Assignment

on
Testing of Hypothesis
UNIVERSITY OF DELHI
DEPARTMENT OF OPERATIONAL RESEARCH

SUBMITTED TO:

Dr. Preeti Wanti Srivastava

SUBMITTED BY:

Mandeep Singh
Kirorimal College
M.Sc. O.R. SEM-I SEC-B
Introduction:
A statistical hypothesis test is a method of making statistical decisions using
experimental data. In statistics, a result is called statistically significant if it is
unlikely to have occurred by chance. The phrase "test of significance" was coined
by Ronald Fisher: "Critical tests of this kind may be called tests of significance,
and when such tests are available we may discover whether a second sample is or
is not significantly different from the first.
Hypothesis testing is sometimes called confirmatory data analysis, in contrast to
exploratory data analysis. In frequency probability, these decisions are almost
always made using null-hypothesis tests; that is, ones that answer the question
Assuming that the null hypothesis is true, what is the probability of observing a
value for the test statistic that is at least as extreme as the value that was actually
observed? One use of hypothesis testing is deciding whether experimental results
contain enough information to cast doubt on conventional wisdom.
Statistical hypothesis testing is a key technique of frequentist statistical inference,
and is widely used, but also much criticized. The main alternative to statistical
hypothesis testing is Bayesian inference.
The critical region of a hypothesis test is the set of all outcomes which, if they
occur, will lead us to decide that there is a difference. That is, cause the null
hypothesis to be rejected in favour of the alternative hypothesis. The critical
region is usually denoted by C.
A statistical hypothesis is an assumption about a population parameter. This
assumption may or may not be true. The best way to determine whether a
statistical hypothesis is true would be to examine the entire population. Since that
is often impractical, researchers typically examine a random sample from the
population. If sample data are consistent with the statistical hypothesis, the
hypothesis is accepted; if not, it is rejected.

There are two types of statistical hypotheses.

1.

Null hypothesis. The null hypothesis, denoted by H0, is usually the

hypothesis that sample observations result purely from chance.

2.

Alternative hypothesis. The alternative hypothesis, denoted by H1 or Ha,

is the hypothesis that sample observations are influenced by some nonrandom cause.

For example, suppose we wanted to determine whether a coin was fair and
balanced. A null hypothesis might be that half the flips would result in Heads and
half, in Tails. The alternative hypothesis might be that the number of Heads and
Tails would be very different. Symbolically, these hypotheses would be
expressed as
H0: P = 0.5
Ha: P 0.5
Suppose we flipped the coin 50 times, resulting in 40 Heads and 10 Tails. Given
this result, we would be inclined to reject the null hypothesis and accept the
alternative hypothesis.

Decision Errors:Two types of errors can result from a hypothesis test.

1.

Type I error. A Type I error occurs when the researcher rejects a null
hypothesis when it is true. The probability of committing a Type I error is
called the significance level. This probability is also called alpha, and is
often denoted by .

2.

Type II error. A Type II error occurs when the researcher accepts a null
hypothesis that is false. The probability of committing a Type II error is
called Beta, and is often denoted by . The probability of not committing
a Type II error is called the Power of the test.

Decision Rules:The analysis plan includes decision rules for accepting or

rejecting the null hypothesis. In practice, statisticians describe these decision
rules in two ways - with reference to a P-value or with reference to a region of
acceptance.

1.

P-value. The strength of evidence in support of a null hypothesis is

measured by the P-value. Suppose the test statistic is equal to S. The Pvalue is the probability of observing a test statistic as extreme as S,
assuming the null hypothesis is true. If the P-value is less than the
significance level, we reject the null hypothesis.

2.

Region of acceptance. The region of acceptance is a range of values. If

the test statistic falls within the region of acceptance, the null hypothesis
is accepted. The region of acceptance is defined so that the chance of
making a Type I error is equal to the significance level.

The set of values outside the region of acceptance is called the region of
rejection. If the test statistic falls within the region of rejection, the null
hypothesis is rejected. In such cases, we say that the hypothesis has been rejected
at the level of significance.
These approaches are equivalent. Some statistics texts use the P-value approach;
others use the region of acceptance approach. In subsequent lessons .

One-Tailed and Two-Tailed Tests:

1. One-Tailed Test : A test of a statistical hypothesis, where the region of
rejection is on only one side of the sampling distribution, is called a onetailed test.
For example, suppose the null hypothesis states that the mean is less than or
equal to 10. The alternative hypothesis would be that the mean is greater than
10. The region of rejection would consist of a range of numbers located
located on the right side of sampling distribution; that is, a set of numbers
greater than 10.
2. Two-Tailed Test: A test of a statistical hypothesis, where the region of
rejection is on both sides of the sampling distribution, is called a twotailed test.
For example, suppose the null hypothesis states that the mean is equal to 10.
The alternative hypothesis would be that the mean is less than 10 or greater
than 10. The region of rejection would consist of a range of numbers located
on both sides of sampling distribution; that is, the region of rejection would

consist partly of numbers that were less than 10 and partly of numbers that
were greater than 10

A General Procedure for Conducting Hypothesis Tests:

All hypothesis tests are conducted the same way. The researcher states a
hypothesis to be tested, formulates an analysis plan, analyzes sample data
according to the plan, and accepts or rejects the null hypothesis, based on results
of the analysis.
1. State the hypothesis. Every hypothesis test requires the analyst to state a
null hypothesis and an alternative hypothesis. The hypotheses are stated
in such a way that they are mutually exclusive. That is, if one is true, the
other must be false; and vice versa.
2. Formulate an analysis plan. The analysis plan describes how to use
sample data to accept or reject the null hypothesis. It should specify the
following elements.
a. Significance level. Often, researchers choose significance levels
equal to 0.01, 0.05, or 0.10; but any value between 0 and 1 can
be used.
b. Test method. Typically, the test method involves a test statistic
and a sampling distribution. Computed from sample data, the test
statistic might be a mean score, proportion, difference between
means, difference between proportions, z-score, t-score, chisquare, etc. Given a test statistic and its sampling distribution, a
researcher can assess probabilities associated with the test
statistic. If the test statistic probability is less than the
significance level, the null hypothesis is rejected.
3. Analyze sample data. Using sample data, perform computations called
for in the analysis plan.
a. Test statistic. When the null hypothesis involves a mean or
proportion, use either of the following equations to compute the
test statistic.
Test statistic = (Statistic - Parameter) / (Standard deviation of statistic)

Test statistic = (Statistic - Parameter) / (Standard error of statistic)

where Parameter is the value appearing in the null hypothesis, and Statistic is
the point estimate of Parameter. As part of the analysis, you may need to
compute the standard deviation or standard error of the statistic. Previously,
we presented common formulas for the standard deviation and standard error.
When the parameter in the null hypothesis involves categorical data, you
may use a chi-square statistic as the test statistic. Instructions for computing a
chi-square test statistic are presented in the lesson on the chi-square goodness
of fit test.
b. P-value. The P-value is the probability of observing a sample
statistic as extreme as the test statistic, assuming the null
hypothesis is true.
4. Interpret the results. If the sample findings are unlikely, given the null
hypothesis, the researcher rejects the null hypothesis. Typically, this
involves comparing the P-value to the significance level, and rejecting
the null hypothesis when the P-value is less than the significance level.

Importance:Statistical hypothesis testing plays an important role in the whole

of statistics and in statistical inference. For example, Lehmann (1992) in a review
of the fundamental paper by Neyman and Pearson (1933) says: "Nevertheless,
despite their shortcomings, the new paradigm formulated in the 1933 paper, and
the many developments carried out within its framework continue to play a
central role in both the theory and practice of statistics and can be expected to do
so in the foreseeable future".

Criticism: Some statisticians have commented that pure "significance testing"

has what is actually a rather strange goal of detecting the existence of a "real"
difference between two populations. In practice a difference can almost always
be found given a large enough sample, the typically more relevant goal of science
is a determination of causal effect size. The amount and nature of the difference,
in other words, is what should be studied. Many researchers also feel that
hypothesis testing is something of a misnomer. In practice a single statistical test
in a single study never "proves" anything.

Rejection of the null hypothesis at some effect size has no bearing on the
practical significance at the observed effect size. A statistically significantly not
be relevant in practice due to other, larger effects of more concern, whilst a true
effect of practical significance may not appear statistically significant if the test
lacks the power to detect it. Appropriate specification of both the hypothesis and
the test of said hypothesis is therefore important to provide inference of practical
utility.