18-1

Chapter 18

Hypothesis
Testing
 18-2

Learning Objectives

Understand . . .
• the nature and logic of hypothesis testing
• a statistically significant difference
• six-step hypothesis testing procedure
 18-3

Learning Objectives

Understand . . .
• differences between parametric and
nonparametric tests and when to use each
• factors that influence the selection of an
appropriate test of statistical significance
• how to interpret the various test statistics
 18-4

Hypothesis Testing

Inductive Deductive
Reasoning Reasoning
 18-5

Statistical Procedures

Inferential Descriptive
Statistics Statistics
 18-6
Exhibit 18-1
Hypothesis Testing and the
Research Process
 18-7

Approaches to Hypothesis
Testing
Classical statistics Bayesian statistics
• Objective view of • Extension of classical
probability approach
• Established • Analysis based on
hypothesis is rejected sample data
or fails to be rejected • Also considers
• Analysis based on established subjective
sample data probability estimates
 18-8

Statistical Significance
 18-9

Types of Hypotheses

• Null
– H0:  = 50 mpg
– H0:  < 50 mpg
– H0:  > 50 mpg
• Alternate
– HA:  = 50 mpg
– HA:  > 50 mpg
– HA:  < 50 mpg
 18-10

Exhibit 18-2 Two-Tailed

Test of Significance
 18-11

Exhibit 18-2 One-Tailed

Test of Significance
 18-12

Decision Rule

Take no corrective action if the

analysis shows that one cannot
reject the null hypothesis.
 18-13

Exhibit 18-3
Statistical Decisions
 18-14

Exhibit 18-4 Probability of

Making a Type I Error
 18-15

Critical Values
 18-16

Exhibit 18-4 Probability of

Making A Type I Error
 18-17

Factors Affecting Probability of

Committing a  Error

True
True value
value of
of parameter
parameter

Alpha
Alpha level
level selected
selected

One
One or
or two-tailed
two-tailed test
test used
used

Sample
Sample standard
standard deviation
deviation

Sample
Sample size
size
 18-18

Exhibit 18-5 Probability of

Making A Type II Error
 18-19

Statistical Testing
Procedures

State
Statenull
null
hypothesis
hypothesis

Interpret
Interpret the
the Choose
Choose
test
test statistical
statistical test
test
Stages
Stages

Obtain
Obtain critical
critical Select
Select level
levelof
of
test
test value
value significance
significance
Compute
Compute
difference
difference
value
value
 18-20

Tests of Significance

Parametric Nonparametric
 18-21

Assumptions for Using

Parametric Tests

Independent
Independent observations
observations

Normal
Normal distribution
distribution

Equal
Equal variances
variances

Interval
Interval or
or ratio
ratio scales
scales
 18-22

Exhibit 18-6
 18-23

Exhibit 18-6
 18-24

Exhibit 18-6
 18-25

Advantages of Nonparametric
Tests

Easy
Easy to
to understand
understand and
and use
use

Usable
Usable with
with nominal
nominal data
data

Appropriate
Appropriate for
for ordinal
ordinal data
data

Appropriate
Appropriate for
for non-normal
non-normal
population
population distributions
distributions
 18-26

How To Select A Test

How many samples are involved?

If two or more samples are involved,

are the individual cases independent or related?

Is the measurement scale

nominal, ordinal, interval, or ratio?
 18-27

Exhibit 18-7 Recommended

Statistical Techniques

Two-Sample Tests k-Sample Tests

____________________________________________ ____________________________________________

Measurement Independent Independent

Scale One-Sample Case Related Samples Samples Related Samples Samples
Nominal • Binomial • McNemar • Fisher exact test • Cochran Q • x2 for k samples
• x2 one-sample test • x2 two-samples
test
Ordinal • Kolmogorov-Smirnov • Sign test • Median test • Friedman two- • Median
one-sample test way ANOVA extension
• Runs test •Wilcoxon •Mann-Whitney U •Kruskal-Wallis
matched-pairs •Kolmogorov- one-way ANOVA
test Smirnov
•Wald-Wolfowitz
Interval and • t-test • t-test for paired • t-test • Repeated- • One-way
Ratio samples measures ANOVA
• Z test • Z test ANOVA • n-way ANOVA
 18-28

Questions Answered by
One-Sample Tests
• Is there a difference between observed
frequencies and the frequencies we would
expect?
• Is there a difference between observed
and expected proportions?
• Is there a significant difference between
some measures of central tendency and
the population parameter?
 18-29

Parametric Tests

Z-test t-test
 18-30

One-Sample t-Test
Example

Null Ho: = 50 mpg

Statistical test t-test
Significance level .05, n=100
Calculated value 1.786
Critical test value 1.66
(from Appendix C, Exhibit C-2)
 18-31

One Sample Chi-Square

Test Example

Expected
Intend to Number Percent Frequencies
Living Arrangement Join Interviewed (no. interviewed/200) (percent x 60)

Dorm/fraternity 16 90 45 27

Apartment/rooming
13 40 20 12
house, nearby

Apartment/rooming
16 40 20 12
house, distant

Live at home 15 30 15 9
_____ _____ _____ _____

Total 60 200 100 60

 18-32

One-Sample Chi-Square
Example

Null Ho: 0 = E
Statistical test One-sample chi-square
Significance level .05
Calculated value 9.89
Critical test value 7.82
(from Appendix C, Exhibit C-3)
 18-33

Two-Sample
Parametric Tests
 18-34

Two-Sample t-Test
Example

A Group B Group

Average hourly sales X1 = $1,500 X2 = $1,300

Standard deviation s1 = 225 s2 = 251

 18-35

Two-Sample t-Test
Example

Null Ho: A sales = B sales

Statistical test t-test
Significance level .05 (one-tailed)
Calculated value 1.97, d.f. = 20
Critical test value 1.725
(from Appendix C, Exhibit C-2)
 18-36

Two-Sample Nonparametric
Tests: Chi-Square

On-the-Job-Accident
Cell Designation
Count
Expected Values Yes No Row Total
Smoker 1,1 1,2
Heavy Smoker 12, 4 16
8.24 7.75
2,1 2,2
Moderate 9 6 15
7.73 7.27
3,1 3,2
Nonsmoker 13 22 35
18.03 16.97

Column Total 34 32 66
 18-37

Two-Sample Chi-Square
Example

Null There is no difference in

distribution channel for age
categories.
Statistical test Chi-square
Significance level .05
Calculated value 6.86, d.f. = 2
Critical test value 5.99
(from Appendix C, Exhibit C-3)
 18-38

Exhibit 18-8 SPSS Cross-

Tab Procedure
 18-39

Two-Related-Samples
Tests

Parametric Nonparametric
 18-40

Exhibit 18-9 Sales Data for

Paired-Samples t-Test

Sales Sales
Company Year 2 Year 1 Difference D D2
GM 126932 123505 3427 11744329
GE 54574 49662 4912 24127744
Exxon 86656 78944 7712 59474944
IBM 62710 59512 3192 10227204
Ford 96146 92300 3846 14971716
AT&T 36112 35173 939 881721
Mobil 50220 48111 2109 4447881
DuPont 35099 32427 2632 6927424
Sears 53794 49975 3819 14584761
Amoco 23966 20779 3187 10156969
Total ΣD = 35781 . ΣD = 157364693 .
 18-41

Paired-Samples t-Test
Example

Null Year 1 sales = Year 2 sales

Statistical test Paired sample t-test
Significance level .01
Calculated value 6.28, d.f. = 9
Critical test value 3.25
(from Appendix C, Exhibit C-2)
 18-42

Exhibit 18-10 SPSS Output

for Paired-Samples t-Test
 18-43

Related-Samples Nonparametric
Tests: McNemar Test

After After
Before
Do Not Favor Favor

Favor A B

Do Not Favor C D
 18-44

An Example of the
McNemar Test

After After
Before
Do Not Favor Favor

Favor A=10 B=90

Do Not Favor C=60 D=40

 18-45

k-Independent-Samples
Tests: ANOVA
• Tests the null hypothesis that the means
of three or more populations are equal
• One-way: Uses a single-factor, fixed-
effects model to compare the effects of a
treatment or factor on a continuous
dependent variable
 18-46

Exhibit 18-12
ANOVA Example
__________________________________________Model Summary_________________________________________

Source d.f. Sum of Squares Mean Square F Value p Value

Model (airline) 2 11644.033 5822.017 28.304 0.0001

Residual (error) 57 11724.550 205.694

Total 59 23368.583

_______________________Means Table________________________

Count Mean Std. Dev. Std. Error

Delta 20 38.950 14.006 3.132
Lufthansa 20 58.900 15.089 3.374

KLM 20 72.900 13.902 3.108

All data are hypothetical

 18-47

ANOVA Example
Continued

Null A1 = A2 = A3

Statistical test ANOVA and F ratio
Significance level .05
Calculated value 28.304, d.f. = 2, 57
Critical test value 3.16
(from Appendix C, Exhibit C-9)
 18-48

Post Hoc: Scheffe’s S Multiple

Comparison Procedure

Crit.
Verses Diff Diff. p Value
Delta Lufthansa 19,950 11.400 .0002

KLM 33.950 11.400 .0001

Lufthansa KLM 14.000 11.400 .0122

 18-49

Exhibit 18-13 Multiple

Comparison Procedures
Unequal
Equal Equal Variances
Complex Pairwise n’s Unequal Variances Not
Test Comparisons Comparisons Only n’s Assumed Assumed
Fisher LSD X X X

Bonferroni X X X

Tukey HSD X X X

Tukey-Kramer X X X
Games-Howell X X X

Tamhane T2 X X X

Scheffé S X X X X

Brown-Forsythe X X X X

Newman-Keuls X X

Duncan X X

Dunnet’s T3 X

Dunnet’s C X
 18-50

Exhibit 18-14 ANOVA Plots

 18-51

Exhibit 18-15 Two-Way

ANOVA Example
__________________________________________Model Summary_________________________________________
Source d.f. Sum of Squares Mean Square F Value p Value
Airline 2 11644.033 5822.017 39.178 0.0001

Seat selection 1 3182.817 3182.817 21.418 0.0001

Airline by seat selection 2 517.033 258.517 1.740 0.1853

Residual 54 8024.700 148.606

__________Means Table Effect: Airline by Seat

Selection___________
Count Mean Std. Dev. Std. Error
Delta economy 10 35.600 12.140 3.839
Delta business 10 42.300 15.550 4.917
Lufthansa economy 10 48.500 12.501 3.953
Lufthansa business 10 69.300 9.166 2.898
KLM economy 10 64.800 13.037 4.123

KLM business 10 81.000 9.603 3.037

All data are hypothetical

 18-52

k-Related-Samples Tests

More than two levels in

grouping factor

Observations are matched

Data are interval or ratio

 18-53

Exhibit 18-17 Repeated-

Measures ANOVA Example
__________________________________________________________Model
Summary_________________________________________________________
Source d.f. Sum of Squares Mean Square F Value p Value
Airline 2 3552735.50 17763.775 67.199 0.0001
Subject (group) 57 15067.650 264.345
Ratings 1 625.633 625.633 14.318 0.0004
Ratings by air....... 2 2061.717 1030.858 23.592 0.0001
Ratings by subj..... 57 2490.650 43.696

___________________________________Means Table by Airline

_________________________________________________________________________
Count Mean Std. Dev. Std. Error
Rating 1, Delta 20 38.950 14.006 3.132
Rating 1, Lufthansa 20 58.900 15.089 3.374
Rating 1, KLM 20 72.900 13.902 3.108
Rating 2, Delta 20 32.400 8.268 1.849
Rating 2, Lufthansa 20 72.250 10.572 2.364
Rating 2, KLM 20 79.800 11.265 2.519
______________________________________Means Table Effect: Ratings_________________________________________________________________

Count Mean Std. Dev. Std. Error

Rating 1 60 56.917 19.902 2.569
Rating 2 60 61.483 23.208 2.996

All data are hypothetical.

 18-54

Key Terms

• a priori contrasts • K-independent-samples

• Alternative hypothesis tests
• Analysis of variance • K-related-samples tests
(ANOVA • Level of significance
• Bayesian statistics • Mean square
• Chi-square test • Multiple comparison tests
• Classical statistics (range tests)
• Critical value • Nonparametric tests
• F ratio • Normal probability plot
• Inferential statistics
 18-55

Key Terms

• Null hypothesis • Region of acceptance

• Observed significance • Region of rejection
level • Statistical significance
• One-sample tests • t distribution
• One-tailed test • Trials
• p value • t-test
• Parametric tests • Two-independent-samples
• Power of the test tests
• Practical significance
 18-56

Key Terms

• Two-related-samples • Type II error

tests • Z distribution
• Two-tailed test • Z test
• Type I error