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Stats HW#2

MGMG 638 Quantitative Research Methods (I):Assignment 2

The variable BSTART measures the proportion of participants in the sample answering YES to the question
“You are, alone or with others, currently trying to start a new business, including any type of self-
employment or selling any goods or services?”

1.Suppose that from earlier research in other countries you expect the proportion of YES answers on the
BSTART question to equal 12% and you would like to test whether the proportion in Thailand is significantly
greater than 12%. Formulate a null hypothesis and an alternative hypothesis. Explain and write carefully,
as you would do in a paper you are about to submit to a journal

The issue of “new business venture” has been studied globally. When on average 12% of population in
most countries is interested in starting new business, the study in Thailand is conducted to determine if
Thais’ “new business venture” behavior is different from others. When p = proportion (or probability) of
people who are interested in starting new businesses
Therefore the Null and alternative Hypotheses are

Null Hypothesis: H0 : p ≤ 0.12

Alternative Hypothesis: H1 : p > 0.12

2.Explain how to calculate a p-value for this test in Excel. What is the p-value for the test in question 1?

[1] Obtain descriptive stats of the samples in order to use some of the Mean 0.14450
statistics in the calculation i.e. counts, sum(a result of answering “yes” = 1, Standard Error 0.00786
Median 0.00000
therefore sum of this column is a number of answers with “Yes” which is 289)
Mode 0.00000
Standard
[2] As data is in a form of Binomial Distribution, Excel can calculate the Deviation 0.35168
probability with a function “BINOMDIST” Sample
This function has this syntax: = Variance 0.12368
BINOMDIST(No_success,No_trials,Prob_success,CumulativeTF) Kurtosis 2.09756
When in this case:: Number of Success = sum of ones = 289 Skewness 2.02373
Number of Trials = number of subjects/surveys in the study = 2,000 Range 1.00000
Minimum 0.00000
Probability of Success = population probability that we believe that’s it true
Maximum 1.00000
which is 0.12 (12%) Sum 289.00000
And Count 2000.00000
Cumulative = False (The value “True” will give the value of P cumulated from Confidence
the left while the value “False” will give the value of P cumulated from the Level(95.0%) 0.01542
right)

Therefore we can use a cell references

=BINOMDIST(B14,B15,0.12,TRUE) Or =BINOMDIST(289,2,000,0.12,TRUE)

The p-value is 0.0001167 which means:

It is most likely that these samples do not belong to the population we study or, in this case, Thais have a
different “new venture” behavior which leads to a rejection of null hypothesis.
3. Explain how we should interpret the p-value? (What does it mean?)

p-value represents a percentage showing “possibility” comparable to level of significant (or 1-confidence
interval). P-value unit is a probability which is an area under the distribution curve related to samples. If
the p-value has a value less than the significant level (e.g. significant level = 0.005 and p-value =0.003), it
means that the mean of the samples is most likely to lie outside the population distribution acceptable
area.

Or in other word, p-value determines the point where the mean of samples lie. If p-value is less than
significant level, it means that the mean lies beyond acceptable boundary of population.

4 Explain how to calculate a critical value for the test described above in Excel. What is the critical value
for the test in question 1, assuming a significance level of 5% (i.e. α = 5%)?

Excel has a function called ‘CRITBINOM’. This function, using the same calculation as BINOMDIST, it gives
the value of the means at specified significant level.

The function takes in 3 variables; number of trials, probability of success and significant level (alpha)
[ =CRITBINOM(trials,probability_success,alpha)] when trials = number of trials which is 2000, probability of
success or the mean of population = 12% and significant level or alpha = 0.05 or 5% one tailed test

Therefore, in this case, Critical Value in question 1 is

=CRITBINOM(2000,0.12,0.95)
= 264
5. What is your conclusion with respect to the hypothesis in question 1?
Explain and write carefully, as you would do in a paper you are about to submit to a journal.

By using a critical value approach and C value = 264, the conclusion will be:

By comparing samples surveyed in Thailand to the rest of the world statistics, the critical value (264)
indicates that Thais’ “new business venture behavior” is quite different from others (when the number of
“yes” in the survey = 289). The survey (with the mean of 289) shows that the mean of samples is much
higher than the mean and limit boundary of the population and the null hypothesis has to be
rejected.

6.Suppose that we expect the proportion of YES answers on BSTART to be 15%. Test the hypothesis and
interpret the result. Explain and write carefully.

If the population mean equals 15% and 95% confident interval is used in the analysis. The hypotheses will
be:

Null Hypothesis: H0 : p ≤ 0.15

Alternative Hypothesis: H1 : p > 0.15

Using Excel to determine p-value and Critical Value:

p-value: =BINOMDIST(289,2000,0.15,TRUE) = 0.25676
Critical Value: =CRITBINOM(2000,0.15,0.95) = 326
Considering a probability that people will start new businesses to be 15%, the study in Thailand with a
sample size of 2000 and 289 “yes” answers indicates that Thais’ “new venture” behavior is not different
from others and we cannot reject the Null Hypothesis.

When the p-value is 0.25676 and C-value is 326, it means that the mean of the samples are in the null
hypothesis acceptable range or, in other word, the samples belong to the population which means that we
cannot reject the null hypothesis.