Statistics 300:

Elementary Statistics
Section 8-2

1
 Hypothesis Testing

• Principles
• Vocabulary
• Problems

2
 Principles
• Game
• I say something is true
• Then we get some data
• Then you decide whether
– Mr. Larsen is correct, or
– Mr. Larsen is a lying dog

3
 Risky Game
• Situation #1
• This jar has exactly (no more
and no less than) 100 black
marbles
• You extract a red marble
• Correct conclusion:
– Mr. Larsen is a lying dog
4
 Principles
• My statement will lead to certain
probability rules and results
• Probability I told the truth is
“zero”
• No risk of false accusation

5
 Principles
• Game
• I say something is true
• Then we get some data
• Then you decide whether
– Mr. Larsen is correct, or
– Mr. Larsen has inadvertently
made a very understandable error
6
 Principles
• My statement will lead to certain
probability rules and results
• Some risk of false accusation
• What risk level do you accept?

7
 Risky Game
• Situation #2
• This jar has exactly (no more
and no less than) 999,999 black
marbles and one red marble
• You extract a red marble
• Correct conclusion:
– Mr. Larsen is mistaken
8
 Risky Game
• Situation #2 (continued)
• Mr. Larsen is mistaken because
if he is right, the one red marble
was a 1-in-a-million event.
• Almost certainly, more than red
marbles are in the far than just
one
9
 Risky Game
• Situation #3
• This jar has 900,000 black
marbles and 100,000 red marbles
• You extract a red marble
• Correct conclusion:
– Mr. Larsen’s statement is
reasonable
10
 Risky Game
• Situation #3 (continued)
• Mr. Larsen’s statement is
reasonable because it makes
P(one red marble) = 10%.
• A ten percent chance is not too
far fetched.

11
 Principles (reworded)
• The statement or “hypothesis”
will lead to certain probability
rules and results
• Some risk of false accusation
• What risk level do you accept?

12
 Risky Game
• Situation #4
• This jar has 900,000 black
marbles and 100,000 red marbles
• A random sample of four
marbles has 3 red and 1 black
• If Mr. Larsen was correct, what
is the probability of this event?
13
 Risky Game
• Situation #4 (continued)
• Binomial: n=4, x=1, p=0.9
• Mr. Larsen’s statement is not
reasonable because it makes
P(three red marbles) = 0.0036.
• A less than one percent chance is
too far fetched.
14
 Formal Testing Method
Structure and Vocabulary

• The risk you are willing to take

15
 Conventional  levels
______________________
• Two-tail One-tail
• 0.20 0.10
• 0.10 0.05
• 0.05 0.025
• 0.02 0.01
• 0.01 0.005

16
 Formal Testing Method
Structure and Vocabulary
• Critical Value
– similar to Z/2 in confidence int.
– separates two decision regions
• Critical Region
– where you say I am incorrect

17
 Formal Testing Method
Structure and Vocabulary
• Critical Value and Critical Region
are based on three things:
– the hypothesis
– the significance level
– the parameter being tested
• not based on data from a sample
• Watch how these work together 18
 Test Statistic for 

x  0
~ tn 1df
 s 
 
 n
19
 Test Statistic for p
np0>5 and nq0>5)

pˆ  p0
~ N 0,1
p0 q0
n
20
 Test Statistic for 

n  1 s 2
~χ 2
2 n 1df
σ0
21
 Formal Testing Method
Structure and Vocabulary

• H0: always is =  or 
• H1: always is  > or <

22
 Formal Testing Method
Structure and Vocabulary
• In the alternative hypotheses, H1:,
put the parameter on the left and
the inequality symbol will point to
the “tail” or “tails”
• H1: , p,   is “two-tailed”
• H1: , p, < is “left-tailed”
• H1: , p,  > is “right-tailed” 23
 Formal Testing Method
Structure and Vocabulary
• Example of Two-tailed Test
– H0:  = 100
– H1:   100

24
 Formal Testing Method
Structure and Vocabulary
• Example of Two-tailed Test
– H0:  = 100
– H1:   100
• Significance level,  = 0.05
• Parameter of interest is 

25
 Formal Testing Method
Structure and Vocabulary
• Example of Two-tailed Test
– H0:  = 100
– H1:   100
• Significance level,  = 0.10
• Parameter of interest is 

26
 Formal Testing Method
Structure and Vocabulary
• Example of Left-tailed Test
– H0: p  0.35
– H1: p < 0.35

27
 Formal Testing Method
Structure and Vocabulary
• Example of Left-tailed Test
– H0: p  0.35
– H1: p < 0.35
• Significance level,  = 0.05
• Parameter of interest is “p”

28
 Formal Testing Method
Structure and Vocabulary
• Example of Left-tailed Test
– H0: p  0.35
– H1: p < 0.35
• Significance level,  = 0.10
• Parameter of interest is “p”

29
 Formal Testing Method
Structure and Vocabulary
• Example of Right-tailed Test
– H0:   10
– H1:  > 10

30
 Formal Testing Method
Structure and Vocabulary
• Example of Right-tailed Test
– H0:   10
– H1: > 10
• Significance level,  = 0.05
• Parameter of interest is 

31
 Formal Testing Method
Structure and Vocabulary
• Example of Right-tailed Test
– H0:   10
– H1: > 10
• Significance level,  = 0.10
• Parameter of interest is 

32
 Claims
• is, is equal to, equals =
• less than <
• greater than >
• not, no less than 
• not, no more than 
• at least 
• at most 
33
 Claims

• is, is equal to, equals

34
 Claims
• less than
• H 0: 
• H 1: <

35
 Claims
• greater than
• H 0: 
• H 1: >

36
 Claims
• not, no less than
• H 0: 
• H 1: <

37
 Claims
• not, no more than
• H 0: 
• H 1: >

38
 Claims
• at least
• H 0: 
• H 1: <

39
 Claims
• at most
• H 0: 
• H 1: >

40
 Structure and Vocabulary
• Type I error: Deciding that H0: is
wrong when (in fact) it is correct
• Type II error: Deciding that H0:
is correct when (in fact) is is
wrong

41
 Structure and Vocabulary
• Interpreting the test result
– The hypothesis is not reasonable
– The Hypothesis is reasonable
• Best to define reasonable and
unreasonable before the
experiment so all parties agree
42
Traditional Approach to
Hypothesis Testing

43
 Test Statistic
• Based on Data from a Sample
and on the Null Hypothesis, H0:
• For each parameter (, p, ), the
test statistic will be different
• Each test statistic follows a
probability distribution
44
 Traditional Approach
• Identify parameter and claim
• Set up H0: and H1:
• Select significance Level, 
• Identify test statistic & distribution
• Determine critical value and region
• Calculate test statistic
• Decide: “Reject” or “Do not reject”
45
 Next three slides are
repeats of slides 19-21

46
 Test Statistic for 
(small sample size: n)

x  0
~ tn 1df
 s 
 
 n
47
 Test Statistic for p
np0>5 and nq0>5)

pˆ  p0
~ N 0,1
p0 q0
n
48
 Test Statistic for 

n  1 s 2
~χ 2
2 n 1df
σ0
49