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INTRODUCTION

Setting up and testing hypotheses is an essential part of statistical inference. In order to formulate such a
test, usually some theory has been put forward, either because it is believed to be true or because it is to
be used as a basis for argument, but has not been proved, for example, claiming that a new drug is better
than the current drug for treatment of the same symptoms.

In each problem considered, the question of interest is simplified into two competing claims / hypotheses
between which we have a choice; the null hypothesis, denoted H 0, against the alternative hypothesis,
denoted H1. These two competing claims / hypotheses are not however treated on an equal basis, special
consideration is given to the null hypothesis. We have two common situations:

1. The experiment has been carried out in an attempt to disprove or reject a particular hypothesis,
the null hypothesis, thus we give that one priority so it cannot be rejected unless the evidence
against it is sufficiently strong. For example, H 0: there is no difference in taste between coke and
diet coke against H1: there is a difference.
2. If one of the two hypotheses is 'simpler' we give it priority so that a more 'complicated' theory is
not adopted unless there is sufficient evidence against the simpler one. For example, it is 'simpler'
to claim that there is no difference in flavour between coke and diet coke than it is to say that
there is a difference.

The hypotheses are often statements about population parameters like expected value and variance, for
example H0 might be that the expected value of the height of ten year old boys in the Mauritian
population is not different from that of ten year old girls? A hypothesis might also be a statement about
the distributional form of a characteristic of interest, for example that the height of ten year old boys is
normally distributed within the Mauritian population?

The outcome of a hypothesis test is reject H0' or 'do not reject H0'.

1.1 Null Hypothesis

The null hypothesis, H0 represents a theory that has been put forward, either because it is believed to be
true or because it is to be used as a basis for argument, but has not been proved. For example, in a clinical
trial of a new drug, the null hypothesis might be that the new drug is no better, on average, than the
current drug. We would write:-
H0: there is no difference between the two drugs on average.

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We give special consideration to the null hypothesis. This is due to the fact that the null hypothesis relates
to the statement being tested, whereas the alternative hypothesis relates to the statement to be accepted if /
when the null is rejected.

The final conclusion once the test has been carried out is always given in terms of the null hypothesis. We
either reject H0 in favour of H1' or 'do not reject H0'; we never conclude 'reject H1', or even 'accept H1'.

If we conclude 'do not reject H0', this does not necessarily mean that the null hypothesis is true, it only
suggests that there is not sufficient evidence against H 0 in favour of H1; rejecting the null hypothesis then,
suggests that the alternative hypothesis may be true.

1.2 Alternative Hypothesis

The alternative hypothesis, H1, is a statement of what a statistical hypothesis test is set up to establish. It
is the hypothesis that says that the null hypothesis is wrong.
For example, in a clinical trial of a new drug, the alternative hypothesis might be that the new drug has a
different effect, on average, compared to that of the current drug. We would write:-
H1: the two drugs have different effects, on average.
The alternative hypothesis might also be that the new drug is better, on average, than the current drug. In
this case we would write:-
H1: the new drug is better than the current drug, on average.

The final conclusion once the test has been carried out is always given in terms of the null hypothesis. We
either 'do not accept H0 in favour of H1' or 'do not reject H0'; we never conclude 'reject H1', or even 'accept
H1'.

If we conclude 'do not reject H0', this does not necessarily mean that the null hypothesis is true, it only
suggests that there is not sufficient evidence against H0 in favour of H1; rejecting the null hypothesis
then, suggests that the alternative hypothesis may be true.

1.3 Simple Hypothesis

A simple hypothesis is a hypothesis which specifies the population distribution completely .
Examples

1. H0: X~Bi(100,1/2) i.e. p is specified

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 2. H0: X~N(5,20) i.e. and are specified

1.4 Composite Hypothesis

A composite hypothesis is a hypothesis which does not specify the population distribution completely.

Examples

1. X~Bi(100,p) H1: p > 0.5

2. X~N(0, ) H1: unspecified

1.5 Type I Error

In a hypothesis test, a type I error occurs when the null hypothesis is rejected when it is in fact
true; that is, H0 is wrongly rejected.
For example, in a clinical trial of a new drug, the null hypothesis might be that the new drug is
no better, on average, than the current drug; that is H 0: there is no difference between the two
drugs on average. A type I error would occur if we concluded that the two drugs produced
different effects when in fact there was no difference between them.

P(type I error) = significance level =

1.6 Type II Error

In a hypothesis test, a type II error occurs when the null hypothesis H 0, is not rejected when it is
in fact false.
For example, in a clinical trial of a new drug, the null hypothesis might be that the new drug is
no better, on average, than the current drug; that is H 0: there is no difference between the two
drugs on average. A type II error would occur if it was concluded that the two drugs produced the
same effect, that is, there is no difference between the two drugs on average, when in fact they
produced different ones.

P(type II error) = (but is generally unknown).

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 1.7 Test Statistic
A test statistic is a quantity calculated from our sample of data. Its value is used to decide whether or not
the null hypothesis should be rejected in our hypothesis test.
The choice of a test statistic will depend on the assumed probability model and the hypotheses under
question.
1.8 Critical Value(s)
The critical value(s) for a hypothesis test is a threshold to which the value of the test statistic in a sample
is compared to determine whether or not the null hypothesis is rejected .
The critical value for any hypothesis test depends on the significance level at which the test is carried out,
and whether the test is one-sided or two-sided.

1.9 Critical Region

The critical region (CR), or rejection region (RR), is a set of values of the test statistic for which the null
hypothesis is rejected in a hypothesis test; that is, the sample space for the test statistic is partitioned into
two regions; one region (the critical region) will lead us to reject the null hypothesis H 0', the other not. So,
if the observed value of the test statistic is a member of the critical region, we conclude 'reject H 0'; if it is
not a member of the critical region then we conclude 'do not reject H 0.

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 1.10 Significance Level

The significance level of a statistical hypothesis test is a fixed probability of wrongly not accepting the
null hypothesis H0, if it is in fact true.

It is the probability of a type I error and is set by the investigator in relation to the consequences of such
an error. That is, we want to make the significance level as small as possible in order to protect the null
hypothesis and to prevent, as far as possible, the investigator from inadvertently making false claims.

The significance level is usually denoted by

Significance Level = P(type I error) =

Usually, the significance level is chosen to be = 0.05 = 5%.

1.11 P-Value
The probability value (p-value) of a statistical hypothesis test is the probability of getting a value of the
test statistic as extreme as or more extreme than that observed by chance alone, if the null hypothesis H 0,
is true.
It is the probability of wrongly rejecting the null hypothesis if it is in fact true.

It is equal to the significance level of the test for which we would only just reject the null hypothesis. The
p-value is compared with the significance level and, if it is smaller, the result is significant. That is, if
the null hypothesis were to be rejected at

= 0.05, this would be reported as 'p < 0.05'.

Small p-values suggest that the null hypothesis is unlikely to be true. The smaller it is, the more
convincing is the rejection of the null hypothesis. It indicates the strength of evidence for say, rejecting
the null hypothesis H0, rather than simply concluding 'reject H0' or 'do not reject H0'.

1.12 Power
The power of a statistical hypothesis test measures the test's ability to reject the null hypothesis when it is
actually false - that is, to make a correct decision.
In other words, the power of a hypothesis test is the probability of not committing a type II error. It is
calculated by subtracting the probability of a type II error from 1, usually expressed as:

Power = 1 - P(type II error) =

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The maximum power a test can have is 1, the minimum is 0. Ideally we want a test to have high power,
close to 1.

1.13 Decision

A statement based upon the null hypothesis. It is either "reject the null hypothesis" or "fail to reject
the null hypothesis". We will never accept the null hypothesis.

1.14 Conclusion

A statement which indicates the level of evidence (sufficient or insufficient), at what level of
significance, and whether the original claim is rejected (null) or supported (alternative).

EXAMPLE
A government report claims that the average temperature on the planet Venus is at least 300_ C. You dont
believe this - you think the average temperature must be lower - so you carry out an experiment during
which you will measure the temperature on Venus at 100 random times, then compute the mean of the
measured temperatures. If the mean temperature is over 20_ C less than thereports claim, then you will
declare the reports claim false.

Answer:

Thus, the null hypothesis is H0 : T = 300 and the alterative hypothesis is H1: T < 300. The value c = 280
separates the rejection region from the fail to reject region; that is, if T < 280, the null hypothesis will be
rejected, and if T 280, then the null hypothesis will not be rejected.

Suppose that the actual temperature on Venus is indeed 300 0C (or greater), as the report stated. If the
sample mean has T 280, then the null hypothesis will correctly be not rejected. If the sample mean has T
< 280 then the null hypothesis will incorrectly be rejected; this is a Type I error.

On the other hand, if the actual temperature on Venus is less than 300 0 C, but the sample mean has T
280, then the null hypothesis will incorrectly be accepted; this is a Type II error. If the sample mean has
T < 280, then the null hypothesis will correctly be rejected.

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