Probability & Statistics

Lecture 8

Hypothesis Testing
 What is a Hypothesis?
 A hypothesis is a claim
(assumption) about a
population parameter:
 population mean
Example: The mean monthly cell phone bill
of this city is μ = $42
 The Null Hypothesis, H0

 States the assumption (numerical) to be

tested
Example: The average number of TV sets in
U.S. Homes is equal to three ( H0 : μ 3 )
 Is always about a population parameter,
not about a sample statistic

H0 : μ 3 H0 : X 3
 The Null Hypothesis, H0
(continued)

 Begin with the assumption that the null

hypothesis is true
 Similar to the notion of innocent until

proven guilty
 Refers to the status quo
 Always contains “=” , “≤” or “” sign
 May or may not be rejected
 The Alternative Hypothesis, H1
 Is the opposite of the null hypothesis
 e.g., The average number of TV sets in U.S.
homes is not equal to 3 ( H1: μ ≠ 3 )
 Challenges the status quo

Never contains the “=” , “≤” or “” sign
 May or may not be supported
 Is generally the hypothesis that the
researcher is trying to support
 Hypothesis Testing Process

Claim: the
population
mean age is 50.
(Null Hypothesis:
Population
H0: μ = 50 )
Now select a
random sample
Is X20 likely if μ = 50?
If not likely, Suppose
the sample
REJECT mean age Sample
Null Hypothesis is 20: X = 20
 Reason for Rejecting H0
Sampling Distribution of X

X
20 μ = 50
If H0 is true
If it is unlikely that ... then we
we would get a reject the null
sample mean of ... if in fact this were hypothesis that
this value ... the population mean… μ = 50.
 Level of Significance, 
 Defines the unlikely values of the sample
statistic if the null hypothesis is true
 Defines rejection region of the sampling
distribution

Is designated by  , (level of significance)
 Typical values are .01, .05, or .10
 Is selected by the researcher at the beginning

Provides the critical value(s) of the test
 Level of Significance
and the Rejection Region
Level of significance =  Represents
critical value
H0: μ = 3 /2 /2
Rejection
H1: μ ≠ 3 Two-tail test 0 region is
shaded
H0: μ ≤ 3 
H1: μ > 3
Upper-tail test 0

H0: μ ≥ 3

H1: μ < 3
Lower-tail test 0
 Errors in Making Decisions
 Type I Error
 Reject a true null hypothesis

 Considered a serious type of error

The probability of Type I Error is 


Called level of significance of the test

Set by researcher in advance
 Errors in Making Decisions
(continued)

 Type II Error
 Fail to reject a false null hypothesis

The probability of Type II Error is β

 Outcomes and Probabilities

Possible Hypothesis Test Outcomes

Actual Situation
Decision H0 True H0 False
Do Not
No error Type II Error
Key: Reject
(1 -  ) (β)
Outcome H0
(Probability) Reject Type I Error No Error
H0 () (1-β)
Hypothesis Tests for the Mean

Hypothesis
Tests for 

 Known  Unknown
 Test of Hypothesis
for the Mean (σ Known)
 Convert sample result ( x ) to a z value
Hypothesis
Tests for 

σ Known σ Unknown

Consider the test

H0 : μ μ0 The decision rule is:
H1 : μ  μ0 x  μ0
Reject H0 if z   zα
σ
(Assume the population is n
normal)
 Decision Rule
H0: μ = μ0
x  μ0
Reject H0 if z   zα
σ H1: μ > μ0
n

Alternate rule:
Reject H0 if X  μ0  Z ασ/ n 

Do not reject H0 Reject H0

Z 0 zα
x μ0 μ0  z α
σ
n

Critical value
 Example: Upper-Tail Z Test
for Mean ( Known)
A phone industry manager thinks that
customer monthly cell phone bill have
increased, and now average over $52 per
month. The company wishes to test this
claim. (Assume  = 10 is known)

Form hypothesis test:

H0: μ ≤ 52 the average is not over $52 per month
H1: μ > 52 the average is greater than $52 per month
(i.e., sufficient evidence exists to support the
manager’s claim)
 Example: Find Rejection Region
(continued)
 Suppose that  = .10 is chosen for this test

Find the rejection region: Reject H0

= .10

Do not reject H0 Reject H0

0 1.28

x  μ0
Reject H0 if z   1.28
σ/ n
 Example: Sample Results
(continued)

Obtain sample and compute the test statistic

Suppose a sample is taken with the following

results: n = 64, x = 53.1 (=10 was assumed known)
 Using the sample results,
x  μ0 53.1  52
z  0.88
σ 10
n 64
 Example: Decision
(continued)
Reach a decision and interpret the result:
Reject H0

= .10

Do not reject H0 Reject H0

0
1.28
z = 0.88

Do not reject H0 since z = 0.88 < 1.28

i.e.: there is not sufficient evidence that the
mean bill is over $52
 One-Tail Tests

 In many cases, the alternative hypothesis

focuses on one particular direction

H0: μ ≤ 3 This is an upper-tail test since the

alternative hypothesis is focused on
H1: μ > 3 the upper tail above the mean of 3

This is a lower-tail test since the

H0: μ ≥ 3
alternative hypothesis is focused on
the lower tail below the mean of 3
H1: μ < 3
 Upper-Tail Tests

 There is only one H0: μ ≤ 3

critical value, since H1: μ > 3
the rejection area is
in only one tail 

Do not reject H0 Reject H0

Z 0 zα
x μ

Critical value
 Lower-Tail Tests
H0: μ ≥ 3
 There is only one
critical value, since
H1: μ < 3
the rejection area is
in only one tail 

Reject H0 Do not reject H0

-z 0 Z

μ x
Critical value
 Two-Tail Tests
 In some settings, the
H0: μ = 3
alternative hypothesis does
not specify a unique direction H1: μ 
3

/2 /2
 There are two
critical values, x
3
defining the two
Reject H0 Do not reject H0 Reject H0
regions of
-z/2 0 +z/2 z
rejection
Lower Upper
critical value critical value
 Hypothesis Testing Example
Test the claim that the true mean # of
TV sets in US homes is equal to 3.
(Assume σ = 0.8)
 State the appropriate null and alternative
hypotheses
 H : μ = 3 , H : μ ≠ 3 (This is a two tailed test)
0 1
 Specify the desired level of significance
 Suppose that  = .05 is chosen for this test

 Choose a sample size

 Suppose a sample of size n = 100 is selected
 Hypothesis Testing Example
(continued)
 Determine the appropriate technique

σ is known so this is a z test
 Set up the critical values
 For  = .05 the critical z values are ±1.96

 Collect the data and compute the test statistic

 Suppose the sample results are
n = 100, x = 2.84 (σ = 0.8 is assumed known)
So the test statistic is:
X  μ0 2.84  3  .16
z     2.0
σ 0.8 .08
n 100
 Hypothesis Testing Example
(continued)
 Is the test statistic in the rejection region?

Reject H0 if  = .05/2  = .05/2

z < -1.96 or
z > 1.96;
otherwise Reject H0 Do not reject H0 Reject H0

do not -z = -1.96 0 +z = +1.96

reject H0

Here, z = -2.0 < -1.96, so the

test statistic is in the rejection
region
 Hypothesis Testing Example
(continued)
 Reach a decision and interpret the result

 = .05/2  = .05/2

Reject H0 Do not reject H0 Reject H0

-z = -1.96 0 +z = +1.96
-2.0
Since z = -2.0 < -1.96, we reject the null hypothesis
and conclude that there is sufficient evidence that the
mean number of TVs in US homes is not equal to 3
 t Test of Hypothesis for the Mean
(σ Unknown)
 Convert sample result ( x ) to a t test statistic
Hypothesis
Tests for 

σ Known σ Unknown

Consider the test

The decision rule is:
H0 : μ μ0
x  μ0
H1 : μ  μ0 Reject H0 if t   t n-1, α
s
(Assume the population is n
normal)
 t Test of Hypothesis for the Mean
(σ Unknown)
(continued)
 For a two-tailed test:
Consider the test
H0 : μ μ0 (Assume the population is normal,
and the population variance is
H1 : μ μ0 unknown)

The decision rule is:

x  μ0 x  μ0
Reject H0 if t    t n-1, α/2 or if t   t n-1, α/2
s s
n n
 Example: Two-Tail Test
( Unknown)

The average cost of a

hotel room in New York
is said to be $168 per
night. A random sample
of 25 hotels resulted in
x = $172.50 and H0: μ=
s = $15.40. Test at the 168 H1:
 = 0.05 level. μ 168
(Assume the population distribution is normal)
 Example Solution:
Two-Tail Test

H0: μ= /2=.025 /2=.025

168 H1:
 μ 168
= 0.05 Reject H0 Do not reject H0 Reject H0
-t n-1,α/2 0
t n-1,α/2
 n = 25 -2.0639 2.0639
1.46
  is unknown, so x μ 172.50  168
t n 1   1.46
use a t statistic s 15.40
n 25
 Critical Value:

t24 , .025 = ± 2.0639 Do not reject H0: not sufficient evidence that
true mean cost is different than $168