilty.
If there is insufficient evidence, then the jury does not reject the null hypothesis. We
behave as if the defendant is innocent.

In statistics, we always make one of two decisions. We either "reject the null hypothesis" or we
"fail to reject the null hypothesis."

Errors in Hypothesis Testing

Did you notice the use of the phrase "behave as if" in the previous discussion? We "behave as
if" the defendant is guilty; we do not "prove" that the defendant is guilty. And, we "behave as
if" the defendant is innocent; we do not "prove" that the defendant is innocent.

This is a very important distinction! We make our decision based on evidence not on 100%
guaranteed proof. Again:

If we reject the null hypothesis, we do not prove that the alternative hypothesis is true.
If we do not reject the null hypothesis, we do not prove that the null hypothesis is true.

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We merely state that there is enough evidence to behave one way or the other. This is always
true in statistics! Because of this, whatever the decision, there is always a chance that we
made an error.

Let's review the two types of errors that can be made in criminal trials:

Table S.3.1
Truth

Not Guilty Guilty

Jury Decision Not Guilty OK ERROR

Guilty ERROR OK

Table S.3.2 shows how this corresponds to the two types of errors in hypothesis testing.

Table S.3.2
Truth

Null Alternative
Hypothesis Hypothesis

Do not Reject
Decision OK Type II Error
Null

Reject Null Type I Error OK

Note that, in statistics, we call the two types of errors by two different names -- one is called a
"Type I error," and the other is called a "Type II error." Here are the formal definitions of the
two types of errors:

Type I Error
The null hypothesis is rejected when it is true.

Type II Error
The null hypothesis is not rejected when it is false.

There is always a chance of making one of these errors. But, a good scientific study will
minimize the chance of doing so!

Making the Decision

Recall that it is either likely or unlikely that we would observe the evidence we did given our
initial assumption. If it is likely, we do not reject the null hypothesis. If it is unlikely, then we
reject the null hypothesis in favor of the alternative hypothesis. Effectively, then, making the
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decision reduces to determining "likely" or "unlikely."

In statistics, there are two ways to determine whether the evidence is likely or unlikely given
the initial assumption:

1. We could take the "critical value approach" (favored in many of the older textbooks).
2. Or, we could take the "P-value approach" (what is used most often in research, journal
articles, and statistical software).

In the next two sections, we review the procedures behind each of these two approaches. To
make our review concrete, let's imagine that μ is the average grade point average of all
American students who major in mathematics. We first review the critical value approach for
conducting each of the following three hypothesis tests about the population mean $\mu$:

Type Null Alternative

Right-tailed H0 : μ = 3 HA : μ > 3

Left-tailed H0 : μ = 3 HA : μ < 3

Two-tailed H0 : μ = 3 HA : μ ≠ 3

In Practice

We would want to conduct the first hypothesis test if we were interested in concluding
that the average grade point average of the group is more than 3.
We would want to conduct the second hypothesis test if we were interested in concluding
that the average grade point average of the group is less than 3.
And, we would want to conduct the third hypothesis test if we were only interested in
concluding that the average grade point average of the group differs from 3 (without
caring whether it is more or less than 3).

Upon completing the review of the critical value approach, we review the P-value approach for
conducting each of the above three hypothesis tests about the population mean . The
procedures that we review here for both approaches easily extend to hypothesis tests about
any other population parameter.

S.3.1 Hypothesis Testing (Critical Value Approach)

S.3.1 Hypothesis Testing (Critical Value Approach)

The critical value approach involves determining "likely" or "unlikely" by determining whether
or not the observed test statistic is more extreme than would be expected if the null
hypothesis were true. That is, it entails comparing the observed test statistic to some cutoff
value, called the "critical value." If the test statistic is more extreme than the critical value,
then the null hypothesis is rejected in favor of the alternative hypothesis. If the test statistic is
not as extreme as the critical value, then the null hypothesis is not rejected.

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Specifically, the four steps involved in using the critical value approach to conducting any
hypothesis test are:

1. Specify the null and alternative hypotheses.

2. Using the sample data and assuming the null hypothesis is true, calculate the value of
the test statistic. To conduct the hypothesis test for the population mean μ, we use the t-
statistic which follows a t-distribution with n - 1 degrees of freedom.
3. Determine the critical value by finding the value of the known distribution of the test
statistic such that the probability of making a Type I error — which is denoted (greek
letter "alpha") and is called the "significance level of the test" — is small (typically 0.01,
0.05, or 0.10).
4. Compare the test statistic to the critical value. If the test statistic is more extreme in the
direction of the alternative than the critical value, reject the null hypothesis in favor of
the alternative hypothesis. If the test statistic is less extreme than the critical value, do
not reject the null hypothesis.

Example S.3.1.1

Mean GPA

In our example concerning the mean grade point average, suppose we take a random sample
of n = 15 students majoring in mathematics. Since n = 15, our test statistic t* has n - 1 = 14
degrees of freedom. Also, suppose we set our significance level α at 0.05, so that we have only
a 5% chance of making a Type I error.

Right-Tailed

The critical value for conducting the right-tailed test H0 : μ = 3 versus HA : μ > 3 is the t-value,
denoted t , n - 1, such that the probability to the right of it is . It can be shown using either
statistical software or a t-table that the critical value t 0.05,14 is 1.7613. That is, we would reject
the null hypothesis H0 : μ = 3 in favor of the alternative hypothesis HA : μ > 3 if the test statistic
t* is greater than 1.7613. Visually, the rejection region is shaded red in the graph.

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Left-Tailed

The critical value for conducting the left-tailed test H0 : μ = 3 versus HA : μ < 3 is the t-value,
denoted -t( , n - 1) , such that the probability to the left of it is . It can be shown using either
statistical software or a t-table that the critical value -t0.05,14 is -1.7613. That is, we would reject
the null hypothesis H0 : μ = 3 in favor of the alternative hypothesis HA : μ < 3 if the test statistic
t* is less than -1.7613. Visually, the rejection region is shaded red in the graph.

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Two-Tailed

There are two critical values for the two-tailed test H0 : μ = 3 versus HA : μ ≠ 3 — one for the
left-tail denoted -t( 2, n - 1) and one for the right-tail denoted t( 2, n - 1). The value -t( /2, n - 1) is
/ /
the t-value such that the probability to the left of it is /2, and the value t( /2, n - 1) is the t-value
such that the probability to the right of it is /2. It can be shown using either statistical
software or a t-table that the critical value -t0.025,14 is -2.1448 and the critical value t0.025,14 is
2.1448. That is, we would reject the null hypothesis H0 : μ = 3 in favor of the alternative
hypothesis HA : μ ≠ 3 if the test statistic t* is less than -2.1448 or greater than 2.1448. Visually,
the rejection region is shaded red in the graph.

S.3.2 Hypothesis Testing (P-Value Approach)

S.3.2 Hypothesis Testing (P-Value Approach)

The P-value approach involves determining "likely" or "unlikely" by determining the probability
— assuming the null hypothesis were true — of observing a more extreme test statistic in the
direction of the alternative hypothesis than the one observed. If the P-value is small, say less
than (or equal to) , then it is "unlikely." And, if the P-value is large, say more than , then it is
"likely."

If the P-value is less than (or equal to) , then the null hypothesis is rejected in favor of the
alternative hypothesis. And, if the P-value is greater than , then the null hypothesis is not
rejected.

Specifically, the four steps involved in using the P-value approach to conducting any
hypothesis test are:
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1. Specify the null and alternative hypotheses.

2. Using the sample data and assuming the null hypothesis is true, calculate the value of
the test statistic. Again, to conduct the hypothesis test for the population mean μ, we use
the t-statistic which follows a t-distribution with n - 1 degrees of freedom.
3. Using the known distribution of the test statistic, calculate the P-value: "If the null
hypothesis is true, what is the probability that we'd observe a more extreme test statistic
in the direction of the alternative hypothesis than we did?" (Note how this question is
equivalent to the question answered in criminal trials: "If the defendant is innocent, what
is the chance that we'd observe such extreme criminal evidence?")
4. Set the significance level, , the probability of making a Type I error to be small — 0.01,
0.05, or 0.10. Compare the P-value to . If the P-value is less than (or equal to) , reject
the null hypothesis in favor of the alternative hypothesis. If the P-value is greater than ,
do not reject the null hypothesis.

Example S.3.2.1

Mean GPA

In our example concerning the mean grade point average, suppose that our random sample
of n = 15 students majoring in mathematics yields a test statistic t* equaling 2.5. Since n = 15,
our test statistic t* has n - 1 = 14 degrees of freedom. Also, suppose we set our significance
level α at 0.05, so that we have only a 5% chance of making a Type I error.

Right Tailed

The P-value for conducting the right-tailed test H0 : μ = 3 versus HA : μ > 3 is the probability
that we would observe a test statistic greater than t* = 2.5 if the population mean really
were 3. Recall that probability equals the area under the probability curve. The P-value is
therefore the area under a tn - 1 = t14 curve and to the right of the test statistic t* = 2.5. It can
be shown using statistical software that the P-value is 0.0127. The graph depicts this visually.

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The P-value, 0.0127, tells us it is "unlikely" that we would observe such an extreme test statistic
t* in the direction of HA if the null hypothesis were true. Therefore, our initial assumption that
the null hypothesis is true must be incorrect. That is, since the P-value, 0.0127, is less than =
0.05, we reject the null hypothesis H0 : μ = 3 in favor of the alternative hypothesis HA : μ > 3.

Note that we would not reject H0 : μ = 3 in favor of HA : μ > 3 if we lowered our willingness to
make a Type I error to = 0.01 instead, as the P-value, 0.0127, is then greater than = 0.01.

Left Tailed

In our example concerning the mean grade point average, suppose that our random sample
of n = 15 students majoring in mathematics yields a test statistic t* instead equaling -2.5. The
P-value for conducting the left-tailed test H0 : μ = 3 versus HA : μ < 3 is the probability that we
would observe a test statistic less than t* = -2.5 if the population mean μ really were 3. The P-
value is therefore the area under a tn - 1 = t14 curve and to the left of the test statistic t* = -2.5.
It can be shown using statistical software that the P-value is 0.0127. The graph depicts this
visually.

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The P-value, 0.0127, tells us it is "unlikely" that we would observe such an extreme test statistic
t* in the direction of HA if the null hypothesis were true. Therefore, our initial assumption that
the null hypothesis is true must be incorrect. That is, since the P-value, 0.0127, is less than α =
0.05, we reject the null hypothesis H0 : μ = 3 in favor of the alternative hypothesis HA : μ < 3.

Note that we would not reject H0 : μ = 3 in favor of HA : μ < 3 if we lowered our willingness to
make a Type I error to α = 0.01 instead, as the P-value, 0.0127, is then greater than = 0.01.

Two Tailed

In our example concerning the mean grade point average, suppose again that our random
sample of n = 15 students majoring in mathematics yields a test statistic t* instead equaling
-2.5. The P-value for conducting the two-tailed test H0 : μ = 3 versus HA : μ ≠ 3 is the probability
that we would observe a test statistic less than -2.5 or greater than 2.5 if the population mean
μ really were 3. That is, the two-tailed test requires taking into account the possibility that the
test statistic could fall into either tail (and hence the name "two-tailed" test). The P-value is
therefore the area under a tn - 1 = t14 curve to the left of -2.5 and to the right of the 2.5. It can
be shown using statistical software that the P-value is 0.0127 + 0.0127, or 0.0254. The graph
depicts this visually.

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Note that the P-value for a two-tailed test is always two times the P-value for either of the one-
tailed tests. The P-value, 0.0254, tells us it is "unlikely" that we would observe such an extreme
test statistic t* in the direction of HA if the null hypothesis were true. Therefore, our initial
assumption that the null hypothesis is true must be incorrect. That is, since the P-value,
0.0254, is less than α = 0.05, we reject the null hypothesis H0 : μ = 3 in favor of the alternative
hypothesis HA : μ ≠ 3.

Note that we would not reject H0 : μ = 3 in favor of HA : μ ≠ 3 if we lowered our willingness to

make a Type I error to α = 0.01 instead, as the P-value, 0.0254, is then greater than = 0.01.

Now that we have reviewed the critical value and P-value approach procedures for each of
three possible hypotheses, let's look at three new examples — one of a right-tailed test, one of
a left-tailed test, and one of a two-tailed test.

The good news is that, whenever possible, we will take advantage of the test statistics and P-
values reported in statistical software, such as Minitab, to conduct our hypothesis tests in this
course.

S.3.3 Hypothesis Testing Examples

S.3.3 Hypothesis Testing Examples

Example: Right-Tailed Test [2]

Example: Left-Tailed Test [3]
Example: Two-Tailed Test [4]

1. Brinell Hardness Scores

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An engineer measured the Brinell hardness of 25 pieces of ductile iron that were
subcritically annealed. The resulting data were:

170 167 174 179 179 187 179 183 179

156 163 156 187 156 167 156 174 170

183 179 174 179 170 159 187

The engineer hypothesized that the mean Brinell hardness of all such ductile iron pieces is
greater than 170. Therefore, he was interested in testing the hypotheses:

H0 : μ = 170
HA: μ > 170

The engineer entered his data into Minitab and requested that the "one-sample t-test" be
conducted for the above hypotheses. He obtained the following output:

Descriptive Statistics

SE 95% Lower
N Mean StDev
Mean Bound

25 172.52 10.31 2.06 168.99

$\mu$: mean of Brinelli

Test

Null hypothesis H₀: $\mu$ = 170

Alternative hypothesis H₁: $\mu$ > 170

T-Value P-Value

1.22 0.117

The output tells us that the average Brinell hardness of the n = 25 pieces of ductile iron was
172.52 with a standard deviation of 10.31. (The standard error of the mean "SE Mean",
calculated by dividing the standard deviation 10.31 by the square root of n = 25, is 2.06).
The test statistic t* is 1.22, and the P-value is 0.117.

If the engineer set his significance level α at 0.05 and used the critical value approach to
conduct his hypothesis test, he would reject the null hypothesis if his test statistic t* were
greater than 1.7109 (determined using statistical software or a t-table):

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Since the engineer's test statistic, t* = 1.22, is not greater than 1.7109, the engineer fails to
reject the null hypothesis. That is, the test statistic does not fall in the "critical region."
There is insufficient evidence, at the = 0.05 level, to conclude that the mean Brinell
hardness of all such ductile iron pieces is greater than 170.

If the engineer used the P-value approach to conduct his hypothesis test, he would
determine the area under a tn - 1 = t24 curve and to the right of the test statistic t* = 1.22:

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In the output above, Minitab reports that the P-value is 0.117. Since the P-value, 0.117, is
greater than = 0.05, the engineer fails to reject the null hypothesis. There is insufficient
evidence, at the = 0.05 level, to conclude that the mean Brinell hardness of all such
ductile iron pieces is greater than 170.

Note that the engineer obtains the same scientific conclusion regardless of the approach
used. This will always be the case.

2. Height of Sunflowers

A biologist was interested in determining whether sunflower seedlings treated with an

extract from Vinca minor roots resulted in a lower average height of sunflower seedlings
than the standard height of 15.7 cm. The biologist treated a random sample of n = 33
seedlings with the extract and subsequently obtained the following heights:

11.5 11.8 15.7 16.1 14.1 10.5 9.3 15.0 11.1

15.2 19.0 12.8 12.4 19.2 13.5 12.2 13.3

16.5 13.5 14.4 16.7 10.9 13.0 10.3 15.8

15.1 17.1 13.3 12.4 8.5 14.3 12.9 13.5

The biologist's hypotheses are:

H0 : μ = 15.7
HA: μ < 15.7

The biologist entered her data into Minitab and requested that the "one-sample t-test" be
conducted for the above hypotheses. She obtained the following output:

Descriptive Statistics

SE 95% Upper
N Mean StDev
Mean Bound

33 13.664 2.544 0.443 14.414

$\mu$: mean of Height

Test

Null hypothesis H₀: $\mu$ = 15.7

Alternative hypothesis H₁: $\mu$ < 15.7

T-Value P-Value

-4.60 0.000

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The output tells us that the average height of the n = 33 sunflower seedlings was 13.664
with a standard deviation of 2.544. (The standard error of the mean "SE Mean", calculated
by dividing the standard deviation 13.664 by the square root of n = 33, is 0.443). The test
statistic t* is -4.60, and the P-value, 0.000, is to three decimal places.

Minitab Note. Minitab will always report P-values to only 3 decimal places. If Minitab
reports the P-value as 0.000, it really means that the P-value is 0.000....something.
Throughout this course (and your future research!), when you see that Minitab reports the
P-value as 0.000, you should report the P-value as being "< 0.001."

If the biologist set her significance level at 0.05 and used the critical value approach to
conduct her hypothesis test, she would reject the null hypothesis if her test statistic t* were
less than -1.6939 (determined using statistical software or a t-table):s-3-3

Since the biologist's test statistic, t* = -4.60, is less than -1.6939, the biologist rejects the
null hypothesis. That is, the test statistic falls in the "critical region." There is sufficient
evidence, at the α = 0.05 level, to conclude that the mean height of all such sunflower
seedlings is less than 15.7 cm.

If the biologist used the P-value approach to conduct her hypothesis test, she would
determine the area under a tn - 1 = t32 curve and to the left of the test statistic t* = -4.60:

In the output above, Minitab reports that the P-value is 0.000, which we take to mean <
0.001. Since the P-value is less than 0.001, it is clearly less than = 0.05, and the biologist
rejects the null hypothesis. There is sufficient evidence, at the = 0.05 level, to conclude
that the mean height of all such sunflower seedlings is less than 15.7 cm.

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Note again that the biologist obtains the same scientific conclusion regardless of the
approach used. This will always be the case.

3. Gum Thickness

A manufacturer claims that the thickness of the spearmint gum it produces is 7.5 one-
hundredths of an inch. A quality control specialist regularly checks this claim. On one
production run, he took a random sample of n = 10 pieces of gum and measured their
thickness. He obtained:

7.65 7.60 7.65 7.70 7.55

7.55 7.40 7.40 7.50 7.50

The quality control specialist's hypotheses are:

H0 : μ = 7.5
HA: μ ≠ 7.5

The quality control specialist entered his data into Minitab and requested that the "one-
sample t-test" be conducted for the above hypotheses. He obtained the following output:

Descriptive Statistics

SE 95% CI for
N Mean StDev
Mean $\mu$

(7.4765,
10 7.550 0.1027 0.0325
7.6235)
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$\mu$: mean of Thickness

Test

Null hypothesis H₀: $\mu$ = 7.5

Alternative hypothesis H₁: $\mu \ne$ 7.5

T-Value P-Value

1.54 0.158

The output tells us that the average thickness of the n = 10 pieces of gums was 7.55 one-
hundredths of an inch with a standard deviation of 0.1027. (The standard error of the mean
"SE Mean", calculated by dividing the standard deviation 0.1027 by the square root of n =
10, is 0.0325). The test statistic t* is 1.54, and the P-value is 0.158.

If the quality control specialist sets his significance level at 0.05 and used the critical
value approach to conduct his hypothesis test, he would reject the null hypothesis if his
test statistic t* were less than -2.2616 or greater than 2.2616 (determined using statistical
software or a t-table):

Since the quality control specialist's test statistic, t* = 1.54, is not less than -2.2616 nor
greater than 2.2616, the quality control specialist fails to reject the null hypothesis. That is,
the test statistic does not fall in the "critical region." There is insufficient evidence, at the
= 0.05 level, to conclude that the mean thickness of all of the manufacturer's spearmint
gum differs from 7.5 one-hundredths of an inch.

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If the quality control specialist used the P-value approach to conduct his hypothesis test, he
would determine the area under a tn - 1 = t9 curve, to the right of 1.54 and to the left of
-1.54:

In the output above, Minitab reports that the P-value is 0.158. Since the P-value, 0.158, is
greater than = 0.05, the quality control specialist fails to reject the null hypothesis. There
is insufficient evidence, at the = 0.05 level, to conclude that the mean thickness of all
pieces of spearmint gum differs from 7.5 one-hundredths of an inch.

Note that the quality control specialist obtains the same scientific conclusion regardless of
the approach used. This will always be the case.

In closing

In our review of hypothesis tests, we have focused on just one particular hypothesis test,
namely that concerning the population mean . The important thing to recognize is that
the topics discussed here — the general idea of hypothesis tests, errors in hypothesis
testing, the critical value approach, and the P-value approach — generally extend to all of
the hypothesis tests you will encounter.

S.4 Chi-Square Tests

S.4 Chi-Square Tests

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Chi-Square Test of Independence

Do you remember how to test the independence of two categorical variables? This test is
performed by using a Chi-square test of independence.

Recall that we can summarize two categorical variables within a two-way table, also called a r ×
c contingency table, where r = number of rows, c = number of columns. Our question of
interest is “Are the two variables independent?” This question is set up using the following
hypothesis statements:

Null Hypothesis
The two categorical variables are independent

Alternative Hypothesis
The two categorical variables are dependent

Chi-Square Test Statistic

where O represents the observed frequency. E is the expected frequency under the null
hypothesis and computed by:

We will compare the value of the test statistic to the critical value of with degree of
freedom = (r - 1) (c - 1), and reject the null hypothesis if .

Example S.4.1
Is gender independent of education level? A random sample of 395 people were surveyed and
each person was asked to report the highest education level they obtained. The data that
resulted from the survey is summarized in the following table:

High School Bachelors Masters Ph.d. Total

Female 60 54 46 41 201

Male 40 44 53 57 194

Total 100 98 99 98 395

Question: Are gender and education level dependent at 5% level of significance? In other
words, given the data collected above, is there a relationship between the gender of an
individual and the level of education that they have obtained?

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Answer

Here's the table of expected counts:

High School Bachelors Masters Ph.d. Total

Female 50.886 49.868 50.377 49.868 201

Male 49.114 48.132 48.623 48.132 194

Total 100 98 99 98 395

So, working this out,

The critical value of with 3 degree of freedom is 7.815. Since 8.006 > 7.815, we reject the
null hypothesis and conclude that the education level depends on gender at a 5% level of
significance.

S.5 Power Analysis

S.5 Power Analysis

Why is Power Analysis Important?

Consider a research experiment where the p-value computed from the data was 0.12. As a
result, one would fail to reject the null hypothesis because this p-value is larger than = 0.05.
However, there still exist two possible cases for which we failed to reject the null hypothesis:

1. the null hypothesis is a reasonable conclusion,

2. the sample size is not large enough to either accept or reject the null hypothesis, i.e.,
additional samples might provide additional evidence.

Power analysis is the procedure that researchers can use to determine if the test contains
enough power to make a reasonable conclusion. From another perspective power analysis can
also be used to calculate the number of samples required to achieve a specified level of power.

Example S.5.1

Let's take a look at an example that illustrates how to compute the power of the test.

Example

Let X denote the height of a randomly Penn State students. Assume that X is normally
distributed with unknown mean and standard deviation of 9. Take a random sample of n =
25 students, so that, after setting the probability of committing a Type I error at , we
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can test the null hypothesis against the alternative hypothesis that
.

What is the power of the hypothesis test if the true population mean were ?

Answer

So we should reject the null hypothesis when the observed sample mean is 172.961 or
greater:

We get

and illustrated below:

In summary, we have determined that we have a 87.13% chance of rejecting the null
hypothesis in favor of the alternative hypothesis if the true
unknown population mean is in reality .

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Calculating Sample Size

If the sample size is fixed, then decreasing Type I error will increase Type II error . If one
wants both to decrease, then one has to increase the sample size.

To calculate the smallest sample size needed for specified , , , then ( is the likely value
of at which you want to evaluate the power.

Sample Size for One-Tailed Test

Sample Size for Two-Tailed Test

Let's investigate by returning to our previous example.

Example S.5.2

Let X denote the height of a randomly Penn State students. Assume that X is normally
distributed with unknown mean and standard deviation 9. We are interested in testing at
level , the null hypothesis against the alternative hypothesis that
.

Find the sample size n that is necessary to achieve 0.90 power at the alternative μ = 175.

Answer

In summary, you should see how power analysis is very important so that we are able to make
the correct decision when the data indicate that one cannot reject the null hypothesis. You
should also see how power analysis can also be used to calculate the minimum sample size
required to detect a difference that meets the needs of your research.

S.6 Test of Proportion

S.6 Test of Proportion

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Let us consider the parameter p of population proportion. For instance, we might want to
know the proportion of males within a total population of adults when we conduct a survey. A
test of proportion will assess whether or not a sample from a population represents the true
proportion from the entire population.

Critical Value Approach

The steps to perform a test of proportion using the critical value approval are as follows:

1. State the null hypothesis H0 and the alternative hypothesis HA.

2. Calculate the test statistic:

where is the null hypothesized proportion i.e., when

3. Determine the critical region.

4. Make a decision. Determine if the test statistic falls in the critical region. If it does, reject
the null hypothesis. If it does not, do not reject the null hypothesis.

Example S.6.1

Newborn babies are more likely to be boys than girls. A random sample found 13,173 boys
were born among 25,468 newborn children. The sample proportion of boys was 0.5172. Is this
sample evidence that the birth of boys is more common than the birth of girls in the entire
population?

Solution

Here, we want to test

The test statistic

We will reject the null hypothesis if or equivalently if Z > 1.645

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Here's a picture of such a "critical region" (or "rejection region"):

It looks like we should reject the null hypothesis because:

or equivalently since our test statistic Z = 5.49 is greater than 1.645.

Our Conclusion: We say there is sufficient evidence to conclude boys are more common than
girls in the entire population.

- value Approach
Next, let's state the procedure in terms of performing a proportion test using the p-value
approach. The basic procedure is:

1. State the null hypothesis H0 and the alternative hypothesis HA.

2. Set the level of significance .
3. Calculate the test statistic:

4. Calculate the p-value.

5. Make a decision. Check whether to reject the null hypothesis by comparing p-value to .
If the p-value < then reject ; otherwise do not reject .

Example S.6.2

Let's investigate by returning to our previous example. Again, we want to test

Solution

The test statistic

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The p-value is represented in the graph below:

Our Conclusion: Because the p-value is smaller than the significance level , we can
reject the null hypothesis. Again, we would say that there is sufficient evidence to conclude
boys are more common than girls in the entire population at the level.

As should always be the case, the two approaches, the critical value approach and the p-
value approach lead to the same conclusion.

S.7 Self-Assess

S.7 Self-Assess

We suggest you...

1. Review the concepts and methods on the pages in this section of this website.
2. Download and Complete the Self-Assessment Exam. [5]
3. Determine your Score by reviewing the Self-Assessment Exam Solutions [6]

Students with a score below 70% suggests that the concepts and procedures that are covered
in STAT 500 have not been mastered adequately. Students are strongly encouraged to take
STAT 500, thoroughly review the materials that are covered in the sections above or take
additional coursework that focuses on these foundations.

If you have struggled with the concepts and methods that are presented here, you will indeed
struggle in any of the graduate level courses included in the Master of Applied Statistics
program above STAT 500 that expect and build on this foundation.

Note: These materials are NOT intended to be a complete treatment of the ideas and methods
used in basic statistics. These materials and the accompanying self-assessment are simply
intended as simply an 'early warning signal' for students. Also, please note that completing

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the self-assessment successfully does not automatically ensure success in any of the courses
that use this foundation.

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