Science, Technology, Engineering and Mathematics
Statistics and Probability
Level of Significance
In a hypothesis test, the
level of significance
is your maximum allowable probability of making a type I
It is denoted by
lowercase Greek letter alpha
. By setting the level of significance at a small
value, you are saying that you want the probability of rejecting a true null hypothesis to be small.
Commonly used levels of significance:
Meanwhile, the probability of making a type II error is denoted by
After stating the null and alternative hypotheses and specifying the level of significance, a random sample
is taken from the population and sample statistics are calculated. The statistic that is compared with the
parameter in the null hypothesis is called the
t (n < 30)
Another way of expressing the level of statistical significance is using P-values, which is based on the
normal distribution. A
) of a hypothesis test is the probability of obtaining
a sample statistic with a value as extreme or more extreme than the one determined from the sample data.
The smaller the p-value, the stronger the evidence that you should reject the null hypothesis.