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Type II Error and Power Calculations

type ii error and power calculations

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17 views

Type II Error and Power Calculations

type ii error and power calculations

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ONGC WCS
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Type II Error and Power Calculations

Recall that in hypothesis testing you can make two types of errors
• Type I Error – rejecting the null when it is true.
• Type II Error – failing to reject the null when it is false.

The probability of a Type I Error in hypothesis testing is predetermined by the


significance level.

The probability of a Type II Error cannot generally be computed because it depends on


the population mean which is unknown. It can be computed at, however, for given values
of µ , σ 2 , and n .

The power of a hypothesis test is nothing more than 1 minus the probability of a Type II
error. Basically the power of a test is the probability that we make the right decision
when the null is not correct (i.e. we correctly reject it).

Example: Consider the following hypothesis test

H 0 : µ ≥ 30
H a : µ < 30

[email protected]
A5JSZX32V0 Assume you have prior information σ 2 = 10,0000 so that in a sample of 100

σ2 10,000 σ
σ X2 = = = 100 ⇒ σ X = = 10
n 100 n

What we would like to now is calculate the probability of a Type II error conditional on a
particular value of µ . Lets assume that µ = 26 , but we could choose any value such that
the null is not correct. Lets also assume that the significance level for the test is 0.05.

We know
1. This is a left tailed test
2. We will fail to reject the null (commit a Type II error) if we get a Z statistic
greater than -1.64.
3. This -1.64 Z-critical value corresponds to some X critical value X critical , such ( )
that

⎛ µ = 30 ⎞
P ( z − stat ≥ −1.64) = P ⎜ X ≥ X critical | ⎟ = 0.95
⎝ σ X
= 10 ⎠

We can find the value of X critical by solving the following equation

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X critical − µ0
−1.64 = Z critical = ⇒
σX
X critical − 30
−1.64 = ⇒ X critical = 13.6
10

So I will incorrectly fail to reject the null as long as a draw a sample mean that greater
than 13.6. To complete the problem what I now need to do is compute the probability of
drawing a sample mean greater than 13.6 given µ = 26 and σ X = 10 . Thus, the
probability of a Type II error is given by

⎛ µ = 26 ⎞ ⎛ 13.6 − 26 ⎞
P ⎜ X > 13.6
⎜ σ =
⎟
⎟
= P⎜Z > ⎟ = P ( Z > −1.24 ) = 0.8925
⎝ X
10 ⎠ ⎝ 10 ⎠

and the power of the test is 0.1075.

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A5JSZX32V0

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