STATISTICAL DECISION THEORY
- making decisions about the population on the basis of sample
information
- useful to make assumptions, these are called statistical hypothesis
Hypothesis testing is a form of statistical inference that uses data from a
sample to draw conclusions about a population parameter or a
population probability distribution. https://www.britannica.com
›
Two types of statistical hypothesis
1. Null Hypothesis, Ho
2. Alternative Hypothesis, Ha
Null Hypothesis
This is otherwise known as a no difference or a no relationship
hypothesis.
Examples
1. There is no significant relationship between water absorption and
bending strength.
2. There is no significant difference between the academic
performance in English of male and female students.
3. There is no significant relationship between nutritional status and
academic performance.
Alternative Hypothesis
The experimental hypothesis stating that there is some real difference
between two or more groups. It is the alternative to the null hypothesis.
Examples
1. There is a significant difference between reading comprehension
and mathematics achievement of students of WPU-ASHS.
2. There is a significant difference between the academic performance
in English of male and female students.
3. There is a significant relationship between nutritional status and
academic performance.
Properties of Null and Alternative Hypothesis
Non-Directional and Directional Hypothesis
1. Non directional
Also called two-tailed
Researcher predicts that two groups will be different; but doesn’t
say in what direction.
H0: µ1 = µ2 (null hypothesis)
Ha: µ1 µ2 (alternative hypothesis)
2. Directional
One-Tailed Test
Experimenter predicts that one group will do better than the
other.
H0: µ1 ≤ µ2 (null hypothesis)
Ha: µ1 µ2 (alternative hypothesis) – this is the experimenters prediction
Experimenter predicts that group 1 is less than group 2
H0: µ1 ≥ µ2 (null hypothesis)
Ha: µ1 µ2 (alternative hypothesis) – this is the experimenters prediction
Errors in Hypothesis Testing
1. Type 1 Error
A Type I error means rejecting the null hypothesis when it’s
actually true. It means concluding that results are statistically
significant when, in reality, they came about purely by chance or
because of unrelated factors.
The risk of committing this error is the significance level (alpha or
α) you choose. That’s a value that you set at the beginning of your study
to assess the statistical probability of obtaining your results (p value).
The significance level is usually set at 0.05 or 5%. This means that
your results only have a 5% chance of occurring, or less, if the null
hypothesis is actually true.
If the p value of your test is lower than the significance level, it
means your results are statistically significant and consistent with the
alternative hypothesis. If your p value is higher than the significance
level, then your results are considered statistically non-significant.
2. Type 2 Error
A Type II error means not rejecting the null hypothesis when it’s
actually false. This is not quite the same as “accepting” the null
hypothesis, because hypothesis testing can only tell you whether to
reject the null hypothesis.
Instead, a Type II error means failing to conclude there was an
effect when there actually was. In reality, your study may not have had
enough statistical power to detect an effect of a certain size.
Power is the extent to which a test can correctly detect a real
effect when there is one. A power level of 80% or higher is usually
considered acceptable.
The risk of a Type II error is inversely related to the statistical
power of a study. The higher the statistical power, the lower the
probability of making a Type II error.
Example:
You decide to get tested for COVID-19 based on mild symptoms. There are
two errors that could potentially occur:
Type I error (false positive):
The test result says you have coronavirus, but you actually
don’t.
Type II error (false negative):
The test result says you don’t have coronavirus, but you actually
do.
The Critical Value and the p-Value Approach to Hypothesis Testing
By applying the critical value approach, it is determined, whether
or not the observed test statistic is more extreme than a defined critical
value. Therefore, the observed test statistic (calculated on the basis of
sample data) is compared to the critical value, some kind of cutoff value.
If the test statistic is more extreme than the critical value, the null
hypothesis is rejected. If the test statistic is not as extreme as the critical
value, the null hypothesis is not rejected. The critical value is computed
based on the given significance level α and the type of probability
distribution of the idealized model. The critical value divides the area under
the probability distribution curve in rejection region(s) and in non-
rejection region.
The following three figures show a right tailed test, a left tailed tests,
and a two-sided test. The idealized model in the figures, and thus H0H0, is
described by a bell-shaped normal probability curve.
In a two-sided test the null hypothesis is rejected if the test statistic
is either too small or too large. Thus the rejection region for such a test
consists of two parts: one on the left and one on the right.
For the p-value approach, the likelihood (p-value) of the numerical
value of the test statistic is compared to the specified significance level (αα)
of the hypothesis test.
The p-value corresponds to the probability of observing sample data
at least as extreme as the actually obtained test statistic. Small p-values
provide evidence against the null hypothesis. The smaller (closer to 0) the p-
value, the stronger is the evidence against the null hypothesis.
If the p-value is less than or equal to the specified significance
level αα, the null hypothesis is rejected; otherwise, the null hypothesis is
not rejected. In other words, if p≤αp≤α, reject H0; otherwise, if p>αp>α do
not reject H0.
In consequence, by knowing the p-value any desired level of
significance may be assessed.
For example, if the p-value of a hypothesis test is 0.01, the null
hypothesis can be rejected at any significance level larger than or equal to
0.01. It is not rejected at any significance level smaller than 0.01. Thus,
the p-value is commonly used to evaluate the strength of the evidence
against the null hypothesis without reference to significance level.
Steps in Hypothesis Testing
1. Formulate the null (Ho) hypothesis and alternative (H1 or Ha)
hypothesis
2. Choose the appropriate test-statistics
3. Specify the level of significance (α) and determine the critical or
rejection region of the test.
The most commonly used values are α are 0.01and 0.05,
although a researcher may choose any level of significance.
4. Formulate the Decision Rule
5. Compute the value of the test statistic
6. Decision
Whether to accept or reject the null hypothesis
7. Draw a Conclusion
