Lesson 5.

3 – Testing Hypothesis About Proportion

(Edited by E. Arthur A. Balosa 1st)
From Stat Trek, (https://stattrek.com/hypothesis-test/proportion.aspx),
Feb. 28, 2019 Date Visited

How will we apply this to everyday life?

To be honest, this is essential for gaining academic and general

survey info., why? It’s purpose is to compare data to another data. Further
explanation will be tackled to “two tailed test” example from page 4.
There will be times that 2 or 3 test such as surveys will have
correlation and having opposities definition about their topic, at some point.
That’s why it’s a necessity for a researcher (or a practitioner) to learn
this method.

Hypothesis Test For a Proportion

This lesson explains how to conduct a hypothesis test for a proportion,
when the following conditions are met:

 The sampling method is simple random sampling.

 Each sample point can result in just two possible outcomes. We call
one of these outcomes a success and the other, a failure.
 The sample includes at least 10 successes and 10 failures.
 The population size is at least 20 times as big as the sample size.

This approach consists of four steps: (1) state the hypotheses, (2)
formulate an analysis plan, (3) analyze sample data, and (4) interpret
results.
State the Hypotheses

Every hypothesis test requires the analyst to state a null hypothesis and
an alternative hypothesis. The hypotheses are stated in such a way that
they are mutually exclusive. That is, if one is true, the other must be false;
and vice versa.

Formulate an Analysis Plan

The analysis plan describes how to use sample data to accept or reject the
null hypothesis. It should specify the following elements.

 Significance level. Often, researchers choose significance

levels equal to 0.01, 0.05, or 0.10; but any value between 0 and 1 can
be used.
 Test method. Use the one-sample z-test to determine whether the
hypothesized population proportion differs significantly from the
observed sample proportion.

Analyze Sample Data

Using sample data, find the test statistic and its associated P-Value.

 Standard deviation. Compute the standard deviation (σ) of the

sampling distribution.

σ = sqrt[ P * ( 1 - P ) / n ]

where P is the hypothesized value of population proportion in the null

hypothesis, and n is the sample size.

 Test statistic. The test statistic is a z-score (z) defined by the

following equation.

z = (p - P) / σ
 where P is the hypothesized value of population proportion in the null
hypothesis, p is the sample proportion, and σ is the standard
deviation of the sampling distribution.

 P-value. The P-value is the probability of observing a sample statistic

as extreme as the test statistic. Since the test statistic is a z-score,
use the Normal Distribution Calculator to assess the probability
associated with the z-score. (See sample problems at the end of this
lesson for examples of how this is done.)

Interpret Results

If the sample findings are unlikely, given the null hypothesis, the researcher
rejects the null hypothesis. Typically, this involves comparing the P-value to
the significance level, and rejecting the null hypothesis when the P-value is
less than the significance level.

Test Your Understanding

In this section, two hypothesis testing examples illustrate how to conduct a

hypothesis test of a proportion. The first problem involves a a two-tailed
test; the second problem, a one-tailed test.

Problem 1: Two-Tailed Test

The CEO of a large electric utility claims that 80 percent of his 1,000,000
customers are very satisfied with the service they receive. To test this
claim, the local newspaper surveyed 100 customers, using simple random
sampling. Among the sampled customers, 73 percent say they are very
satisified. Based on these findings, can we reject the CEO's hypothesis that
80% of the customers are very satisfied? Use a 0.05 level of significance.

Solution: The solution to this problem takes four steps: (1) state the
hypotheses, (2) formulate an analysis plan, (3) analyze sample data, and
(4) interpret results. We work through those steps below:
 State the hypotheses. The first step is to state the null hypothesis
and an alternative hypothesis.

Null hypothesis: P = 0.80

Alternative hypothesis: P ≠ 0.80

Note that these hypotheses constitute a two-tailed test. The null

hypothesis will be rejected if the sample proportion is too big or if it is
too small.

 Formulate an analysis plan. For this analysis, the significance level

is 0.05. The test method, shown in the next section, is a one-sample
z-test.

 Analyze sample data. Using sample data, we calculate the standard

deviation (σ) and compute the z-score test statistic (z).

σ = sqrt[ P * ( 1 - P ) / n ]

σ = sqrt [(0.8 * 0.2) / 100]

σ = sqrt(0.0016) = 0.04

z = (p - P) / σ = (.73 - .80)/0.04 = -1.75

where P is the hypothesized value of population proportion in the null

hypothesis, p is the sample proportion, and n is the sample size.
 Since we have a two-tailed test, the P-value is the probability that the
z-score is less than -1.75 or greater than 1.75.

We use the Normal Distribution Calculator to find P(z < -1.75) = 0.04,
and P(z > 1.75) = 0.04. Thus, the P-value = 0.04 + 0.04 = 0.08.

 Interpret results. Since the P-value (0.08) is greater than the

significance level (0.05), we cannot reject the null hypothesis.

Note: If you use this approach on an exam, you may also want to mention
why this approach is appropriate. Specifically, the approach is appropriate
because the sampling method was simple random sampling, the sample
included at least 10 successes and 10 failures, and the population size was
at least 10 times the sample size.