MBA Hypothesis Testing

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Hypothesis Testing1

Hypothesis testing is a formal procedure for investigating our ideas about the world using
statistics. It is most often used by scientists to test specific predictions, called hypotheses, that
arise from theories.

There are 5 main steps in hypothesis testing:

1. State your research hypothesis as a null (Ho) and alternate (Ha) hypothesis.
2. Collect data in a way designed to test the hypothesis.
3. Perform an appropriate statistical test.
4. Decide whether the null hypothesis is supported or refuted.
5. Present the findings in your results and discussion section.

Though the specific details might vary, the procedure you will use when testing a hypothesis
will always follow some version of these steps.

Step 1: State your null and alternate hypothesis


After developing your initial research hypothesis (the prediction that you want to investigate),
it is important to restate it as a null (Ho) and alternate (Ha) hypothesis so that you can test it
mathematically.

The alternate hypothesis is usually your initial hypothesis that predicts a relationship
between variables. The null hypothesis is a prediction of no relationship between the variables
you are interested in.

You want to test whether there is a relationship between gender and height. Based on your
knowledge of human physiology, you formulate a hypothesis that men are, on average, taller
than women. To test this hypothesis, you restate it as:

Ho: Men are, on average, not taller than women.


Ha: Men are, on average, taller than women.

Step 2: Collect data


For a statistical test to be valid, it is important to perform sampling and collect data in a way
that is designed to test your hypothesis. If your data are not representative, then you cannot
make statistical inferences about the population you are interested in.

To test differences in average height between men and women, your sample should have an
equal proportion of men and women, and cover a variety of socio-economic classes and any
other variables that might influence average height.

You should also consider your scope (Worldwide? For one country?) A potential data source
in this case might be census data, since it includes data from a variety of regions and social
classes and is available for many countries around the world.

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Source: https://www.scribbr.com/methodology/hypothesis-testing/
For students’ study purpose during covid19 pandemic lockdown
Step 3: Perform a statistical test
There are a variety of statistical tests available, but they are all based on the comparison
of within-group variance (how spread out the data is within a category) versus between-
group variance (how different the categories are from one another).

If the between-group variance is large enough that there is little or no overlap between groups,
then your statistical test will reflect that by showing a low p-value. This means it is unlikely
that the differences between these groups came about by chance.

Alternatively, if there is high within-group variance and low between-group variance, then your
statistical test will reflect that with a high p-value. This means it is likely that any difference
you measure between groups is due to chance.

Your choice of statistical test will be based on the type of data you collected.

Based on the type of data you collected, you perform a one-tailed t-test to test whether men are
in fact taller than women. This test gives you:

 an estimate of the difference in average height between the two groups.


 a p-value showing how likely you are to see this difference if the null hypothesis of no
difference is true.

Your t-test shows an average height of 175.4 cm for men and an average height of 161.7 cm
for women, with an estimate of the true difference ranging from 10.2cm to infinity. The p-value
is 0.002.

Step 4: Decide whether the null hypothesis is


supported or refuted
Based on the outcome of your statistical test, you will have to decide whether your null
hypothesis is supported or refuted.

In most cases you will use the p-value generated by your statistical test to guide your decision.
And in most cases, your cutoff for refuting the null hypothesis will be 0.05 – that is, when there
is a less than 5% chance that you would see these results if the null hypothesis were true.

In your analysis of the difference in average height between men and women, you find that the
p-value of 0.002 is below your cutoff of 0.05, so you decide to reject your null hypothesis of
no difference.

Step 5: Present your findings


The results of hypothesis testing will be presented in the results and discussion sections of your
research paper.

In the results section you should give a brief summary of the data and a summary of the results
of your statistical test (for example, the estimated difference between group means and
associated p-value). In the discussion, you can discuss whether your initial hypothesis was
supported or refuted.
In the formal language of hypothesis testing, we talk about refuting or accepting the null
hypothesis. You will probably be asked to do this in your statistics assignments.

Stating results in a statistics assignment

In our comparison of mean height between men and women we found an average difference of
14.3cm and a p-value of 0.002; therefore, we can refute the null hypothesis that men are not
taller than women and conclude that there is likely a difference in height between men and
women.
However, when presenting research results in academic papers we rarely talk this way. Instead,
we go back to our alternate hypothesis (in this case, the hypothesis that men are on average
taller than women) and state whether the result of our test was consistent or inconsistent with
the alternate hypothesis.

If your null hypothesis was refuted, this result is interpreted as being consistent with your
alternate hypothesis.

Stating results in a research paper

We found a difference in average height between men and women of 14.3cm, with a p-value
of 0.002, consistent with our hypothesis that there is a difference in height between men and
women.
These are superficial differences; you can see that they mean the same thing.

You might notice that we don’t say that we accept or reject the alternate hypothesis. This
is because hypothesis testing is not designed to prove or disprove anything. It is only designed
to test whether a pattern we measure could have arisen by chance.

If we reject the null hypothesis based on our research (i.e., we find that it is unlikely that the
pattern arose by chance), then we can say our test lends support to our hypothesis. But if the
pattern does not pass our decision rule, meaning that it could have arisen by chance, then we
say the test is inconsistent with our hypothesis.

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