Statistics

By Abhijeet Salunke
Statistical Decisions
• Very often in practice we are called upon to make decisions about
populations on the basis of sample information.
• Such decisions are called statistical decisions.
• For example, we may wish to decide on the basis of sample data
whether a new serum is really effective in curing a disease, whether
one educational procedure is better than another, or whether a given
coin is loaded
Statistical Hypotheses. Null Hypotheses
• In attempting to reach decisions, it is useful to make assumptions or
guesses about the populations involved.
• Such assumptions, which may or may not be true, are called statistical
hypotheses and in general are statements about the probability
distributions of the populations.
NULL hypotheses
• If we want to decide whether a given coin is loaded, we formulate the
hypothesis that the coin is fair, i.e., p = 0.5, where p is the probability
of heads.
• Similarly, if we want to decide whether one procedure is better than
another, we formulate the hypothesis that there is no difference
between the procedures (i.e., any observed differences are merely
due to fluctuations in sampling from the same population).
• Such hypotheses are often called null hypotheses or simply
hypotheses, are denoted by H0.
Alternate hypotheses
• Any hypothesis that differs from a given null hypothesis is called an
alternative hypothesis.
• For example, if the null hypothesis is p 0.5, possible alternative
hypotheses are p =0.7, or p ≠0.5. A hypothesis alternative to the null
hypothesis is denoted by H1.
Tests of Hypotheses and Significance
• If on the supposition that a particular hypothesis is true we find that results
observed in a random sample differ markedly from those expected under the
hypothesis on the basis of pure chance using sampling theory, we would say
that the observed differences are significant and we would be inclined to reject
the hypothesis (or at least not accept it on the basis of the evidence obtained).
• For example, if 20 tosses of a coin yield 16 heads, we would be inclined to
reject the hypothesis that the coin is fair, although it is conceivable that we
might be wrong.
• Procedures that enable us to decide whether to accept or reject hypotheses or
to determine whether observed samples differ significantly from expected
results are called tests of hypotheses, tests of significance, or decision rule.
Type I and Type II Errors
• If we reject a hypothesis when it happens to be true, we say that a Type
I error has been made.
• If, on the other hand, we accept a hypothesis when it should be
rejected, we say that a Type II error has been made.
• In either case a wrong decision or error in judgment has occurred.
• In order for any tests of hypotheses or decision rules to be good, they
must be designed so as to minimize errors of decision.
• This is not a simple matter since, for a given sample size, an attempt to
decrease one type of error is accompanied in general by an increase in
the other type of error
Level of Significance
• In testing a given hypothesis, the maximum probability with which we would
be willing to risk a Type I error is called the level of significance of the test.
• This probability is often specified before any samples are drawn, so that
results obtained will not influence our decision.
• In practice a level of significance of 0.05 or 0.01 is customary, although other
values are used.
• If for example a 0.05 or 5% level of significance is chosen in designing a test
of a hypothesis, then there are about 5 chances in 100 that we would reject
the hypothesis when it should be accepted, i.e., whenever the null
hypotheses is true, we are about 95% confident that we would make the
right decision.
Tests Involving the Normal Distribution
• To illustrate the ideas presented above,
suppose that under a given hypothesis the
sampling distribution of a statistic S is a
normal distribution with mean μs and
standard deviation σs.
• Also, suppose we decide to reject the
hypothesis if S is either too small or too
large. The distribution of the standardized
variable is the standard normal distribution
(mean 0, variance 1) shown in Fig, and
extreme values of Z would lead to the
rejection of the hypothesis.
Tests Involving the Normal Distribution
• As indicated in the figure, we can be 95% confident that, if the hypothesis
is true, the z score of an actual sample statistic S will lie between -1.96
and 1.96. (since the area under the normal curve between these values is
0.95).
• If on choosing a single sample at random we find that the z score of its
statistic lies outside the range -1.96 to 1.96, we would conclude that such
an event could happen with the probability of only 0.05 (total shaded
area in the figure) if the given hypothesis were true.
• We would then say that this z score differed significantly from what would
be expected under the hypothesis, and we would be inclined to reject the
hypotheses.
Tests Involving the Normal Distribution
• Hypothesis is rejected at a 0.05 level of significance or that the z score
of the given sample statistic is significant at a 0.05 level of
significance.
• The set of z scores outside the range -1.96 to 1.96 constitutes what is
called the critical region or region of rejection of the hypothesis or the
region of significance. The set of z scores inside the range -1.96 to
1.96 could then be called the region of acceptance of the hypothesis
or the region of nonsignificance.
Decision Rules
• On the basis of the above remarks, we can formulate the following
decision rule:
(a) Reject the hypothesis at a 0.05 level of significance if the z score of
the statistic S lies outside the range -1.96 to 1.96 (i.e., either z > - 1.96
or z < 1.96). This is equivalent to saying that the observed sample
statistic is significant at the 0.05 level.
(b) Accept the hypothesis (or, if desired, make no decision at all)
otherwise.
One-Tailed and Two-Tailed Tests
• In the above test we displayed interest in extreme values of the
statistic S or its corresponding z score on both sides of the mean, i.e.,
in both tails of the distribution. For this reason such tests are called
two-tailed tests or two-sided test.
• Often, however, we may be interested only in extreme values to one
side of the mean, i.e., in one tail of the distribution.
• Such tests are called one-tailed tests or one-sided tests. In such cases
the critical region is a region to one side of the distribution, with area
equal to the level of significance.
One-Tailed and Two-Tailed Tests
P- Value
• In most of the tests we will consider, the null hypothesis H0 will be an
assertion that a population parameter has a specific value, and the
alternative hypothesis H1 will be one of the following assertions:
(i) The parameter is greater than the stated value (right-tailed test).
(ii) The parameter is less than the stated value (left-tailed test).
(iii) The parameter is either greater than or less than the stated value
(two-tailed)
P- Value
• The P value of the test is the probability that a value of S in the
direction(s) of H1 and as extreme as the one that actually did occur
would occur if H0 were true.
• For example, suppose the standard deviation of a normal population
is known to be 3, and H0 asserts that the mean is equal to 12. A
random sample of size 36 drawn from the population yields a sample
mean 12.95. The test statistic is chosen to be,
z-Test
z-Test
z-test example (cont.)
P-Value
t-test
z-Test Vs t-Test
t-test Example
t-test Example
t-test Example
F-test
F-Test
F-test example
F-test example(cont.)
Chi-Square Test
P-values
• Z-Test = Done
• T-test = Done
• F-test = Homework
• Chi-Square test = Homework
ANOVA