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Unit 10
Unit 10
Testing of Hypotheses
Structure
10.1 Introduction
Objectives
10.2 Concepts in Testing of Hypothesis
Steps in Testing of Hypothesis Exercise
Test Statistic for Testing Hypothesis about Population Mean
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.1 Introduction
A hypothesis is an assumption or a statement that may or may not be true. The
hypothesis is tested on the basis of information obtained from a sample. Instead
of asking, for example, what the mean assessed value of an apartment in a
multistoried building is, one may be interested in knowing whether or not the
assessed value equals some particular value, say `80 lakh. Some other examples
could be whether a new drug is more effective than the existing drug based on
the sample data, and whether the proportion of smokers in a class is different
from 0.30. The formulation of hypothesis has already been discussed in Unit 2.
We will now study the concepts and steps in the testing of hypothesis exercise.
Objectives
After studying this unit, you should be able to:
discuss the concepts used in the testing of hypothesis exercise.
explain the steps used in testing of hypothesis exercise.
explain the test of the significance of the mean of a single population
using both t and Z test.
Sikkim Manipal University
Research Methodology
Unit 10
Research Methodology
Unit 10
300 ml of the drink when they are paying for 300 ml. This could bring bad
reputation to the company. The company wants to avoid both overfilling
and underfilling. Therefore, it would prefer to test the hypothesis whether
the mean content of the bottles is different from 300 ml. This hypothesis
could be written as:
H0
= 300 ml.
H1
300 ml
= 300 ml.
H1
= 300 ml.
H1
The hypothesis stated above is also called one-tailed test and the
researcher would be interested in the lower tail (left hand tail) of the distribution.
Type I and type II error: The acceptance or rejection of a hypothesis is
based upon sample results and there is always a possibility of sample not being
representative of the population. This could result in errors, as a consequence
of which inferences drawn could be wrong. The situation could be depicted as
given in Figure 10.1.
Accept H0
Reject H0
H0
True
Correct
decision
Type I Error
H0
False
Type II Error
Correct
decision
Research Methodology
Unit 10
error. The probability of committing a Type I error is denoted by alpha (). This
is termed as the level of significance. Similarly, if the null hypothesis H0 when
false is accepted, the researcher is committing an error called Type II error. The
probability of committing a Type II error is denoted by beta (). The expression
1 is called power of test. To decrease the risk of committing both types of
errors, you may increase the sample size.
Research Methodology
Unit 10
Research Methodology
Unit 10
Not Known
Small (n 30)
Self-Assessment Questions
1. The probability of committing a type I error is denoted by ___________ .
2. When population standard deviation is unknown and sample size is small,
a ___________ test is appropriate for testing of mean.
3. The null hypothesis could be specified as H0 : p > 0.22. (True/False)
4. Accepting a null hypothesis when it is false is called type II error (True/
False).
X H 0
Where,
X
= Sample mean
Research Methodology
Unit 10
= Size of sample.
S.
No.
Alternative
Hypothesis
1.
<0
Z < Z
Z Z
2.
>0
Z > Z
Z Z
3.
Z < Z/2
or
Z > Z/2
Z/2 Z Z/2
1
XX
n 1
is used as an estimate of . It may be noted that Z and Z/2 are Z values such
that the area to the right under the standard normal distribution is and /2
respectively. Below are solved examples using the above concepts.
Example 10.1: A sample of 200 bulbs made by a company give a lifetime mean
of 1540 hours with a standard deviation of 42 hours. Is it likely that the sample
has been drawn from a population with a mean lifetime of 1500 hours? You may
use 5 per cent level of significance.
Solution:
In the above example, the sample size is large (n = 200), sample mean ( X )
equals 1540 hours and the sample standard deviation (s) is equal to 42 hours.
The null and alternative hypotheses can be written as:
H0 : = 1500 hrs
H1 : 1500 hrs
It is a two-tailed test with level of significance () to be equal to 0.05.
Since n is large (n > 30), though population standard deviation is unknown,
one can use Z test. The test statistics are given by:
Z
X H 0
Research Methodology
Unit 10
true
= Estimated standard error of mean
X
Here H 0 1,500,
X
n
n
42
200
2.97
X H 0 1,540 1,500
40
13.47
s
2.97
2.97
n
The value of = 0.05 and since it is a two-tailed test, the critical value Z is
given by Z/2 and Z/2 which could be obtained from the standard normal table
given in Appendix 1 at the end of the book.
Research Methodology
Unit 10
X H 0 73.6 75 1.4
1.04
1.35
1.35
x
s
8.10 8.10
1.35
x
6
n
36
Since it is a one-tailed test and the interest is in the left hand tail of the
distribution, the critical value of Z is given by Z = 1.645. Now, the computed
value of Z lies in the acceptance region, and the null hypothesis is accepted as
shown below:
Acceptance
Region
Rejection
Region
1.04
Z distribution
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Unit 10
Where,
X H 0
n 1 = degrees of freedom
A few examples pertaining to t test are worked out for testing the
hypothesis of mean in case of a small sample.
Example 10.3: Prices of share (in `) of a company on the different days in a
month were found to be 66, 65, 69, 70, 69, 71, 70, 63, 64 and 68. Examine
whether the mean price of shares in the month is different from 65. You may
use 10 per cent level of significance.
Solution:
H0 : = 65
H1 : 65
Since the sample size is n = 10, which is small, and the sample standard
deviation is unknown, the appropriate test in this case would be t. First of all,
we need to estimate the value of sample mean ( X ) and the sample standard
deviation (s). It is known that the sample mean and the standard deviation are
given by the following formula.
X
X
n
1
XX
n 1
X 675,
X X
70.5
s2
1
XX
n 1
675
67.5
10
70.5
7.83
9
s 7.83 2.80
Research Methodology
Unit 10
X X
66
1.5
2.25
65
2.5
6.25
69
1.5
2.25
70
2.5
6.25
69
1.5
2.25
71
3.5
12.25
70
2.5
6.25
63
4.5
20.25
64
3.5
12.25
10
68
0.5
0.25
Total
675
70.5
(X X )
X H 0 X H 0 67.5 65 2.5 10
2.8
s
2.8
x
10
n
Research Methodology
Unit 10
X H0
X H0
s/ n
0.3
7.9 8.2
0.25
1.185
1.185
s
2.65
1.185
x
n
5
Research Methodology
Unit 10
Self-Assessment Questions
5. Whenever the degrees of freedom exceed 30, the t distribution can be
approximated by Z distribution. (True/False)
6. The sample standard deviation could be used as an unbiased estimate of
the population standard deviation. (True/False)
7. The expression
is called __________.
( X 1 X 2 ) (1 2 )H0
n
n
2
Research Methodology
If
1 and 2
Unit 10
and
are used.
1 n1
s1
( X1i X 1 )2
n11 i 1
1
1 n2
s2
( X 2 i X 2 )2
n2 1 i 1
2
The Z value for the problem can be computed using the above formula
and compared with the table value to either accept or reject the hypothesis. Let
us consider the following problem:
Example 10.5: A study is carried out to examine whether the mean hourly wages
of the unskilled workers in the two citiesAmbala Cantt and Lucknow are the
same. The random sample of hourly earnings in both the cities is taken and the
results are presented in the Table 10.4.
Table 10.4 Survey Data on Hourly Earnings in Two Cities
Sample Mean
Hourly Earnings
Standard
Deviation of
Sample
Sample Size
Ambala Cantt
` 8.95 ( X1 )
0.40 (s1)
200 (n1)
Lucknow
` 9.10 ( X2 )
0.60 (s2)
175 (n2)
City
Since both n1, n2 are greater than 30 and the sample standard deviations
are given, a Z test would be appropriate.
Research Methodology
Unit 10
( X 1 X 2 ) (1 2 )H0
12 22
n1 n2
2 2
1
n1
2
n2
Z=
s2 2
(0.4)2 (0.6)2
0.0028 0.0053
200
175
(8.95 9.10) 0
2.83
0.053
Research Methodology
Unit 10
12 22
=
n1 n2
2 2
1
1
n1 n2
n1 n2
(Assuming 12 22 2 )
1 2 = 0
H1 : 1 2
1 2 0
n1 n2 2
( X 1 X 2 ) (1 2 ) H0
1
1
n1 n2
Where,
Research Methodology
Unit 10
1 2 = 0
H1 : 1 2
1 2 0
As both n1, n2 are small and the sample standard deviations are unknown,
one may use a t test with the degrees of freedom = n1 + n2 2 = 12 + 8 2 = 18
d.f.
The test statistics is given by:
t
n1 n2 2
( X 1 X 2 ) (1 2 ) H0
1
1
n1 n2
Where,
12 8 2
18
35.64 30.87
66.61
3.698 1.92
18
18
(8.5 7.9) (0)
0.6
t
18
1 1
1.92 0.2083
1.92
12 8
0.6
0.6
0.685
1.92 0.456 0.8755
The critical value of t with 18 degrees of freedom at 5 per cent level of
significance is given by 1.734. The sample value of t = 0.685 lies in the
acceptance region as shown in figure below:
Research Methodology
Unit 10
( X 1 X 2 ) (1 2 ) H0
12 22
n1 n2
d .f
s12 s22
n n
1
2
2
1 s12
1 s22
n1 1 n1
n2 1 n2
Research Methodology
Unit 10
drug 1 and seven adults who were administered drug 2. The decrease in weight
(in pounds) is given below:
Drug 1
10
12
14
15
13
Drug 2
12
10
12
11
12
11
X1
10
8
12
X2
12
10
7
(X1 X 1 )
1.25
3.25
0.75
(X2 X 2 )
2
0
-3
(X1 X 1 )
1.5625
10.5625
0.5625
4
5
6
7
8
Total
Mean
14
7
15
13
11
90
11.25
6
12
11
12
2.75
4.25
3.75
1.75
0.25
0
-4
2
1
2
7.5625
18.0625
14.0625
3.0625
0.0625
55.5
70
10
n1 8,
X1
X1 90
11.25
8
n1
s12
( X1 X 1 )2 55.5
7.93
n1 1
7
2
(X2 X 2 )
4
0
9
16
4
1
4
38
n2 7,
X2
X 2 70
10
7
n2
Research Methodology
s22
x1 x2
Unit 10
( X 2 X 2 )2 38
6.33
n2 1
6
s12 s22
7.93 6.33
2
s12 s22
7.33 6.33
n n
8
1
2
7
d .f .
2
2
1 s12
1 s22 1 7.33
1 6.33
n1 1 n1 n2 1 n2 7 8
6 7
3.314
3.314
12.996 13 (approx.)
0.12 0.136 0.12 0.136
( X 1 X 2 ) (1 2 ) H0
12 22
n1 n2
11.25 10 1.25
0.912
1.37
1.37
Self-Assessment Questions
9. The degrees of freedom in the two sample t test for testing the equality of
means is given by n1 + n2 2. (True/False)
Sikkim Manipal University
Research Methodology
Unit 10
10. An alternative hypothesis while testing the equality of two population means
could be written as H1 : 1 = 2. (True/False)
11. While testing the equality of two means under small sample when
population variances are not equal ________ for the test are to be
computed.
12. When both samples are greater than 30, the test for equality of means is
conducted using __________ test.
p pH
Where,
p
= sample proportion
Research Methodology
Unit 10
The value of
pH qH0
Where, qH
n
= 1 pH
n = Sample size
For a given level of significance , the computed value of Z is compared
with the corresponding critical values, i.e. Z/2 or Z/2 to accept or reject the null
hypothesis. We will consider a few examples to explain the testing procedure
for a single population proportion.
Example 10.8: An officer of the health department claims that 60 per cent of
the male population of a village comprises smokers. A random sample of 50
males showed that 35 of them were smokers. Are these sample results consistent
with the claim of the health officer? Use a level of significance of 0.05.
Solution:
Sample size (n)
= 50
Sample proportion = p
x 35
0.70
n 50
H0 : p = 0.60
H1 : p > 0.60
The test statistic is given by:
p pH
PH0 qH0
n
1.44
0.069
0.069
0.6 0.4
0.24
0.069
50
50
Research Methodology
Unit 10
Self-Assessment Questions
13. Normal distribution may be used as an approximation to a binomial
distribution whenever both np and nq are at least 5, where the notations
have their usual meanings. (True/False)
14. A t test could be used to test for a specified value of a population proportion.
(True/False)
p1 p2 = 0
H1 : p1 p2
p1 p2 0
p1 p2 ( p1 p2 ) H0
P P
1
Research Methodology
Unit 10
Where,
p1
p2
P1 P2
(p1 p2)H0 =
P1 P2
is given by:
P1 P2
p1q1 p2q2
n1
n2
We do not know the value of p1, p2, etc., but under the null hypothesis
p1 = p2 = p.
P1P2
1
pq pq
1
pq
n1 n2
n1 n2
x1 x2
n1 n2
Where,
x1 = Number of successes in sample 1
x2 = Number of successes in sample 2
n1 = Size of sample taken from population 1
n2 = Size of sample taken from population 2
It is known that p1
x2
x1
and p2
.
n2
n1
Therefore, x1 n1 p1 and x2 n2 p2
Research Methodology
Therefore, p
Unit 10
n1 p1 n2 p2
n1 n2
P1P2
1
1
pq
n1 n2
p1 p2 ( p1 p2 ) H0
1
1
pq
n1 n2
Research Methodology
nA 60,
Unit 10
x A 18,
x A 18
pA n 60 0.3
A
Z
nB 100,
xB 22
xB
22
pB n 100 0.22
B
PA PB ( pA pB ) H0
0.3 0.22 0
1
1
PA PB
pq
nA nB
0.08
1
1
0.25 0.75
60 100
0.08
0.25 0.75(0.0267)
0.08
1.3
0.071
18 22
40
x A xB
p n n 60 100 160 0.25
A
B
Research Methodology
Unit 10
Self-Assessment Questions
15. An estimate of the combined proportion while testing for the equality of
two population proportion is given by the total number of successes in the
two samples divided by the sum of sizes of two samples. (True/False)
16. The estimate of standard error of difference between two sample
proportion is obtained under the assumption that __________ is true.
Research Methodology
Unit 10
10.8 Summary
Let us recapitulate the important concepts discussed in this unit:
A hypothesis is a statement or an assumption regarding a population,
which may or may not be true.
The sequences of steps that need to be followed for the testing of
hypothesis are: setting up of a hypothesis, setting up of a suitable
significance level, determination of a test statistic, determination of critical
region, computing the value of test-statistic and making decision
In the test procedure for a single population mean or for examining the
equality of two population means, for large samples, a Z test is appropriate
whereas for the small samples, a t test is used under the two cases where:
(i) population variances are equal and (ii) population variances are not equal.
In the testing procedures concerning the proportion of a single population
and the difference between two population proportions the hypotheses
concerning them are carried out using a Z test under the assumption that
the normal distribution could be used as an approximation to the binomial
distribution for a large sample.
10.9 Glossary
Critical region: The region that leads to rejection of null hypothesis.
Level of significance: The probability of committing a Type 1 error.
Null hypothesis: The hypotheses that is proposed with the intent of
receiving a rejection for them.
Type I error: This occurs when null hypothesis is rejected when it is actually
true.
Research Methodology
Unit 10
(iii) n = 64 s = 8
(iv) n = 28 = 10
(v) n = 56 = 6
3. The company XYZ manufacturing bulbs hypothesizes that the life of its
bulbs is 145 hours with a known standard deviation of 210 hours. A random
sample of 25 bulbs gave a mean life of 130 hours. Using a 0.05 level of
significance, can the company conclude that the mean life of bulbs is less
than the 145 hours?
4. Average annual income of the employees of a company has been reported
to be `18,750. A random sample of 100 employees was taken. Then
average annual income was found to be `19,240 with a standard deviation
of `2,610. Test at 5 per cent level of significance whether the sample
results are representative of population results.
5. If 54 out of a random sample of 150 boys smoke, while 31 out of random
sample of 100 girls smoke, can we conclude at the 0.05 level of significance
that the proportion of male smokers is higher than that of female smokers?
Use the 0.05 level of significance to test the null hypothesis that the
prescribed programme of exercise is not effective in reducing weight.
6. In a departmental stores study designed to test whether the mean balance
outstanding on 30-day charge account is same in its two suburban branch
stores, random samples yielded the following results:
n1 = 60
X 1 = `6420
s1 = `1600
n2 = 100
X 2 = `7141
s2 = `2213
where the subscripts denote branch store 1 and branch store 2. Use the
0.05 level of significance to test the hypothesis against a suitable
alternative.
10.11 Answers
Answers to Self-Assessment Questions
1. Alpha
2. t
3. False
4. True
Research Methodology
Unit 10
5. True
6. True
7. Standard error of means
8. Flatter
9. True
10. False
11. Degrees of freedom
12. Z
13. True
14. False
15. True
16. Null hypothesis
10.12 References
Chawla D and Sondhi, N. (2011). Research Methodology: Concepts and
Cases, New Delhi: Vikas Publishing House.
Cooper, Donald R. (2006). Business Research Methods. New Delhi: Tata
McGraw-Hill Publishing Company Ltd.
Kinnear, T C and Taylor, J R. (1996). Marketing Research: An Applied
Approach. 5th edn. New York: McGraw Hill, Inc.
Malhotra, N K. (2002). Marketing Research An Applied Orientation.
3rd edn. New Delhi: Pearson Education.