Tests of Significance

In Statistics, tests of significance are the method of reaching a conclusion to reject or support the
claims based on sample data. The statistics are a special branch of Mathematics which deals with
the collection and calculation over numerical data. This subject is well known for research based
on statistical surveys. During a statistical process, a very common as well as an important term
we come across is “significance”.

 Statistical significance formula

 Hypothesis testing formula
 P-Value
 T Test Formula
 F Test Formula

Statistical significance is very important in research not only in Mathematics but in several
different fields such as medicine, psychology and biology. There are many methods through
which the significance can be tested. These are known as significance tests. Let us learn about
significance testing in detail.

Definition of Significance Testing

In statistics, it is important to know if the result of an experiment is significant enough or not. In
order to measure the significance, there are some predefined tests which could be applied. These
tests are called the tests of significance or simply the significance tests.

This statistical testing is subjected to some degree of error. For some experiments, the researcher
is required to define the probability of sampling error in advance. In any test which does not
consider the entire population, the sampling error does exist. The testing of significance is very
important in statistical research.

The significance level is the level at which it can be accepted if a given event is statistically
significant. This is also termed as p-value. It is observed that the bigger samples are less prone to
chance, thus the sample size plays a vital role in measuring the statistical significance. One
should use only representative and random samples for significance testing.

In short, the significance is the probability that a relationship exists. Significance tests tell us
about the probability that if a relationship we found is due to random chance or not and to which
level. This indicates about the error that would be made by us if the found relationship is
assumed to exist.

Tests of Significance in Statistics

Technically speaking, the statistical significance refers to the probability of a result of some
statistical test or research occurring by chance. The main purpose of performing statistical
research is basically to find the truth. In this process, the researcher has to make sure about the
quality of sample, accuracy, and good measures which need a number of steps to be done. The
researcher has to determine whether the findings of experiments have occurred due to a good
study or just by fluke.

The significance is a number which represents probability indicating the result of some study has
occurred purely by chance. The statistical significance may be weak or strong. It does not
necessarily indicate practical significance. Sometimes, when a researcher does not carefully
make use of language in the report of their experiment, the significance may be misinterpreted.

The psychologists and statisticians look for a 5% probability or less which means 5% results
occur due to chance. This also indicates that there is a 95% chance of results occurring NOT by
chance. Whenever it is found that the result of our experiment is statistically significant, it refers
that we should be 95% sure the results are not due to chance.

Process of Significance Testing

In the process of testing for statistical significance, there are the following steps:

1. Stating a Hypothesis for Research

2. Stating a Null Hypothesis
3. Selecting a Probability of Error Level
4. Selecting and Computing a Statistical Significance Test
5. Interpreting the results

Types of Errors
There are basically two types of errors:

 Type I
 Type II

Type I Error
The type I error occurs when the researcher finds out that the relationship assumed through
research hypothesis does exist; but in reality, there is evidence that it does not exist. In this type
of error, the researcher is supposed to reject the research hypothesis and accept the null
hypothesis, but its opposite happens. The probability that researchers commit Type I error is
denoted by alpha (α).

Type II Error
The type II error is just opposite the type I error. It occurs when it is assumed that a relationship
does not exist, but in reality it does. In this type of error, the researcher is supposed to accept the
research hypothesis and reject the null hypothesis, but he does not and the opposite happens. The
probability that a type II error is committed is represented by beta (β).
Types of Statistical Tests
One-tailed and two-tailed are two types of statistical tests that are used alternatively for the
computation of the statistical significance of some parameter in a given set of data. These are
also termed as one-sided and two-sided tests.

 In research, the one-tailed test can be used when the deviations of the estimated
parameter in one direction from an assumed benchmark value are considered
theoretically possible.
 On the other hand, the two-tailed test should be utilized when the deviations in both
directions of benchmark value are considered as theoretically possible.
The word “tail” is used in the names on these tests since the extreme points of the distributions
in which observations tend to reject the null hypothesis are quite small and “tail off” to zero
similar to the bell curve or normal distribution. The choice of one-tailed or two-tailed
significance test depends upon the research hypothesis.

Example
1. The one-tailed test can be utilized for the test of the null hypothesis such as, boys will not
score significantly higher marks than girls in 10 Standard. In this example, the null
hypothesis does indirectly assume the direction of the difference.
2. The two-tailed test could be utilized in the testing of the null hypotheses: There is no
significant difference in scores of boys and girls in 10 Standard.

What is p-Value Testing?

In the context of the statistical significance of a data, the p-value is an important terminology for
hypothesis testing. The p-value is said to be a function of observed sample results which is
being used for testing of statistical hypothesis. A threshold value is to be selected before the
test is performed. This value is known as the significance level that is traditionally 1% or
5%. It is denoted by α.

In the case when the p-value is smaller than or equal to significance level (α), the data is said to
be inconsistent for our assumption of the null hypothesis to be true. Therefore, the null
hypothesis should be rejected and an alternative hypothesis is supposed to be accepted or
assumed as true.

Note that the smaller the p-value is, the bigger the significance should be as it indicates that the
research hypothesis does not adequately explain the observation. If the p-value is calculated
accurately, then such test controls type I error rate not to be greater than the significance level
(α). The use of p-values in statistical hypothesis testing is very commonly seen in a wide variety
of areas such as psychology, sociology, science, economics, social science, biology, criminal
justice etc.