Hypotheses testing
- 1. HYPOTHESIS TESTING Presented by -: Mrs. Kiran Soni, Assistant Professor
- 2. Inferential Statistics • Inferential statistics to make judgments of the probability that an observed difference between groups is a dependable one or one that might have happened by chance.
- 3. There are two main methods used in inferential statistics: • Estimation & • Hypothesis testing
- 4. What is Hypothesis • A Hypothesis is the statement or an assumption about relationships between variables. or • A Hypothesis is a tentative explanation for certain behaviors, phenomenon or events that have occurred or will occur.
- 5. Interesting Hypothesis • Bankers assumed high-income earners are more profitable than low-income earners. • Old clients were more likely to diminish CD balances by large amounts compared to younger clients. This was nonintrusive because conventional wisdom suggested that older clients have a larger portfolio of assets and seek less risky investments
- 6. Criteria for Hypothesis Construction • It should be empirically testable, whether it is right or wrong. • It should be specific and precise. • The statements in the hypothesis should not be contradictory. • It should specify variables between which the relationship is to be established. • It should describe one issue only.
- 7. Steps in Hypothesis Testing
- 8. Types of Hypothesis • Null Hypothesis (H0) • Alternative Hypothesis (Ha or H1) Each of the following statements is an example of a null hypothesis and alternative hypothesis.
- 9. Establish Critical or Rejection region
- 10. Select the Suitable Test of significance or Test Statistic • Whether the test involves one sample, two samples, or samples? • Whether two or more samples used are independent or related? • Is the measurement scale nominal, ordinal, interval, or ratio?
- 11. The choice of a probability distribution of a sample statistics is guided but the sample size n and the value of population standard deviation as shown in the table.
- 13. Formulate a Decision Rule to Accept Null Hypothesis • Accept H0 if the test statistic value falls within the area of acceptance. • Reject otherwise.
- 15. Summary of Certain Values for Sample Statistics Z
- 16. THANK YOU