W4 The Concept of ANOVA

# W4 The Concept of ANOVA - The Concept of ANOVA Class the...

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The Concept of ANOVA Class, the concept of ANOVA is difficult to grasp at first, but if we understand what it is we are looking for, then it becomes easier. These comments are a bit long, but take each point at a time. Recall that when we are interested in whether the difference between two means (a population and a sample mean) is statistically different, we use the t or z test. What if we have more than two means? What do we do then? The answer is to use analysis of variance (ANOVA). We simply calculate as many means as we have and test the difference among them with the analysis of variance procedure. An example is comparing the costs of three different health insurance programs that are being piloted tested by a city. The independent variable in this case is the type of health insurance program, which has three categories: HMO1, HMO2, and HMO3 (a nominal variable). The dependent variable is the cost of each program (an interval-ratio variable). If we are interested in comparing the costs of the three insurance
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