2. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 1 Chapter 7 Hypothesis Testing 7-1 Overview 7-2 Fundamentals of Hypothesis Testing 7-3 Testing a Claim about a Mean: Large Samples 7-4 Testing a Claim about a Mean: Small Samples 7-5 Testing a Claim about a Proportion 7-6 Testing a Claim about a Standard Deviation or Variance

3. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 2 Hypothesis in statistics, is a claim or statement about a property of a population Hypothesis Testing is to test the claim or statement Example: A conjecture is made that “the average starting salary for computer science gradate is $30,000 per year”.

4. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 3 Question: How can we justify/test this conjecture? A. What do we need to know to justify this conjecture? B. Based on what we know, how should we justify this conjecture?

5. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 4 Answer to A: Randomly select, say 100, computer science graduates and find out their annual salaries ---- We need to have some sample observations, i.e., a sample set!

6. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 5 Answer to B: That is what we will learn in this chapter ---- Make conclusions based on the sample observations

7. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 6 Statistical Reasoning Analyze the sample set in an attempt to distinguish between results that can easily occur and results that are highly unlikely.

8. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 7 Figure 7-1 Central Limit Theorem:

9. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 8 Figure 7-1 Central Limit Theorem: Distribution of Sample Means µ x = 30k Likely sample means Assume the conjecture is true!

10. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 9 Figure 7-1 Central Limit Theorem: Distribution of Sample Means z = –1.96 x = 20.2k or z = 1.96 x = 39.8k or µ x = 30k Likely sample means Assume the conjecture is true!

11. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 10 Figure 7-1 Central Limit Theorem: Distribution of Sample Means z = –1.96 x = 20.2k or z = 1.96 x = 39.8k or Sample data: z = 2.62 x = 43.1k or µ x = 30k Likely sample means Assume the conjecture is true!

12. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 11 Components of a Formal Hypothesis Test

13. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 12 Definitions  Null Hypothesis (denoted H 0 ): is the statement being tested in a test of hypothesis.  Alternative Hypothesis (H 1 ): is what is believe to be true if the null hypothesis is false.

14. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 13 Null Hypothesis: H 0  Must contain condition of equality  =, , or   Test the Null Hypothesis directly  Reject H 0 or fail to reject H 0

15. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 14 Alternative Hypothesis: H 1  Must be true if H 0 is false  ,  ‘opposite’ of Null Example: H 0 : µ = 30 versus H 1 : µ > 30

16. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 15 Stating Your Own Hypothesis  If you wish to support your claim, the claim must be stated so that it becomes the alternative hypothesis.

17. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 16 Important Notes:  H 0 must always contain equality; however some claims are not stated using equality. Therefore sometimes the claim and H 0 will not be the same.  Ideally all claims should be stated that they are Null Hypothesis so that the most serious error would be a Type I error.

18. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 17 Type I Error  The mistake of rejecting the null hypothesis when it is true.  The probability of doing this is called the significance level, denoted by   (alpha).  Common choices for  : 0.05 and 0.01  Example: rejecting a perfectly good parachute and refusing to jump

19. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 18 Type II Error  the mistake of failing to reject the null hypothesis when it is false.  denoted by ß (beta)  Example:failing to reject a defective parachute and jumping out of a plane with it.

20. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 19 Table 7-2 Type I and Type II Errors True State of Nature We decide to reject the null hypothesis We fail to reject the null hypothesis The null hypothesis is true The null hypothesis is false Type I error (rejecting a true null hypothesis) Type II error (failing to reject a false null hypothesis) Correct decision Correct decision Decision

21. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 20 Definition Test Statistic: is a sample statistic or value based on sample data Example: z =z = x – µxx – µx   n

22. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 21 Definition Critical Region : is the set of all values of the test statistic that would cause a rejection of the null hypothesis

23. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 22 Critical Region Set of all values of the test statistic that would cause a rejection of the null hypothesis Critical Region

24. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 23 Critical Region Set of all values of the test statistic that would cause a rejection of the null hypothesis Critical Region

25. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 24 Critical Region Set of all values of the test statistic that would cause a rejection of the null hypothesis Critical Regions

26. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 25 Definition Critical Value: is the value (s) that separates the critical region from the values that would not lead to a rejection of H 0

27. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 26 Critical Value Value (s) that separates the critical region from the values that would not lead to a rejection of H 0 Critical Value ( z score )

28. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 27 Critical Value Value (s) that separates the critical region from the values that would not lead to a rejection of H 0 Critical Value ( z score ) Fail to reject H 0 Reject H 0

29. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 28 Controlling Type I and Type II Errors  , ß, and n are related  when two of the three are chosen, the third is determined   and n are usually chosen  try to use the largest  you can tolerate  if Type I error is serious, select a smaller  value and a larger n value

30. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 29 Conclusions in Hypothesis Testing  always test the null hypothesis 1. Fail to reject the H 0 2. Reject the H 0  need to formulate correct wording of final conclusion See Figure 7-2

31. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 30 Original claim is H 0 FIGURE 7-2 Wording of Conclusions in Hypothesis Tests Do you reject H 0 ?. Yes (Reject H 0 ) “There is sufficient evidence to warrant rejection of the claim that... (original claim).” “There is not sufficient evidence to warrant rejection of the claim that... (original claim).” “The sample data supports the claim that... (original claim).” “There is not sufficient evidence to support the claim that... (original claim).” Do you reject H 0 ? Yes (Reject H 0 ) No (Fail to reject H 0 ) No (Fail to reject H 0 ) (This is the only case in which the original claim is rejected). (This is the only case in which the original claim is supported). Original claim is H 1

32. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 31 Two-tailed, Left-tailed, Right-tailed Tests

33. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 32 Left-tailed Test H 0 : µ  200 H 1 : µ < 200

34. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 33 Left-tailed Test H 0 : µ  200 H 1 : µ < 200 Points Left

35. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 34 Left-tailed Test H 0 : µ  200 H 1 : µ < 200 200 Values that differ significantly from 200 Fail to reject H 0 Reject H 0 Points Left

36. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 35 Right-tailed Test H 0 : µ  200 H 1 : µ > 200

37. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 36 Right-tailed Test H 0 : µ  200 H 1 : µ > 200 Points Right

38. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 37 Right-tailed Test H 0 : µ  200 H 1 : µ > 200 Values that differ significantly from 200 200 Fail to reject H 0 Reject H 0 Points Right

39. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 38 Two-tailed Test H 0 : µ = 200 H 1 : µ  200

40. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 39 Two-tailed Test H 0 : µ = 200 H 1 : µ  200  is divided equally between the two tails of the critical region

41. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 40 Two-tailed Test H 0 : µ = 200 H 1 : µ  200 Means less than or greater than  is divided equally between the two tails of the critical region

42. Copyright © 1998, Triola, Elementary Statistics Addison Wesley Longman 41 Two-tailed Test H 0 : µ = 200 H 1 : µ  200 Means less than or greater than Fail to reject H 0 Reject H 0 200 Values that differ significantly from 200  is divided equally between the two tails of the critical region