Unformatted text preview: r test statistic does not necessarily mean right away that you are more likely to reject the
null. Generally, a large (in absolute value) test statistic in the direction of the tail of the test is
more likely to reject the null hypothesis. Utku Suleymanoglu (UMich) Hypothesis Testing 18 / 39 What determines test results? Why Left/Right Tail? Why do we focus on the lefttail if the null hypothesis is µ ≥ µ0 ?.
When testing the null H0 : µ ≥ 1: if x values that are larger than 1 are surely supporting the null.
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We saw this in the previous example.
Got x = 100? It is ﬁne, because the null is µ ≥ 1, they are in agreement, so we should not reject
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the null.
We focus on the lefttail, because values of x less than 1 is still possible. Notice when
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x < 1 = µ0 ⇒ z < 0. As x gets smaller, they also get more and more imporabable.
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If µ = 1, x = 0.9 is possible, so is x = 0.1. As we move to lower x ’s, the probability shrinks. We
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¯
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can calculate this probability, and we set a criteria for a low probability.
This is a criteria for: x is too small to have come from a µ which is 1 or larger.
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Notice: If an x value is too small if µ = 1, it will be even less improbable if µ were larger.
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This is why we pay attention to the left tail.
Exercise: For H0 : µ ≥ 1, and SE (¯ ) = 0.3, α = 0.05, ﬁnd the largest x where we reject H0 .
x
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Exercise: To make sure you understand this, do the righttailed version yourself. Utku Suleymanoglu (UMich) Hypothesis Testing 19 / 39 What determines test results? Precision of the sampling distribution: Standard error of the sample statistic determines how
much variation we should expect in x from sample to sample. If it is high, it is more likely to have
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samples with x that deviates largely from the hypothesized value.
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Consider the formula for test statistic:
z= x − µ0
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σ
√
n = x − µ0
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SE (¯ )
x Remember from Chapter 7: as the standard error of the mean (denominator above) decreases, we
say we measure x more precisely. The same x − µ0 di...
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This note was uploaded on 03/17/2014 for the course ECON 404 taught by Professor Staff during the Spring '08 term at University of Michigan.
 Spring '08
 STAFF

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