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Statistics Hypothesis

This document discusses hypothesis testing, which involves making judgments about whether observed differences between groups likely occurred by chance or represent dependable relationships. There are two main methods: estimation and hypothesis testing. A hypothesis is a statement about relationships between variables or tentative explanations for events. Hypotheses should be testable, specific, non-contradictory, and specify the variables in question. Hypothesis testing involves a null hypothesis (H0) and alternative hypothesis (Ha) that are mutually exclusive. It also establishes a critical region, selects an appropriate test statistic based on sample size and distribution, and formulates a decision rule to either accept or reject the null hypothesis depending on where the test statistic value falls.

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Shubha Muralidhar
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28 views17 pages

Statistics Hypothesis

This document discusses hypothesis testing, which involves making judgments about whether observed differences between groups likely occurred by chance or represent dependable relationships. There are two main methods: estimation and hypothesis testing. A hypothesis is a statement about relationships between variables or tentative explanations for events. Hypotheses should be testable, specific, non-contradictory, and specify the variables in question. Hypothesis testing involves a null hypothesis (H0) and alternative hypothesis (Ha) that are mutually exclusive. It also establishes a critical region, selects an appropriate test statistic based on sample size and distribution, and formulates a decision rule to either accept or reject the null hypothesis depending on where the test statistic value falls.

Uploaded by

Shubha Muralidhar
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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HYPOTHESIS TESTING

Inferential Statistics

 Inferential statistics to make judgments of the


probability that an observed difference between
groups is a dependable one or one that might have
happened by chance.
There are two main methods used in
inferential statistics:
 Estimation &
 Hypothesis testing
What is Hypothesis

 A Hypothesis is the statement or an assumption about relationships


between variables.
or

 A Hypothesis is a tentative explanation for certain behaviors,


phenomenon or events that have occurred or will occur.
Interesting Hypothesis

 Bankers assumed high-income earners are more profitable than low-


income earners.

 Old clients were more likely to diminish CD balances by large


amounts compared to younger clients.
This was nonintrusive because conventional wisdom suggested that
older clients have a larger portfolio of assets and seek less risky
investments
Criteria for Hypothesis
Construction
 It should be empirically testable, whether it is right or
wrong.
 It should be specific and precise.
 The statements in the hypothesis should not be
contradictory.
 It should specify variables between which the relationship is
to be established.
 It should describe one issue only.
Overview of Hypothesis
Testing
Null and Alternative Hypotheses
 Afterrecognizing that a particular decision requires
formal hypothesis testing, the first step is to state a null
hypothesis and an alternative hypothesis.
 The symbols H0 and Ha denote the null and alternative
hypotheses, respectively.
 Hypotheses always pertain to population parameters or
characteristics rather than to sample characteristics.
Cont.
 The null and alternative hypotheses complement each other;
they are mutually exclusive and collectively exhaustive.
 In other words, the two hypotheses are stated in such a way
that Ha will not be accepted if the sample evidence strongly
supports H0.
 Similarly, Ha will be accepted if the sample evidence is
strong enough to reject H0.
 The null hypothesis should be stated more conservatively;
that is, failure to reject H0 from the sample evidence should
preserve the status quo.
Steps in Hypothesis Testing
Types of Hypothesis
 Null Hypothesis (H0)
 Alternative Hypothesis (Ha or H1)

Each of the following statements is an example of a null


hypothesis and alternative hypothesis.
Establish Critical or Rejection region
Select the Suitable Test of
significance or Test Statistic
 Whether the test involves one sample, two samples, or
samples?
 Whether two or more samples used are independent or
related?
 Is the measurement scale nominal, ordinal, interval, or
ratio?
The choice of a probability distribution of a sample
statistics is guided but the sample size n and the value of
population standard deviation  as shown in the table.
Formulate a Decision Rule to
Accept Null Hypothesis
 Accept H0 if the test statistic value falls within the area of
acceptance.
 Reject otherwise.
ERRORS IN HYPOTHESIS
TESTING
Summary of Certain Values for Sample Statistics Z

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