Chapter-8-Estimation & Hypothesis Testing
Chapter-8-Estimation & Hypothesis Testing
Chapter-8-Estimation & Hypothesis Testing
CHAPTER 8
8. ESTIMATION AND HYPOTHESIS TESTING
Inference is the process of making interpretations or conclusions from sample data for the
totality of the population.
It is only the sample data that is ready for inference.
In statistics there are two ways though which inference can be made.
Statistical estimation
Statistical hypothesis testing.
Inference Analyzed
Population
Data
Numerical
Sample
data
Data analysis is the process of extracting relevant information from the summarized data.
Statistical Estimation
This is one way of making inference about the population parameter where the investigator
does not have any prior notion about values or characteristics of the population parameter.
There are two ways estimation.
1) Point Estimation
It is a procedure that results in a single value as an estimate for a parameter.
2) Interval estimation
It is the procedure that results in the interval of values as an estimate for a parameter,
which is interval that contains the likely values of a parameter. It deals with identifying
the upper and lower limits of a parameter. The limits by themselves are random variable.
Definitions
Confidence Interval: An interval estimate with a specific level of confidence
Confidence Level: The percent of the time that the true value will lie in the interval
estimate given.
Consistent Estimator: An estimator which gets closer to the value of the parameter as the
sample size increases.
Page 1 of 12
Lecture notes on Introduction to Statistics Chapter 8: ESTIMATION AND HYPOTHESIS TESTING
Degrees of Freedom: The number of data values which are allowed to vary once a
statistic has been determined.
Estimator: A sample statistic which is used to estimate a population parameter. It must be
unbiased, consistent, and relatively efficient.
Estimate: Is the different possible values which an estimator can assumes.
Interval Estimate: A range of values used to estimate a parameter.
Point Estimate: A single value used to estimate a parameter.
Relatively Efficient Estimator: The estimator for a parameter with the smallest variance.
Unbiased Estimator: An estimator whose expected value is the value of the parameter
being estimated.
We can phrase the latter question differently: How confident can we be that the value of the
statistic falls within a certain "distance" of the parameter? Or, what is the probability that the
parameter's value is within a certain range of the statistic's value? This range is the confidence
interval.
The confidence level is the probability that the value of the parameter falls within the range
specified by the confidence interval surrounding the statistic.
There are different cases to be considered to construct confidence intervals.
Case 1: If sample size is large or if the population is normal with known variance
Recall the Central Limit Theorem, which applies to the sampling distribution of the mean of a
sample. Consider samples of size n drawn from a population, whose mean is and standard
deviation is with replacement and order important. The population can have any frequency
distribution. The sampling distribution of X will have a mean x and a standard
deviation x , and approaches a normal distribution as n gets large. This allows us to
n
use the normal distribution curve for computing confidence intervals.
Page 2 of 12
Lecture notes on Introduction to Statistics Chapter 8: ESTIMATION AND HYPOTHESIS TESTING
X
Z has a normal distributi on with mean 0 and var iance 1
n
X Z n
X , where is a measure of error .
Z n
- For the interval estimator to be good the error should be small. How it be small?
By making n large
Small variability
Taking Z small
- To obtain the value of Z, we have to attach this to a theory of chance. That is, there is an area of
size 1 such that
P ( Z 2 Z Z 2 ) 1
Where is the probabilit y that the parameter lies outside the int erval
Z 2 s tan ds for the s tan dard normal var iable to the right of which
2 probabilit y lies , i.e P( Z Z 2 ) 2
X
P( Z 2 Z 2 ) 1
n
P( X Z 2 n X Z 2 n) 1
But usually
2
is not known, in that case we estimate by its point estimator S2
Here are the Z values corresponding to the most commonly used confidence levels.
100(1 ) % 2 Z 2
90 0.10 0.05 1.645
95 0.05 0.025 1.96
99 0.01 0.005 2.58
Page 3 of 12
Lecture notes on Introduction to Statistics Chapter 8: ESTIMATION AND HYPOTHESIS TESTING
Case 2: If sample size is small and the population variance, 2 is not known.
X
t has t distributi on with n 1 deg rees of freedom.
S n
The unit of measurement of the confidence interval is the standard error. This is just the
standard deviation of the sampling distribution of the statistic.
Examples:
1. From a normal sample of size 25 a mean of 32 was found .Given that the population
standard deviation is 4.2. Find
a) A 95% confidence interval for the population mean.
b) A 99% confidence interval for the population mean.
Solution:
a)
X 32, 4.2, 1 0.95 0.05, 2 0.025
Z 2 1.96 from table.
The required int erval will be X Z 2 n
32 1.96 * 4.2 25
32 1.65
(30.35, 33.65)
b)
Page 4 of 12
Lecture notes on Introduction to Statistics Chapter 8: ESTIMATION AND HYPOTHESIS TESTING
2. A drug company is testing a new drug which is supposed to reduce blood pressure. From
the six people who are used as subjects, it is found that the average drop in blood pressure
is 2.28 points, with a standard deviation of .95 points. What is the 95% confidence interval
for the mean change in pressure?
Solution:
Hypothesis Testing
This is also one way of making inference about population parameter, where the investigator has
prior notion about the value of the parameter.
Definitions:
Statistical hypothesis: is an assertion or statement about the population whose plausibility is
to be evaluated on the basis of the sample data.
Test statistic: is a statistics whose value serves to determine whether to reject or accept the
hypothesis to be tested. It is a random variable.
Statistic test: is a test or procedure used to evaluate a statistical hypothesis and its value
depends on sample data.
There are two types of hypothesis:
Null hypothesis:
- It is the hypothesis to be tested.
- It is the hypothesis of equality or the hypothesis of no difference.
- Usually denoted by H0.
Alternative hypothesis:
- It is the hypothesis available when the null hypothesis has to be rejected.
- It is the hypothesis of difference.
- Usually denoted by H1 or Ha.
Page 5 of 12
Lecture notes on Introduction to Statistics Chapter 8: ESTIMATION AND HYPOTHESIS TESTING
1. H 0 : 0 vs H1 : 0
2. H 0 : 0 vs H1 : 0
3. H 0 : 0 vs H1 : 0
Page 6 of 12
Lecture notes on Introduction to Statistics Chapter 8: ESTIMATION AND HYPOTHESIS TESTING
Case 2: When sampling is from a normal distribution with unknown and small sample size
2
X 0
Z cal , if 2 is known.
n
X 0
, if 2 is unknown.
S n
- The decision rule is the same as case I.
Page 7 of 12
Lecture notes on Introduction to Statistics Chapter 8: ESTIMATION AND HYPOTHESIS TESTING
Examples:
1. Test the hypotheses that the average height content of containers of certain lubricant is 10 liters if
the contents of a random sample of 10 containers are 10.2, 9.7, 10.1, 10.3, 10.1, 9.8, 9.9, 10.4,
10.3, and 9.8 liters. Use the 0.01 level of significance and assume that the distribution of contents
is normal.
Solution:
Let Population mean. , 0 10
Step 1: Identify the appropriate hypothesis
H 0 : 10 vs H1 : 10
Step 2: select the level of significance, 0.01( given)
Step 3: Select an appropriate test statistics
t- Statistic is appropriate because population variance is not known and the sample size is
also small.
Step 4: identify the critical region.
Here we have two critical regions since we have two tailed hypothesis
The critical region is tcal t0.005 (9) 3.2498
(3.2498, 3.2498) is accep tan ce region.
Step 5: Computations:
X 10.06, S 0.25
X 0 10.06 10
tcal 0.76
S n 0.25 10
Step 6: Decision
Accept H0 , since tcal is in the acceptance region.
Step 7: Conclusion
At 1% level of significance, we have no evidence to say that the average height content of
containers of the given lubricant is different from 10 litters, based on the given sample data.
2. The mean life time of a sample of 16 fluorescent light bulbs produced by a company is computed to
be 1570 hours. The population standard deviation is 120 hours. Suppose the hypothesized value for
the population mean is 1600 hours. Can we conclude that the life time of light bulbs is decreasing?
(Use 0.05 and assume the normality of the population)
Solution:
Let Population mean. , 0 1600
Step 1: Identify the appropriate hypothesis
H 0 : 1600 vs H1 : 1600
Step 2: select the level of significance, 0.05 ( given)
Step 3: Select an appropriate test statistics
Z- Statistic is appropriate because population variance is known.
Page 8 of 12
Lecture notes on Introduction to Statistics Chapter 8: ESTIMATION AND HYPOTHESIS TESTING
Exercise: It is known in a pharmacological experiment that rats fed with a particular diet over a
certain period gain an average of 40 gms in weight. A new diet was tried on a sample of 20 rats
yielding a weight gain of 43 gms with variance 7 gms. Test the hypothesis that the new diet is an
improvement assuming normality.
Test of Association
Suppose we have a population consisting of observations having two attributes or
qualitative characteristics say A and B.
If the attributes are independent then the probability of possessing both A and B is PA*PB
Where PA is the probability that a number has attribute A.
PB is the probability that a number has attribute B.
B
A B1 B2 . . Bj . Bc Total
A1 O11 O12 O1j O1c R1
A2 O21 O22 O2j O2c R2
.
.
Ai Oi1 Oi2 Oij Oic Ri
.
.
Ar Or1 Or2 Orj Orc
Total C1 C2 Cj n
Page 9 of 12
Lecture notes on Introduction to Statistics Chapter 8: ESTIMATION AND HYPOTHESIS TESTING
- The chi-square procedure test is used to test the hypothesis of independency of two
attributes .For instance we may be interested
Whether the presence or absence of hypertension is independent of
smoking habit or not.
Whether the size of the family is independent of the level of education
attained by the mothers.
Whether there is association between father and son regarding boldness.
Whether there is association between stability of marriage and period of
acquaintance ship prior to marriage.
- The 2 statistic is given by:
r c (O e )
2
cal
2 ij ij
~ 2 ( r 1)( c 1)
i 1 j 1 e
ij
Where Oij the number of units that belong to category i of A and j of B.
eij Expected frequency that belong to category i of A and j of B.
Page 10 of 12
Lecture notes on Introduction to Statistics Chapter 8: ESTIMATION AND HYPOTHESIS TESTING
Examples:
1. A geneticist took a random sample of 300 men to study whether there is association between
father and son regarding boldness. He obtained the following results.
Son
Father Bold Not
Bold 85 59
Not 65 91
Using 5% , test whether there is association between father and son regarding boldness.
Solution:
H 0 : There is no associatio n between Father and Son regarding boldness.
H1 : not H 0
Page 11 of 12
Lecture notes on Introduction to Statistics Chapter 8: ESTIMATION AND HYPOTHESIS TESTING
Test the hypothesis that the size of the family is independent of the level of education attained
by fathers. (Use 5% level of significance)
Solution:
H 0 : There is no associatio n between the size of the family and the level of
education attained by fathers.
H1 : not H 0 .
- First calculate the row and column totals
R1 83, R2 117, C1 45, C2 96, C3 59
- Then calculate the expected frequencies( eij’s)
Ri * C j e11 18.675, e12 39.84, e13 24.485
eij
n e21 26.325, e22 56.16, e23 34.515
- Obtain the calculated value of the chi-square.
2 3 (Oij eij ) 2
2
cal
i 1 j 1 e
ij
Page 12 of 12