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Univariate Statistics

Lecture 2
Hypothesis Testing
Part 1
Choosing the Appropriate
Statistical Technique
Type of question to be answered
Number of variables
Univariate
Bivariate
Multivariate
Scale of measurement
Univariate Statistics
Now, we are entering the domain of
Inferential statistics
One of the tools for inferential statistics
Test of statistical significance
Hypothesis testing one variable at a
time
Hypothesis
Unproven proposition
Supposition that tentatively explains
certain facts or phenomena
Assumption about nature of the world
Hypothesis
An unproven proposition or supposition
that tentatively explains certain facts or
phenomena
Null hypothesis
Alternative hypothesis
Null Hypothesis
Statement about the status quo
No difference
For example
Compare superiority of two Brand: Airtel and
Reliance
Null Hypothesis: Brand Airtel=Brand Reliance
Alternative Hypothesis: Brand Airtel is superior
to Brand Reliance
Alternative Hypothesis
Statement that indicates the opposite of
the null hypothesis
Is usually the one which one wishes to
prove

Level of Significance
Very important in context of hypothesis
testing
Critical probability in choosing between the
null hypothesis and the alternative hypothesis
5% level of significance means that the null
hypothesis will get rejected if the result is less
than 0.05 probability of occurring


Level of Significance
Factors that affect level of significance
Size of the sample
Magnitude of the difference between
sample means
Variability of measurements between
two samples

An example
Mainland China is concerned about its
image; one aspect is friendliness of the
service
Survey with likert scale 1(unfriendly
service-5 very friendly service)
Sample mean calculated based on the
survey was 3.78
Example Contd.
Ho:=3.0 (the hypothesis states that
the sample mean feels that the service
of Mainland China is neither friendly nor
unfriendly)
Ha:3.0
Level of significance: 5%
=3.78



=3.0
x
o=.025
o=.025
A Sampling Distribution

LOWER
LIMIT
UPPER
LIMIT
=3.0
A Sampling Distribution
Critical values of
Critical value - upper limit
n
S
Z ZS
X
+ + = or
|
.
|

\
|
+ =
225
5 . 1
96 . 1 0 . 3
( ) 1 . 0 96 . 1 0 . 3 + =
196 . 0 . 3 + =
196 . 3 =
Critical values of
Critical value - lower limit
n
S
Z ZS
X
- or - =
|
|
.
|

\
|
=
225
5 . 1
96 . 1 - 0 . 3
Critical values of
( ) 1 . 0 96 . 1 0 . 3 =
196 . 0 . 3 =
804 . 2 =
Critical values of
Hypothesis Test

2.804
3.196
=3.0
3.78
Results
Since, the sample mean 3.78 falls beyond the
critical value, then we reject Ho.
Meaning, that the customers believe that the
service is friendly
Also, it is unlikely that this result occurred
due to random sampling error
It also means that the management should
look for other factors that affect the image of
the resturant
Accept null Reject null
Null is true
Null is false
Correct-
no error
Type I
error
Type II
error
Correct-
no error
Type I and Type II Errors
Type I and Type II Errors
in Hypothesis Testing
State of Null Hypothesis Decision
in the Population Accept Ho Reject Ho



Ho is true Correct--no error Type I error
Ho is false Type II error Correct--no error
Example
A company is engaged in packaging of a
superior quality tea in jars of 500gm
each. The company is of view that as
long as jars contain 500gm of tea, the
process is in control. The standard
deviation is 50gm. A sample of 225jars
is taken at random and the sample
average is found to be 510gm. Has the
process gone out of control?
Example
A company manufacturing automobile tyres finds that
tyre life is normally distributed with a mean of 40,000
kms and standard deviation of 3,000kms. It is
believed that a change in the production process will
result in a better product and the company has
developed a new tyre. A sample of 64 new tyres has
been selected. The company has found that the
mean life of these new tyres is 41,200kms. Can it be
concluded that the new tyre is significantly better
than the old one?

Example
A pharmaceutical company, engaged in the
manufacture of a patient medicine claimed
that it was 80 percent effective in relieving an
allergy for a period of 15 hrs. A sample of
200 persons, who suffered from allergy, were
given this medicine. It was found that the
medicine provided relief to 150 persons for at
least 12hrs. Do you think that the companys
claim is justified? Use 0.05 level of
significance.
Types of Measurement