What is Hypothesis Testing in

Statistics? Types and Examples

What Is Hypothesis Testing in Statistics?

Hypothesis Testing is a type of statistical analysis in which you put your

assumptions about a population parameter to the test. It is used to estimate
the relationship between 2 statistical variables.

Let's discuss few examples of statistical hypothesis from real-life - 

 A teacher assumes that 60% of his college's students come from lower-
middle-class families.

 A doctor believes that 3D (Diet, Dose, and Discipline) is 90% effective for
diabetic patients.

Now that you know about hypothesis testing, look at the two types of
hypothesis testing in statistics.

How Hypothesis Testing Works?

An analyst performs hypothesis testing on a statistical sample to present

evidence of the plausibility of the null hypothesis. Measurements and
analyses are conducted on a random sample of the population to test a
theory. Analysts use a random population sample to test two hypotheses: the
null and alternative hypotheses.

The null hypothesis is typically an equality hypothesis between population

parameters; for example, a null hypothesis may claim that the population
means return equals zero. The alternate hypothesis is essentially the inverse
of the null hypothesis (e.g., the population means the return is not equal to
zero). As a result, they are mutually exclusive, and only one can be correct.
One of the two possibilities, however, will always be correct.

Null Hypothesis and Alternate Hypothesis

The Null Hypothesis is the assumption that the event will not occur. A null
hypothesis has no bearing on the study's outcome unless it is rejected.

H0 is the symbol for it, and it is pronounced H-naught.

The Alternate Hypothesis is the logical opposite of the null hypothesis. The
acceptance of the alternative hypothesis follows the rejection of the null
hypothesis. H1 is the symbol for it.

Let's understand this with an example.

A sanitizer manufacturer claims that its product kills 95 percent of germs on

average. 

To put this company's claim to the test, create a null and alternate hypothesis.

H0 (Null Hypothesis): Average = 95%.

Alternative Hypothesis (H1): The average is less than 95%.

Another straightforward example to understand this concept is determining

whether or not a coin is fair and balanced. The null hypothesis states that the
probability of a show of heads is equal to the likelihood of a show of tails. In
contrast, the alternate theory states that the probability of a show of heads
and tails would be very different.
Steps of Hypothesis Testing

Step 1: Specify Your Null and Alternate Hypotheses

It is critical to rephrase your original research hypothesis (the prediction that

you wish to study) as a null (Ho) and alternative (Ha) hypothesis so that you
can test it quantitatively. Your first hypothesis, which predicts a link between
variables, is generally your alternate hypothesis. The null hypothesis predicts
no link between the variables of interest.

Step 2: Gather Data

For a statistical test to be legitimate, sampling and data collection must be

done in a way that is meant to test your hypothesis. You cannot draw
statistical conclusions about the population you are interested in if your data is
not representative.

Step 3: Conduct a Statistical Test

Other statistical tests are available, but they all compare within-group variance
(how to spread out the data inside a category) against between-group
variance (how different the categories are from one another). If the between-
group variation is big enough that there is little or no overlap between groups,
your statistical test will display a low p-value to represent this. This suggests
that the disparities between these groups are unlikely to have occurred by
accident. Alternatively, if there is a large within-group variance and a low
between-group variance, your statistical test will show a high p-value. Any
difference you find across groups is most likely attributable to chance. The
variety of variables and the level of measurement of your obtained data will
influence your statistical test selection.

Step 4: Determine Rejection Of Your Null Hypothesis

Your statistical test results must determine whether your null hypothesis
should be rejected or not. In most circumstances, you will base your judgment
on the p-value provided by the statistical test. In most circumstances, your
preset level of significance for rejecting the null hypothesis will be 0.05 - that
is, when there is less than a 5% likelihood that these data would be seen if the
null hypothesis were true. In other circumstances, researchers use a lower
level of significance, such as 0.01 (1%). This reduces the possibility of
wrongly rejecting the null hypothesis.

Step 5: Present Your Results 

The findings of hypothesis testing will be discussed in the results and

discussion portions of your research paper, dissertation, or thesis. You should
include a concise overview of the data and a summary of the findings of your
statistical test in the results section. You can talk about whether your results
confirmed your initial hypothesis or not in the conversation. Rejecting or failing
to reject the null hypothesis is a formal term used in hypothesis testing. This is
likely a must for your statistics assignments.

Types of Hypothesis Testing

Z Test

To determine whether a discovery or relationship is statistically significant,

hypothesis testing uses a z-test. It usually checks to see if two means are the
same (the null hypothesis). Only when the population standard deviation is
known and the sample size is 30 data points or more, can a z-test be applied.

T Test

A statistical test called a t-test is employed to compare the means of two

groups. To determine whether two groups differ or if a procedure or treatment
affects the population of interest, it is frequently used in hypothesis testing.

Chi-Square 

You utilize a Chi-square test for hypothesis testing concerning whether your

data is as predicted. To determine if the expected and observed results are
well-fitted, the Chi-square test analyzes the differences between categorical
variables from a random sample. The test's fundamental premise is that the
observed values in your data should be compared to the predicted values that
would be present if the null hypothesis were true.

Hypothesis Testing and Confidence Intervals

Both confidence intervals and hypothesis tests are inferential techniques that
depend on approximating the sample distribution. Data from a sample is used
to estimate a population parameter using confidence intervals. Data from a
sample is used in hypothesis testing to examine a given hypothesis. We must
have a postulated parameter to conduct hypothesis testing.

Bootstrap distributions and randomization distributions are created using

comparable simulation techniques. The observed sample statistic is the focal
point of a bootstrap distribution, whereas the null hypothesis value is the focal
point of a randomization distribution.

A variety of feasible population parameter estimates are included in

confidence ranges. In this lesson, we created just two-tailed confidence
intervals. There is a direct connection between these two-tail confidence
intervals and these two-tail hypothesis tests. The results of a two-tailed
hypothesis test and two-tailed confidence intervals typically provide the same
results. In other words, a hypothesis test at the 0.05 level will virtually always
fail to reject the null hypothesis if the 95% confidence interval contains the
predicted value. A hypothesis test at the 0.05 level will nearly certainly reject
the null hypothesis if the 95% confidence interval does not include the
hypothesized parameter.

Simple and Composite Hypothesis Testing

Depending on the population distribution, you can classify the statistical

hypothesis into two types.
Simple Hypothesis: A simple hypothesis specifies an exact value for the
parameter.

Composite Hypothesis: A composite hypothesis specifies a range of values.

Example: 

A company is claiming that their average sales for this quarter are 1000 units.
This is an example of a simple hypothesis.

Suppose the company claims that the sales are in the range of 900 to 1000
units. Then this is a case of a composite hypothesis.

One-Tailed and Two-Tailed Hypothesis Testing

The One-Tailed test, also called a directional test, considers a critical region of
data that would result in the null hypothesis being rejected if the test sample
falls into it, inevitably meaning the acceptance of the alternate hypothesis.

In a one-tailed test, the critical distribution area is one-sided, meaning the test
sample is either greater or lesser than a specific value.

In two tails, the test sample is checked to be greater or less than a range of
values in a Two-Tailed test, implying that the critical distribution area is two-
sided.

If the sample falls within this range, the alternate hypothesis will be accepted,
and the null hypothesis will be rejected.

Right Tailed Hypothesis Testing

If the larger than (>) sign appears in your hypothesis statement, you are using
a right-tailed test, also known as an upper test. Or, to put it another way, the
disparity is to the right. For instance, you can contrast the battery life before
and after a change in production. Your hypothesis statements can be the
following if you want to know if the battery life is longer than the original (let's
say 90 hours):

 The null hypothesis is (H0 <= 90) or less change.

 A possibility is that battery life has risen (H1) > 90.

The crucial point in this situation is that the alternate hypothesis (H1), not the
null hypothesis, decides whether you get a right-tailed test.

Left Tailed Hypothesis Testing

Alternative hypotheses that assert the true value of a parameter is lower than
the null hypothesis are tested with a left-tailed test; they are indicated by the
asterisk "<".