HYPOTHESIS TESTING - PowerPoint by e00Dgg

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									HYPOTHESIS TESTING
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Statistical Inference
the methods for drawing a conclusion about the population
 we have sampled, while at the same time having some
 knowledge of the likelihood that the conclusion is incorrect.
the use of the information in a sample to draw conclusions
 about the entire population.
What is a statistical hypothesis?
A statistical hypothesis is a statement about one or more
 parameter in the model we are considering.

There are two hypotheses in a statistical hypothesis testing:

  Null Hypothesis

  Alternative Hypothesis

One of these statistical hypotheses corresponds to the
 scientific hypothesis of interest, while the other contradicts
 the scientific hypothesis.
The NULL: Ho and
the ALTERNATIVE: Ha         Hypotheses

  Ho:         claim about a population that is
         initially assumed to be TRUE

Ho:      Jeremy is guilty of CHEATING in room 34
              during the final exam

  Ha:      hypothesis against the Ho


   Ha:      Jeremy is NOT guilty of CHEATING in
            room 34 during the final exam
Types of Hypothesis Test
                          Non-Directional
                      Alternative Hypothesis




                      Directional Alternative
                            Hypothesis
Example:
The EPA reports that Honda Civic’s mean emission
of NOX/mi is 1.45 grams. Honda claims that their
new car manufacturing process reduces the mean
level of exhaust emitted by Honda Civic. State your
null and alternative hypotheses to prove their
claim.
       Honda civic’s NOX/mile emission has a mean of
   Ho:
       1.45 grams    (µ=1.45)

         Honda civic’s NOX/mile emission has a mean
   Ha:
         that is less than 1.45 grams (µ < 1.45)
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Example: 2
  American Express wondered whether giving
  frequent flyer miles for every purchase would
  increase credit card usage. Their current mean
  usage per individual card holder is $2500 per year.
  State the hypotheses for this claim.

    American Express has a mean card usage of
Ho: $2500/year for individual card holder (µ=$2500)


    American Express has a mean card usage of more than
Ha:
    $2500/year for individual card holder (µ>$2500)
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Example:3
An insurance company is reviewing its current policy
rates. When originally setting the rates, they believed
that the average claim amount was $1800. They are
concerned that the true mean is actually higher than this
set amount, which means they could potentially lose a
lot of money. State the hypotheses for this claim.

Ho: The insurance company’s average claim is $1800
    (µ=$1800)

    The insurance company’s average claim is more
Ha:
    than $1800 (µ>$1800)
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