Statistical Inference Part I

Statistical Inference
School of Chemical and Physical Sciences

Lovely Professional University
Statistical Inference
It is the branch of statistics which is
concerned with using the probability concept
to deal with uncertainty in decision making.
It refers to the process of selecting and using a
sample statistic to draw the inference about a
population parameter based on a subset of it-
the sample drawn from the population.
Hypothesis testing
Estimation
What is Hypothesis?
Ordinarily, it means a mere
assumption or some supposition to
be proved or disproved.
But, for the researchers hypothesis is
a formal question that he intends to
resolve
What is Hypothesis?
Hence a hypothesis may be defined as a
proposition or a set of proposition set
forth as an explanation for the
occurrence of some specified group of
phenomena either asserted merely as
provisional conjecture to guide some
investigations or accepted as highly
probable in the light of established facts.
Hypothesis is a predictive statement,
capable of being tested by scientific
methods, that relates an
independent variable
Characteristics of Hypothesis
1) Hypothesis should be clear and precise. If the
hypothesis is not clear and precise, the
inference drawn on its basis cannot be taken as
reliable.
2) It should be capable of being tested,
3) It should state the relation ship between the
variables
4) It should be limited in scope and must be
specific. A researcher must remember that
narrower hypotheses are generally some
testable and he should develop such hypothesis
Characteristics of Hypothesis
5) Hypothesis should be stated as far as
possible in most simple terms so that the
same is easily understandable by all the
concerned.
6) Hypothesis should be consistent with most
known facts. i.e. it must be consistent with a
substantial body of the established facts. In
other words, it should be one which judges
accept as being the most likely.
7) Hypothesis should be amenable of
testing within a reasonable time.
8) It should explain the facts that gave
rise to the need for explanation. It
means that by using the hypothesis
plus other known and accepted
generalizations, one should be able to
deduce the original problem condition.
Null hypothesis and Alternative Hypothesis
Suppose there are the two methods A and B

If we are able to compare them
And consider that both the methods are
equally good , then this assumption is
termed as Null hypothesis.
But, if we think that method A is superior to B
or vice versa then it is termed as alternative
hypothesis.
Null Hypothesis is represented by H0
Alternative Hypothesis is represented by H1
Null and alternative hypothesis is drawn
before the sample is drawn
In general, null hypothesis represents the
hypothesis we are trying to reject, and
alternative hypothesis represents all other
possibilities.
Type I and Type II errors
We may reject the H0 when H0 is true : type 1
error
and we may accept the H0 when in fact H0 is not

true: type 2 error.
In other words, type 1 error means rejection of
hypothesis which should have been accepted
and type II error means accepting the
hypothesis which should have been rejected.
The size of type 1 error is given by
the probability of type 1 error it is
denoted by α (producer’s risk)
The size of type 2 error is given by
the probability of type 2 error it is
denoted by β (consumer risks)
Level of significance
level of significance is the probability of type
1 error.
If we consider the significance level at 5%
then it means H0 will be rejected when the
sampling result has a less than 0.05
probability of occurring if H0 is true.
It means that researchers is willing to take as
much as the 5 percent risk of rejecting the
null hypothesis when Ho is true.
Thus the significance level is the
maximum value of the
probability of rejecting H0
when it is true and is usually
determined in advance before
testing the hypothesis
Two tailed and One tailed tests
(i) H0: µ=µ0 against H1: µ ≠ µ0

(ii) H0: µ=µ0 against H1: µ > µ0
Or
H0: µ<=µ0 against H1: µ > µ0
(iii) H0: µ=µ0 against H1: µ < µ0
Or
H0: µ>=µ0 against H1: µ < µ0
µ= population mean
µ0 hypothesised mean
Based on the sign of alternative hypothesis

≠ represents two tailed test
> Represents right tailed test
< represents left tail test
Testing the Hypothesis
Let given Hypothesis is H0 and alternative
hypothesis H1
We make a decision rule according to which
we accept and reject
Let us consider the example, that we want to
examine the mean age of the people in a city
is 40 years. For hypothesis testing we have to
be more specific
(i) The mean age of the people in a city is
40 years or not
(ii)The mean age of the people in a city is
40 years or higher
(iii) The mean age of the people in a city
is 40 years or lower
For testing this we set up the hypothesis as
(i) H0 : µ=40 against H1 µ ≠ 40
(ii) H0 : µ=40 against H1 µ > 40
(iii)H0 : µ=40 against H1 µ < 40
Collect the sample size if the sample mean is

closed to 40 then accept H0 otherwise
reject H0
Right tailed test
The critical value is on the right side end
of the probability curve.
For the 5 % of level of significance, the
critical value is 1.645.
The null hypothesis is rejected when the
value of the test statistic is larger than
1.645
Left tail test
The critical value is less than -1.645
And the null hypothesis is rejected
when the value of test statistic is
smaller than -1.645.
Procedure for Hypothesis testing
The various steps involved in hypothesis testing are stated
below:
(i) Making a formal statement
 The step consists in making a formal statement of the null
hypothesis (H0) and also of the alternative hypothesis (H1).
This means that hypotheses should be clearly stated,
considering the nature of the research problem.
For instance, Mr. Mohan of the Civil Engineering
Department wants to test the load bearing capacity of an old
bridge which must be more than 10 tons, in that case he can
state his hypotheses as
The average score in an aptitude test
administered at the national level is 80. To
evaluate a state’s education system, the
average score of 100 of the state’s students
selected on random basis was 75. The state
wants to know if there is a significant
difference between the local scores and the
national scores
Selecting a significance level:
The factors that affect the level of significance are:
(a) the magnitude of the difference between sample
means
(b) the size of the samples
(c) the variability of measurements within samples
(d) whether the hypothesis is directional or non-
directional.
In brief, the level of significance must be adequate in the
context of the purpose and nature of enquiry.
Deciding the distribution to use
 After deciding the level of significance, the
next step in hypothesis testing is to
determine the appropriate sampling
distribution. The choice generally remains
between normal distribution and the t-
distribution. The rules for selecting the
correct distribution are similar to those
which we have stated earlier in the context
of estimation
Selecting a random sample and
computing an appropriate value:
Another step is to select
a random sample(s) and compute an
appropriate value from the sample
data concerning the test statistic
utilizing the relevant distribution
Critical value
Using the distribution of test
statistic, the level of significance and
the type of test (i.e. one tailed or two
tailed)
Decision Value
The null Hypothesis is rejected when value of
(a) Test statistic < lower critical value or test
statistic vale is > upper critical value (two
tailed test)
(b) Test statistic > critical value (right tailed test)
(c) Test statistic< critical value (left tailed test)
Otherwise the null hypothesis cannot be rejected

as there are not enough statistical evidence
against it.
Degree of freedom
The number of independent observations which
make up a statistic is known as the degree of
freedom associated with that statistics.
It is the number of the values in the final
calculation of a statistic that are free to vary.
df of statistic = number of independent
observations-number of parameters estimated.
The degree of freedom for a sample of size n is n-
1
Hypothesis testing for mean
(i) H0: µ=µ0 against H1: µ ≠ µ0
(ii) H0: µ=µ0 against H1: µ > µ0
Or
H0: µ<=µ0 against H1: µ > µ0
(iii) H0: µ=µ0 against H1: µ < µ0
Or
H0: µ>=µ0 against H1: µ < µ0

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Statistical Inference Part I

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Statistical Inference

School of Chemical and Physical Sciences

Suppose there are the two methods A and B

and we may accept the H0 when in fact H0 is not

(i) H0: µ=µ0 against H1: µ ≠ µ0

Based on the sign of alternative hypothesis

Collect the sample size if the sample mean is

Otherwise the null hypothesis cannot be rejected

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