A statistical hypothesis is an assumption about a population which may or may not be true. Hypothesis testing is a set of formal procedures used by statisticians to either accept or reject statistical hypotheses. Statistical hypotheses are of two types:

·        Null hypothesis, H0H0 – represents a hypothesis of chance basis.

·        Alternative hypothesis, HaHa – represents a hypothesis of observations which are influenced by some non-random cause.

Example

suppose we wanted to check whether a coin was fair and balanced. A null hypothesis might say, that half flips will be of head and half will of tails whereas alternative hypothesis might say that flips of head and tail may be very different.

H0:P=0.5Ha:P≠0.5H0:P=0.5Ha:P≠0.5

For example if we flipped the coin 50 times, in which 40 Heads and 10 Tails results. Using result, we need to reject the null hypothesis and would conclude, based on the evidence, that the coin was probably not fair and balanced.

Hypothesis Tests

Following formal process is used by statistican to determine whether to reject a null hypothesis, based on sample data. This process is called hypothesis testing and is consists of following four steps:

1.     State the hypotheses – This step involves stating both null and alternative hypotheses. The hypotheses should be stated in such a way that they are mutually exclusive. If one is true then other must be false.

2.     Formulate an analysis plan – The analysis plan is to describe how to use the sample data to evaluate the null hypothesis. The evaluation process focuses around a single test statistic.

3.     Analyze sample data – Find the value of the test statistic (using properties like mean score, proportion, t statistic, z-score, etc.) stated in the analysis plan.

4.     Interpret results – Apply the decisions stated in the analysis plan. If the value of the test statistic is very unlikely based on the null hypothesis, then reject the null hypothesis.