Hypothesis Testing

Hypothesis – an intelligent guess

Hypothesis Testing – a statistical procedure using sample data to assess or determine which hypothesis
is more acceptable as true which hypothesis is more likely to be true.

Examples of Hypothesis that can be tested:

1. Unemployment rate in the rural areas is more than 35%.
2. The mean age of onset of an acute disease for children is higher than 11 years.
3. The new type of tire manufactured by WEA Company has a shorter skid distance.

Significance Test – performed to determine the validity of a claim regarding the population parameter.

Ex. A manufacturer claims that a new type of metal has a breaking strength of 448kg per square
cm. A sample of 50 such metals yields a mean breaking strength of 446.5 kg/cm2

Errors in Hypothesis
Type I - rejection of the NULL hypothesis which is actually true
Type II –decision to retain a NULL Hypothesis which is actually false

Significance level α – probability of a Type I error

Significance level β – probability of a Type II error

NULL Hypothesis (Ho) – it is assumed as the true value of the parameter being testes and is usually
“hoped” to be rejected
Ho: μ = μ o; σ2 = σo2; μ≤ 𝜇o

ALTERNATIVE Hypothesis (Ha) – a claim that disagrees with the NULL Hypothesis
Ha: μ ≠μ o; σ2≠ σo2; μ> 𝜇o

2 Types of Tests with ALTERNATIVE Hypothesis

1. Two-Tailed Test (or Two-Sided) – the critical region is on both sides of the distribution
- a non-directional test
example: The mean monthly household income in rural areas is ₱9,800.00.
Ho: μ = ₱9,800.00
Ha: μ ≠ ₱9,800.00
α = 0.05

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2. One-Tailed Test – the critical region is in one of the tail of the distribution
- directional test

example: The mean monthly household income in rural areas is less than ₱9,800.00.
Ho: μ = ₱9,800.00
Ha: μ ≠ ₱9,800.00
α = 0.05

left-tailed right-tailed

Exercises:
1. A researcher wants to determine if the mean monthly household expenditure is really
₱10,760.00 as published.
Ho: μ = ₱10,760.00
Ha: μ ≠ ₱10,760.00
2. The mean age of professors is more than 30 years.
Ho: μ ≤ ₱10,760.00
Ha: μ > ₱10,760.00
3. The government anti-pollution spokesperson asserts that more than 78% of the
industries in the region meet the anti-pollution standards.
Ho: Π ≤ 0.78
Ha: Π > 0.78
4. The mean height of females is 155 cm.
Ho: μ = 155cm
Ha: μ ≠155cm
5. DTI receives many complaints from consumers that the bottles of cooking oil sold by a
company contains less than 1 liter of oil advertised.
6. A health practitioner wants to know if the mean height of girls at birth is at least 3.2kgs
as per record of a particular hospital.

CRITICAL REGION
- also known as the REJECTION Region
- area under the curve that contains all values of the statistics that allow rejection of the NULL
Hypothesis
- region on the extreme tails of the sampling distribution
- it has equivalent to α, the level of significance

CRITICAL VALUE OF THE STATISTIC (CRITICAL POINT)

- the point of division between rejection region and non-rejection region (acceptance region)
- the non-rejection region is not part of α and is located in the middle part of a two-tailed test
with a probability of (1- α) and is known as the probability of confidence

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 Hypothesis Testing

LEVEL of SIGNIFICANCE (α) – area in the rejection region

TEST STATISTIC – a value derived or computed from a sample data set that is used to determine the
relative position of the mean in the hypothesized probability distribution of the sample mean.

Example. If α =0.01 (right-tailed z test) then the critical region for rejecting Ho is the area under the tail
of the curve that is equal to 0.01

a. One-tailed test (right-tailed)

α = 0.01

0.5-0.01 = 0.49 ; 0.4901 from the z-table is 2.33, thus Zcritical = 2.33

b. One-tailed test (left-tailed)

α = 0.01

0.5-0.01 = 0.49 ; 0.4901 from the z-table is 2.33, thus Zcritical = -2.33on the left side

c. Two-tailed test
α = 0.01

0.5-0.005 = 0.495 ; 0.4901 from the z-table is 2.575, thus Zcritical = ±2.575 on the both sides

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 Hypothesis Testing

A Hypothesis on μ can take one of 3 general forms as follows:

1. Right-tailed test 2. Left-tailed test 3. Two-tailed test
Ho: μ≤μo ; Ha: μ>μo Ho: μ≥μo ; Ha: μ<μo Ho: μ=μo ; Ha: μ≠μo

Basic Steps in HypothesisTesting

1. Formulate the NULL Hypothesis, Ho and the ALTERNATIVE Hypothesis, Ha
2. Choose the statistical tool (such as z, t, χ2 or F) and choose also a significance level, α.
3. Determine the Rejection region or the Critical region.
4. Calculate the test statistic. This is the calculated value that will be compared to the critical
value. In a one-sample test, the test statistic can be calculated as

_ _
x–μ x–μ _
z = -------- and for a t-test, t = --------- ; with: x as the mean
σ/√𝑛 s/√𝑛 μ as the average
σ as the standard deviation
s as the estimate sample
deviation

**if σ is known, z test is used, if σ is unknown, t test is used

5. Evaluate the test statistic. Make the decision and draw conclusion.
If the computed value (the test statistic) lies within the rejection region, then the NULL
Hypothesis is rejected, otherwise, fail to reject.
The decision rule is
Reject the NULL Hypothesis if I zcomp I ≥ I zcrit I; I tcomp I ≥ I tcrit I; I χ2comp I ≥ I χ2crit I;
I Fcomp I ≥ I Fcrit I. Otherwise, retain the NULL Hypothesis.

Example.

Test Statistic Decision

a. za (left-tailed test) α=0.05 zcomp = -2.09
b. za (right-tailed test) α=0.05 zcomp = 1.42
c. za (two-tailed test) α=0.01 zcomp = 0.97
d. ta (left-tailed test) α=0.01, n=15 tcomp = -5.62
e. ta (right-tailed test) α=0.05, df=20 tcomp = 3.92
f. ta (two-tailed test) α=0.1, n=20 tcomp = 8.75

Example.
In 2006, the average annual family income in NCR was ₱310,860.00 with a standard deviation of
₱176,870.00. With the increased price of commodities, it is hoped that the mean annual family income
has also increased. A survey is conducted to verify this contention. A random sample of 320 families has
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 Hypothesis Testing

a mean annual income of ₱325,255.00 Is the sample result sufficient to demonstrate that the mean
annual family income in NCR is significantly higher than ₱310,860.00 at the 5% level of significance.

Solution:
1. State the NULL and ALTERNATIVE Hypothesis
Since the term “higher” is used, one-sided ALTERNATIVE Hypothesis is chosen .
Ho: μ ≤ ₱310,860.00
Ha: μ > ₱310,860.00

2. Choose the appropriate test statistical tool.

Since σ is known, use z-test with α = 0.05; this is a right-tailed test.

3. Determine the critical value and corresponding critical region.

The critical point is z0.05 = 1.645. Thus, the critical region is z ≥ 1.645. The decision rule is: if zcomp
≥ zcritical, reject Ho, otherwise, retain it.

4. Compute the test statistic. We are using the z-test since deviation is given.
_
x – μ 325,255 – 310,860
zc = ------- = --------------------------- = 1.456
σ/√𝑛 176,870/√320

5. Decision and conclusion.

Since zcomp < zcritical, retain the NULL Hypothesis at 5% significance level. There is a statistical
evidence to show that the mean annual family income in NCR is ₱310,860.00.

Exercises:
1. A random sample of 64 apartments in the city shows that the average monthly water consumption
is 55 cubic meters with a standard deviation of 5 cubic meters. Test the hypothesis that the
average monthly water consumption is 53 cu.m. Use 1% level of significance.
2. A softdrink dispensing machine was designed to discharge, on the average, 7 ounces of beverage
per cup. An experiment was conducted to test if it is really working effectively as designed.
Sixteen cupfuls of beverage were drawn from the machine and measured. The mean and
standard deviation of the 16 measurements were 7.15 oz and 0.12 oz respectively. Is there
sufficient evidence to indicate that the mean discharge differs from 7 oz. Test at the 5% level of
significance.
_
3. A sample of n=100 has a mean x = 15. Assume that the population is approximately normally
distributed a population standard deviation of 4. The hypothesis desired are:
Ho: μ=12.5 Ha: μ≠ 12.5
Test the hypothesis at α =0.02

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 Hypothesis Testing

a. Is this a one-tailed or two-tailed test?

b. What test statistic is to be used?
c. What is the decision rule?
d. What is the computed value of the test statistic?
e. What is your decision regarding the NULL Hypothesis?

Possible Situations for Testing Statistical Hypothesis

Ho is true Ho is false
Reject Ho Type I error (α) Correct Decision (1-β)
Fail to reject Ho Correct Decision (1-α) Type II error (β)

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