Inferential statistics

Inferential statistics is one of the two main branches of statistics. Inferential statistics use a
random sample of data taken from a population to describe and make inferences
about the population.
 Hypothesis
• It is an assumption that is made on the basis of some evidence.
• This is the initial Point of any investigation that translates the research questions into
prediction.
• Hypothesis testing is a part of statistical analysis, where we test the assumptions made
regarding a population parameter.

• Example:
The label of a milk bottle indicates that it contains 1000ml
Null Hypothesis:
The label is correct. μ> =1000 ml.
Alternative Hypothesis:
The label is incorrect μ<1000 ml.
Null Hypothesis:
• Null hypothesis is a statistical theory that suggests there is no statistical significance exists
between the populations.
• It is denoted by H0 and read as H-naught.

Alternative Hypothesis:
• An Alternative hypothesis suggests there is a significant difference between the population
parameters.
• It could be greater or smaller.
• Basically, it is the contrast of the Null Hypothesis.
• It is denoted by Ha or H1.
Note: H0 must always contain equality(=). Ha always contains difference(≠, >, <).

For example, if we were to test the equality of average means (µ) of two groups:
• for a two-tailed test, we define H0: µ1 = µ2 and Ha: µ1≠µ2
• for a one-tailed test, we define H0: µ1 = µ2 and Ha: µ1 > µ2 or Ha: µ1 < µ2
• In the case where the given statement is a well-established fact or default state of being
in the real world, one can call it a null hypothesis (in the simpler word, nothing new).
Well-established facts don’t need any hypothesis testing and hence can be called as null
hypothesis.
• In cases, when there are any new claims made which is not well established in the real-
world, the null hypothesis can be thought of as default state of that claim.
• In case the given statement is a claim (unexpected event in real-world) and not yet
proven, one can call/formulate it as an alternate hypothesis and accordingly define a
null hypothesis.
• In simple words, the hypothesis or claim that needs to be tested against the reality in the
real-world can be termed as the alternate hypothesis.
• In order to reach to a conclusion that the claim is true (with the available evidence), it
would be important to reject the null hypothesis.
• It should be noted that null and alternate hypotheses are mutually exclusive and at the
same time asymmetric.
In general, a hypothesis test about the value of a population mean μ must take one of the
following forms where 𝜇0 is the hypothesized value of the population mean.
One-Tailed Test(lower-tail test) Two-tailed Test

One-Tailed Test(upper-tail test)

 Two-Tailed vs One-Tailed Test

A two-tailed hypothesis test is designed to show whether the sample mean is

significantly greater than and significantly less than the mean of a population. The two-
tailed test gets its name from testing the area under both tails (sides) of a normal
distribution. A one-tailed hypothesis test, on the other hand, is set up to show that the
sample mean would be higher or lower than the population mean.
 Type-I Error

• The hypothesis tests are based on sample data, there is a possibility of errors.
• Type-I error is rejecting 𝐻0 when it is true.
• The probability of making a type-I error when the null hypothesis is true,
called as level of significance.
• The level of significance is denoted by α. Its typical value is 5%. This
represents that the probability of incorrect rejection is only 5%.
• Application of hypothesis testing that only controls the type-I error are often
called significance tests.
 Type-II Error
• A type-II error is accepting 𝐻0 when it is False.
• It is difficult to control for the probability of making a type-II error.
• Statisticians avoid the risk of making a type-II error by using “do not
reject 𝐻0 ” and not “accept 𝐻0 ”
The two methods of concluding the Hypothesis test are using the Test-statistic value, p-value.
In both methods, we start assuming the Null Hypothesis to be true, and then we reject the Null hypothesis if
we find enough evidence.

The decision rule for the Test-statistic method:

If test-statistic (t) > critical Value (C), we reject Null Hypothesis.
If test-statistic (t) ≤ critical value (C), we fail to reject Null Hypothesis.

The decision rule for the p-value method:

if p-value (p) > level of significance (α), we fail to reject Null Hypothesis
if p-value (p) ≤ level of significance (α), we reject Null Hypothesis
 Discussion on Hypothesis Questions
Question1: The outcome of the hypothesis testing is
a) Reject the null hypothesis when it is false
b) Reject the alternate hypothesis when it is true
c) Accept the null hypothesis when it is false
d) Fail to reject the null hypothesis when it is true
Ans:-----------
Question2: The claim that needs to be established is set as
a) Null hypothesis
b) Alternate hypothesis
Ans: ----------
Question3: There is a claim that doing pranayama yoga results in reversing diabetes. Which of the following is
true about null hypothesis?
a) This is true that doing pranayama yoga reverses the diabetes
b) There is no effect of doing yoga on reversing the diabetes
Ans:-----------
 Steps of Hypothesis Testing
All hypotheses are tested using a four-step process:

Step-1:The first step is for the analyst to state the two hypotheses so that only one
can be right.
Step-2:The next step is to formulate an analysis plan, which outlines how the data
will be evaluated.
Step-3:The third step is to carry out the plan and physically analyze the sample
data.
Step-4:The fourth and final step is to analyze the results and either reject the null
hypothesis, or state that the null hypothesis is plausible, given the data.
Question: Determine both Type I and Type II errors for the following scenario:
Assume a null hypothesis, H0, that states the percentage of adults with jobs is at least 88%.
Identify the Type I and Type II errors from these four statements.

a)Not to reject the null hypothesis that the percentage of adults who have jobs is at least 88% when that
percentage is actually less than 88%
b)Not to reject the null hypothesis that the percentage of adults who have jobs is at least 88% when the
percentage is actually at least 88%.
c)Reject the null hypothesis that the percentage of adults who have jobs is at least 88% when the percentage is
actually at least 88%.
d)Reject the null hypothesis that the percentage of adults who have jobs is at least 88% when that percentage
is actually less than 88%.

Type I error: c Type-II Error: Accept the null hypothesis when it is false
Type II error: a Type-I Error: Reject the null hypothesis when it is true