Hypothesis Testing

Hypotheses
a statement about the population parameter
developed for the purpose of testing.
an assertion of tentative theory which aims
to explain facts about the real world
educated guesses and pertinent
evidences turned to propositions
formulated statements cannot be accepted
to be true unless otherwise proven
Null hypothesis (H0)
a statement about the value of a population
parameter (Lind, A., et.al.)
hope to reject
irregardles how the problem is stated H 0
will always contain the equal sign
point of the testing process, it serves as our
working hypothesis
no difference, no effect, no relationship
Alternative hypothesis (HA or H1)
a statement that is accepted if the sample data
provide sufficient evidence that the H A is false

predictive hypothesis

existence difference, effect, relationship

one group is better than the other, non-

directional
Level of Significance
The probability of rejecting the null
hypothesis when it is true
also called level of risk
Critical Value
The dividing point between the region where
the null hypothesis is rejected and the region
where it is not rejected.
Example of Hypothesis
Study on the Relationship of Smoking Habits to
Hypertension Among Employees of ABC
Corporation
H0: There is no relationship between smoking habits and
hypertension among the employees of ABC
Corporation.

HA: There is a relationship between smoking habits and

hypertension among the employees of ABC
Corporation.
Example of Hypothesis
Competencies of Call Center Agents from
Company X and Company Y
H0: There is no significant difference between the
competencies of call center agents from Company X
and Company Y.

HA: There is significant difference between the

competencies of call center agents from Company
X and Company Y.
Type I and Type II Errors
Decision Actual Condition
Ho is True Ho is False
Reject Ho Type I (error Correct decision
Do not Reject Ho Correct decision Type II (error
Type I Error

Level of significance (
Level of confidence (1-
Level of confidence
Level of confidence

Confidence interval
x 87 95% confidence 77.20 and 96.80
One-Tailed and Two-Tailed Hypothesis
Tests
Region of acceptance depends on the
null hypothesis and the alternative hypothesis

H0 HA Number of tails
Set
1 =M M 2
2 >M <M 1
3 <M >M 1
Critical Region or Rejection

The value that divides

the distribution of the
test into rejection and
acceptance region
Test Statistics (Based on the Skewness Test)
Type Parametric Test Nonparametric Test
One mean t -test Wilcoxon
Signed-rank Test
Two means using Pooled t-test Mann-Whitney test
independent samples
Two means using Paired t-test Wilcoxon Signed-rank
paired samples Test for paired
differences
Correlation Linear- Rank-correlation test
correlation test
Several Means using One-way Kruskal-Wallis test
independent samples ANOVA
Steps in Hypothesis Testing
1. Formulate H0

2. Set level of significance and the critical values

to be used.
3. Choose the appropriate test statistic.
4. Find/compute the value of test statistic.
5. Compare the computed value with the critical
or tabular value and then decide top accept or
reject the null hypothesis
Seatwork:
Given the following title, formulate your own
hypothesis.
1. The NSAT Scores and Academic Achievement
of the Students in Private and Public Schools

2. Comparative Study on Consumers

Acceptance of X and Y Toothpastes
Seatwork:
3. A Study on the Effects of Study Habits to
Academic Performance

4. Competencies of Public Accountants among

Government Firms
Possible Answers
1. The NSAT Scores and Academic Achievement
of the Students in Private and Public Schools

H0: There is significant difference in the NSAT

Scores and Academic Achievement of
Students between Private and Public Schools
HA: The NSAT Scores has significant effect on
the Academic Achievement of Students in
Private and Public Schools
Reference:
Lind,D.A. et.al. (2015). Statistical Techniques in Business and
Economics. McGraw-Hill Companies.