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Lecture Business research methods (12/e): Chapter 17 - Donald R. Cooper, Pamela S. Schindler

Chapter 17 - Hypothesis testing. After studying this chapter you will be able to understand: The nature and logic of hypothesis testing, a statistically significant difference, the six-step hypothesis testing procedure, the differences between parametric and nonparametric tests and when to use each, the factors that influence the selection of an appropriate test of statistical significance, how to interpret the various test statistics. | Hypothesis Testing Chapter 17 1 Learning Objectives Understand . . . The nature and logic of hypothesis testing. A statistically significant difference The six-step hypothesis testing procedure. 2 Learning Objectives Understand . . . The differences between parametric and nonparametric tests and when to use each. The factors that influence the selection of an appropriate test of statistical significance. How to interpret the various test statistics 3 Pull Quote “A fact is a simple statement that everyone believes. It is innocent, unless found guilty. A hypothesis is a novel suggestion that no one wants to believe. It is guilty, until found effective.” Edward Teller, theoretical physicist, “father of the hydrogen bomb” (1908–2003) Hypothesis Testing Deductive Reasoning Inductive Reasoning 5 Hypothesis Testing Finds Truth “One finds the truth by making a hypothesis and comparing the truth to the hypothesis.” David Douglass physicist University of Rochester Statistical Procedures . | Hypothesis Testing Chapter 17 1 Learning Objectives Understand . . . The nature and logic of hypothesis testing. A statistically significant difference The six-step hypothesis testing procedure. 2 Learning Objectives Understand . . . The differences between parametric and nonparametric tests and when to use each. The factors that influence the selection of an appropriate test of statistical significance. How to interpret the various test statistics 3 Pull Quote “A fact is a simple statement that everyone believes. It is innocent, unless found guilty. A hypothesis is a novel suggestion that no one wants to believe. It is guilty, until found effective.” Edward Teller, theoretical physicist, “father of the hydrogen bomb” (1908–2003) Hypothesis Testing Deductive Reasoning Inductive Reasoning 5 Hypothesis Testing Finds Truth “One finds the truth by making a hypothesis and comparing the truth to the hypothesis.” David Douglass physicist University of Rochester Statistical Procedures Descriptive Statistics Inferential Statistics 7 Hypothesis Testing and the Research Process 8 When Data Present a Clear Picture As Abacus states in this ad, when researchers ‘sift through the chaos’ and ‘find what matters’ they experience the “ah ha!” moment. Approaches to Hypothesis Testing Classical statistics Objective view of probability Established hypothesis is rejected or fails to be rejected Analysis based on sample data Bayesian statistics Extension of classical approach Analysis based on sample data Also considers established subjective probability estimates 10 Statistical Significance 11 Types of Hypotheses Null H0: = 50 mpg H0: 50 mpg Alternate HA: = 50 mpg HA: > 50 mpg HA: < 50 mpg 12 Two-Tailed Test of Significance 13 One-Tailed Test of Significance 14 Decision Rule Take no corrective action if the analysis shows that one cannot reject the null hypothesis. 15 Statistical Decisions 16 Probability of Making a Type I Error 17 Critical Values 18 .