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# stat400lec31 - Statistics 400 Tests of Statistical...

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Statistics 400 Tests of Statistical Hypothesis Confidence Intervals: Creates an interval where we think the true parameter we are estimating will fall with a certain probability or level of confidence. Serve the purpose when the goal is to estimate some population parameter If we want to TEST our data in favor or against some CLAIM we have to use a method call Hypothesis Testing. Hypothesis Testing: Formal procedure for comparing observed data with a hypothesis whose truth we want to assess Hypothesis: statement about the parameters in the population or model Results of Test: expressed in terms of a probability that measures how well the data and the hypothesis agree Example: Some years ago the government made a claim that the average income of the American people was \$33,950. This would imply that Americans were doing worse than the reported average income was found to be \$34, 076. A need arose to check to see if the government was understating the values of income. In a sample size of 50 people, the

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stat400lec31 - Statistics 400 Tests of Statistical...

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