Testing of Hypothesis

Testing of Hypothesis
Hypothesis means the assumption or quantitative statement of the population parameter which may be true or false. In
order to make proper decision about the quantitative statement of the population, testing of hypothesis technique is
used. The procedure of testing the reliability or validity of such hypothesis by using sample statistic is called testing of
hypothesis or statistical hypothesis or test of significance.
For eg: Suppose a manufacturer of light bulbs claims that the mean life of its product is 3000 hours. Using a sample say
500 bulbs selected at random a consumer or decision maker can test the claim of the manufacturer by looking how
many hours on average they last by calculating the sample mean life. If the selected samples gave an average life of
2900 or 3100 hours then the decision maker will accept the manufacturers claim. If the selected samples gave an
average life of 1800 hours then the decision maker will reject the manufacturers claim. From this example it is clear
that acceptance and rejection depends upon the gap between the sample statistic and population parameter.
Types of Hypothesis
Basically, there are two types of hypothesis
1) Null hypothesis
2) Alternative hypothesis

1) Null Hypothesis
It is a hypothesis of no difference which means there is no significant difference between the sample statistic and
population parameter. In other word, if the difference between true and expected value is set zero, then the hypothesis is
called null hypothesis. It is denoted by Ho. For eg: If the population mean ( ) has specified value o, then we set up the
null hypothesis as
Ho: = o
( - true value, o expected value)
If the manufacturers claim that average life of bulb is 3000 hours then null hypothesis is set up as Ho: = 3000 hours.

2) Alternative Hypothesis
If the decision maker rejects the null hypothesis on the basis of sample information, he/she should accept another
hypothesis which is complementary to null hypothesis and is known as alternative hypothesis. In other word, if the
difference between true and expected value is not equal to zero, then the hypothesis is called alternative hypothesis. It is
denoted by H1.
If the null hypothesis is set up as Ho: = o, then the alternative hypothesis may be either of the following
i)
H1: = o, i.e. there is significant difference between sample statistic and population parameter.
ii)
H1: > o, i.e. population mean is greater than o
iii)
H1: < o, i.e. population mean is less than o

Types of Error in Testing of Hypothesis

When the test procedure is applied to test the Ho against H1, we may find two types of error.
i)
we may reject Ho when Ho is true
ii)
we may accept Ho when Ho is false
It can be shown in following table
True Situation
Ho True
Decision
Accept Ho
No Error
Reject Ho
Type I Error

Ho False
Type II Error
No Error

Type I Error
The error committed in rejecting Ho when Ho is true is called type I error. The probability of committing type I error is
called the size of test or size of critical region and is denoted by .
= Prob.{ type I error} = Prob. { Reject Ho / Ho is true }
Type II Error
The error committed in accepting H o when Ho is false is called type II error. The probability of committing type II error
is denoted by .
= Prob.{ type II error} = Prob. { Accept Ho / Ho is false }
[Suppose we are going to buy 1000 pieces of apples. Out of these 1000, 50 apples are sour and remaining is sweet. In
order to buy apples, 20 apples are selected as sample and taste it. By chance, selected 20 apples are sour. Then we drop
1

Testing of Hypothesis

the idea of buying the apples. Here not buying the apple is wrong decision. Such error decision is said to be type I error
as we are rejecting true hypothesis i.e. rejecting sweet apples.
Similarly, if 50 apples are sweet out of 1000 and remaining are sour. Suppose 20 apples are selected as sample and taste
it. By chance, selected 20 apples are sweet. Then we decide to buy the apples. Here buying the apple is wrong decision.
Such error decision is said to be type II error as we are accepting false hypothesis i.e. accepting sour apples.
If the hypothesis is true and rejects it, no great harm has been done because we can wait for next lot. This type of error
simply leads to opportunity loss. But if the hypothesis is false and accept it, the result may be very harmful. Type II
error is very undesirable result and makes direct impact to the decision maker. Type II error is more harmful than type I
error.]

Level of Significance
The maximum probability of committing a type I error is called the level of significance. In other word, the probability
of rejecting a true null hypothesis is called level of significance. It is denoted by .
= Prob.{ type I error} = Prob. { Rejecting Ho when Ho is true }

Critical Region or Region of Rejection

A region in the sample space S which amounts to rejection of Ho is called as critical region or region of rejection.
Let us define a sample space S we divide the whole sample space S into two region or two disjoint subsets namely W
and S-W such that
W S-W = S
W S-W = (null set)
If the sample points are fall into region W, then we reject the H o and this region is known as critical region or region of
rejection. Otherwise, if the sample points are fall into region S-W, it is called the acceptance region, and then we accept
the Ho.
If the sampling distribution follows normal distribution the critical region or region of rejection is the area under
standard normal curve corresponding to a pre-assigned level of significance (). Therefore, critical region included the
probability of all the set of possible sample values which leads to the rejection of H o when it is true. The region under
normal curve other than size of is called acceptance region.

One Tailed and Two Tailed Test

One Tailed Test
Any test where the critical region consist only one tail of the sampling distribution of the test statistic is called one
tailed test or one-sided test. In other word, the test of hypothesis which is based on critical region represented by only
one tail under the normal curve is called one tailed test. In one tailed test, there is one rejection region and the
alternative hypothesis may be right tailed test or left tailed test. If the critical region lies entirely on the right tail of
normal probability curve, then it is called right tailed test. If the critical region lies entirely on the left of normal
probability curve, then it is called left tailed test.
In one tailed test, the hypothesis is set up as follows
Ho: = o. against
i) H1: > o (right tailed test)
ii) H1: < o (left tailed test)
Two Tailed Test
Any test where the critical region consist two tail of the sampling distribution of the test statistic is called two tailed test
or two-sided test. In other word, the test of hypothesis which is based on critical region represented by both tail under
the normal curve is called two tailed test. In two tailed test, the null hypothesis is rejected if the sample value is
significantly higher or lower than the expected value of the population parameter.
In two tailed test, the hypothesis is set up as follows.
Null hypothesis Ho: = o. against
alternative hypothesis H1: o ( > o or < o )

Critical Values or Significant Values

The values of test statistic which separate the critical region and the acceptance region are called critical values or
significant values. The critical values depend upon the level of significance () and the alternative hypothesis which
leads to one tailed and two tailed tests.
For eg: in case of normally distributed sampling distribution the critical value which divides total distribution into parts
i.e. acceptance and rejection region for given level of significance is given by Z. It is important to note that the

Testing of Hypothesis

critical value of Z for one tailed test at level of significance is same as the critical value of Z at two tailed test at level
of significance 2. The critical value of Z for two tailed test and one tailed test at
= 5% level of significance can be shown in following diagram.
Critical Values (Z) of Z
Critical values
Level of significance ()
(Z)
1%
5%
10 %
Two-tailed test
Z = 2.58
Z = 1.96
Z = 1.645
Right-tailed test
Z = 2.33
Z = 1.645
Z = 1.28
Left-tailed test
Z = -2.33
Z = -1.645
Z = -1.28

Procedure of Testing a Hypothesis

The following steps should be considered while testing a hypothesis

1. Formulating the hypothesis:

First of all set up the null hypothesis against alternative hypothesis.
Ho: = o. against
i) H1: > o (right tailed test)
ii) H1: < o (left tailed test)
iii) H1: o (two tailed test)

2. Compute the Test Statistic:

After formulating the hypothesis the next step is to compute appropriate test statistics. For testing whether the null
hypothesis should be accepted or rejected, we use Z-test for large sample (n 30) and t-test for small sample (n< 30).

3. Choose the level of Significance:

Determine the level of significance at which hypothesis is to be tested. Generally 5% level of significance is fixed.

4. Find Critical Value:

Obtain the critical value or significant value at level of significance (tabulated value) according as whether alternative
hypothesis is one tailed (left or right) or two tailed test.

5. Draw Conclusion:
Draw conclusion by comparing the calculated value and tabulated value of test statistic as follows;
If calculated value is less than or equal to the tabulated value at particular level of significance, then the null hypothesis
is accepted which means that there is no significant difference between the sample statistic and the population
parameter.
If calculated value is greater than the tabulated value at particular level of significance, then the null hypothesis is
rejected which means that there is significant difference between the sample statistic and the population parameter.

Test of Hypothesis For Large Samples ( Z- test)

Test of significance of a single mean
The steps in testing the significance of a sample mean of large sample (n 30) are as follows.
Step 1. Formulate the null hypothesis (Ho) in any one of the following forms.
i)
Ho: = o ( the population mean has specified mean o )
ii)
Ho: there is no significant difference between the sample mean and the population mean
iii)
Ho: the sample mean has been drawn from the given large population with mean o and the standard
deviation
Step 2. Formulate the alternative hypothesis (H1) in any one of the following forms.
i)
H1: o ( the population mean is not equal to mean o )
ii)
H1: there is significant difference between the sample mean and the population mean
iii)
H1: > o, i.e. population mean is greater than o
iv)
H1: < o, i.e. population mean is less than o
Step 3. Compute the test statistic:
Under the null hypothesis Ho, the test statistic is given by
3

Testing of Hypothesis

S .E X

[ calculated value of Z]

Z N (0,1) i.e. Z follows the normal distribution with mean 0 and the standard deviation 1
If is unknown, we estimate from s
= s for large sample.

X
s
n

Step 4. Select the level of significance . The most commonly used is = 5% unless otherwise is stated. Decide
whether one tail or two tailed test is to be applied.
Step 5. Obtain tabulated value or critical value of Z according as whether alternative hypothesis is one tailed or two
tailed test.
Step 6. Draw conclusion by comparing the calculated and tabulated value of Z.
If calculated value of Z tabulated value of Z, then Ho is accepted. Thus, we may conclude that there is no
significant difference between sample mean ( X ) and population mean () or the sample has been drawn from the
given population.
If calculated value of Z > tabulated value of Z, then Ho is rejected. Thus, we may conclude that there is significant
difference between sample mean ( X ) and population mean () or the sample has not been drawn from the given
population.

Technique of Identifying one tailed test or two tailed test in test of significance for single mean:
There is no hard and fast rule for identifying one tailed test and two tailed test. It can be identified by observing the
nature of the problem whether the direction of the difference is specified or not,
If the direction is not specified two tailed test is used. If the direction is specified then one tailed test is used. If the
direction of the difference is specified by using words like less than, more than, lower than, smaller than, higher than,
low, high, at least, at most, only, increase, decrease etc. in that case one tailed test can be applied. The left tailed and
right tailed test can be identified in the following way.
i)
If sample mean ( X ) < population mean (), then we use left tailed test.
ii)
If sample mean ( X ) > population mean (), then we use right tailed test.
Eg.1: A sample of 400 male students is found to have a mean height of 171.38 cm. Can it be reasonably regarded as a sample from a
large population with mean height 171.17 cm. and standard deviation 3.30 cm.
Solution, Here, sample size (n) = 400, sample mean ( X ) = 171.38 cm,
population mean () = 171.17 cm, Standard deviation () = 3.30 cm
Step 1: Null hypothesis, Ho: = 171.17 cm i.e. the sample is from a population with mean height 171.17 cm and s.d. 3.30cm
Step 2: Alternative hypothesis, H1: 171.17 cm i.e. the sample is not from a large population with mean height 171.17 cm and
standard deviation 3.30 cm.
Step 3: Test Statistic, Under Ho, the test statistic is

X 171.38 171.17
0.21
0.21 20 4.2

1.27

3.30
3.30
3.30
3 .3
20
n
400

The calculated value of Z = 1.27

Step 4: Level of significance () =5%. ( as not mentioned)
Step 5: Critical value, The tabulated value of Z for two tailed test at 5% level of significance is 1.96. Thus, the tabulated value Z =
1.96
Step 6: Decision, Since calculated value of Z < tabulated value Z (Zcal < Ztab) at 5% level of significance for two tailed test, it is not
significant and the null hypothesis H o is accepted which means a sample is drawn from a large population of mean height 171.17 cm
and standard deviation 3.30cm.
Eg.2 : The mean breaking strength of the cables supplied by a manufacturer is 2000 with a standard deviation of 150. By a new
technique in the manufacturing process, it is claimed that the breaking strength of the cables have been increased. In order to test this
claim a sample of 100 cables was tested and the mean breaking strength turned out to be 2100. Can we support the claim at 1% level
of significance?
4

Testing of Hypothesis

Solution,
Here, population mean
sample mean ( X ) = 2100

()

2000,

standard

deviation

()

150,

sample

size

(n)

100,

Step 1: Null hypothesis, Ho: = 2000 i.e. the mean breaking strength of the cables supplied by a manufacturer is 2000.
Step 2: Alternative hypothesis, H1: > 2000 i.e. the mean breaking strength of the cables supplied by a manufacturer has been
increased.
Step 3: Test Statistic, Under Ho, the test statistic is

X 2100 2000
100
100

6.67

150
150
15
10
n
100

The calculated value of Z = 6.67

Step 4: Level of significance () = 1%.
Step 5: Critical value, The tabulated value of Z for right tailed test at 1% level of significance is 2.33. Thus, the tabulated value Z =
2.33.
Step 6 : Decision; Since Zcal > Ztab at 1% level of significance for right tailed test , it is significant and the null hypothesis H o is
rejected i.e H1 is accepted which means the breaking strength of the cables have been increased.

Test of Significance of Difference Between Two Means

Let two independent random samples of sizes n 1 and n2 be drawn from two different populations with means 1 and 2
and variances 12 and 22 respectively. Also, let X 1 and X 2 be the corresponding sample means follows normal
2

1
distribution with means 1 and 2 and variances
n1

1 2

follows normal distribution with

If

1
X 1 N 1 ,
n1

and

and 2 respectively. Then the difference ( X 1 X 2 ) also

n2

and variance

2
X 2 N 2 ,
n2

12 2 2

n
2
1

i.e.

1 2

X 1 X 2 N 1 2 ,
n
n 2
1

then

The test statistic Z for the difference of means ( X 1 X 2 ) is performed as follows:

Step 1. Null hypothesis : Ho: 1 = 2 i.e. two population means are equal or two samples have been drawn from same
parent population or there is no significant different between the sample means.
Step 2. Alternative hypothesis: H1: 1 2 i.e. two population means are not equal or two samples have been drawn
from different parent population or there is significant different between the sample means.( two tailed test) or
H1: 1 > 2 i.e. the mean of first population is greater than the mean of the second population or there is decrease in the
second population mean value than the first population mean value. ( right tail test) or
H1: 1 < 2 i.e. the mean of first population is less than the mean of the second population or there is increase in the
second population mean value than the first population mean value. ( left tail test)
Step 3. Test statistic: Under the null hypothesis Ho: 1 = 2, when the sample size are large the test statistic Z for the
difference of means ( X 1 X 2 ) becomes

X 2 1

S .E X 1 X 2

X 2 1 2

1 2

n1
n2
2

X1 X 2

1 2

n1
n2
2

( 1- 2 = 0 as 1 = 2)

Z N (0,1) i.e. Z follows the normal distribution with mean 0 and the standard deviation 1
Here, the population variances 12 and 22 are assumed to be known. If they are unknown then their estimates provided
by the corresponding sample variances s12 and s22 respectively are used i.e.
Hence the test statistic becomes
5

1 s12

and

2 s2 2

for large samples.

Testing of Hypothesis

X1 X 2
2
2
s1 s2 N(0,1)

n1 n2

If the population variances are equal 12 = 22 then

X1 X 2
1
2 1
1

n1 n2

If the common variance 2 is unknown, then it is estimated by the combined sample variance i.e
2

n1 s1 n2 s22

n1 n 2
2

Step 4. Select the level of significance . The most commonly used is = 5% unless otherwise is stated. Decide
whether one tail or two tailed test is to be applied.
Step 5. Obtain tabulated value or critical value of Z according as whether alternative hypothesis is one tailed or two
tailed test.
Step 6. Draw conclusion by comparing the calculated and tabulated value of Z.
If calculated value of Z tabulated value of Z, then Ho is accepted. Thus, we may conclude that there is no
significant difference between two sample mean or the sample have been drawn from the same parent population.
If calculated value of Z > tabulated value of Z, then Ho is rejected. Thus, we may conclude that there is significant
difference between two sample mean or the sample have not been drawn from the same parent population.
Eg.3: In a certain factory there are two independent processes manufacturing the same items. The average weight in a sample of 250
items produced from one process is found to be 120 grammes with a standard deviation of 12 grammes, while the corresponding
figures in a sample of 400 items from the other process are 124 and 14. Find the standard error of the difference of means and also
test whether the two mean weights differ significantly or not at 10 percent level of significance.
Solution:
With usual notation , we have n1 = 250, X 1 = 120gm, s1 = 12gm, n2 = 400, X 2 = 124gm, s2 = 14gm
The standard error of the difference of means is given by
2

S.E. ( X 1

12 2 14 2

1 2
s
s

1 2
n1
n2
n1 n 2

2 )=

250

400

0.576 0.49 1.066 1.032

Step 1. Null hypothesis : Ho: 1 = 2 i.e. two mean weights do not differ significantly
Step 2. Alternative hypothesis: H1: 1 2 i.e. two mean weights differ significantly
Step 3. Test statistic: Under the null hypothesis Ho: 1 = 2, when the sample size are large the test statistic Z for the difference of
means ( X 1

X 2 ) becomes

X1 X 2
2

1 2

n1
n2

X1 X 2
2

s1
s
2
n1 n2

120 124

12

250
[

s1

14

4
0.576 0.49

4
1.066

4
3.88
1.032

400

and

2 s2 2

for large samples]

The calculated value of Z = -3.88 = 3.88

Step 4: Level of significance = 10%
Step 5. Critical value: The tabulated value of Z at 10% level of significance for two tailed test is 1.645.Thus, the tabulated value Z
= 1.645
Step 6. Decision; Since Zcal > Ztab at 10% level of significance for two tailed test , it is significant and the null hypothesis H o is
rejected i.e H1 is accepted which means that two mean weights differ significantly.

Testing of Hypothesis

Eg.4: The means of two samples of 1000 and 2000 individuals are 67.5 inches and 68 inches respectively. Can the samples be
regarded as drawn from the same population of standard deviation 2.5 inches.
Solution:
With usual notation , we have n1 = 1000, X 1 = 67.5 inches, n2 = 2000, X 2 = 68 inches
Common population standard deviation = = 2.5 inches.
Step 1. Null hypothesis : Ho: 1 = 2 i.e. both sample means are drawn from same population
Step 2. Alternative hypothesis: H1: 1 2 i.e. the sample means are drawn from different pop.
Step 3. Test statistic: Under the null hypothesis Ho: 1 = 2, the test statistic is given by

X1 X 2

1
1

n1 n2

67.5 68

2.5 2

1
1

1000 2000

0.5

6.25 0.001 0.0005

0.5
6.25 0.0015

0.5
0.009375

The calculated value of Z = -5.16 = 5.16

Step 4: Level of significance = 5 % [ as is not mentioned]
Step 5. Critical value: The tabulated value of Z at 5% level of significance for two tailed test is 1.96.Thus, the tabulated value Z =
1.96
Step 6. Decision; Since Zcal > Ztab at 5% level of significance for two tailed test , it is significant and the null hypothesis H o is rejected
i.e H1 is accepted which means that sample means are drawn from different population.
Eg.5: A civil group in the city claims that a female college graduate earns less than a male college graduate. To test this claim, a
survey of starting salary of 60 male graduates and 50 female graduates was taken and it was found that the average starting salary for
female graduates were Rs. 29500 with a standard deviation of Rs. 500 and the average salary for male graduates was Rs. 30000 with
a standard deviation of Rs. 600. At 1% level of significance, test if the claim of this civil group is valid.
Solution:
Male of graduates = n1 = 60, Average salary of male = X 1 = Rs. 30000, std deviation = s1 = Rs. 600 Female of graduates = n2 = 50,
Av. salary of female =

= Rs. 29500, std deviation = s2 = Rs. 500

Step 1. Null hypothesis : Ho: 1 = 2 i.e.there is no significant difference in male and female salary
Step 2. Alternative hypothesis: H1: 1 > 2 i.e. female graduate earns less than a male graduates.
Step 3. Test statistic: Under the null hypothesis Ho: 1 = 2, when the sample size are large the test statistic Z for the difference of
means ( X 1

X 2 ) becomes

X1 X 2
2

1 2

n1
n2

X1 X 2
2

s1
s
2
n1 n2

30000 29500

600
60

s1

and

500

500
6000 5000

500
11000

500
4.77
104.88

50

2
2 s2

for large samples]

The calculated value of Z = 4.77

Step 4: Level of significance = 1%
Step 5. Critical value: The tabulated value of Z at 1% level of significance for right tailed test is
2.33.Thus, the tabulated value Z = 2.33
Step 6. Decision; Since Zcal > Ztab at 1% level of significance for right tailed test , it is significant and the null hypothesis H o is
rejected i.e H1 is accepted which means female college graduates earns less than a male college graduates.

Sampling of Attributes
If the quantitative measurements are taken on sampling units like height, weight, income, expenditure etc. in relating
the sample mean to the population mean, then it is called sampling of variables. If the qualitative characteristics are
taken on sampling units like honesty, intelligence, poverty, literacy etc. in relating the sample proportion to the
population proportion, then it is called sampling of attributes. In sampling of attributes, the given population is divided
into two mutually disjoint classes in such a way that one possesses a particular attribute under study termed as success
and the other does not possess the attribute termed as failure. Therefore, one may be interested to test the hypothesis on
proportion of units possessing or not possessing a certain attribute in the proportion.
7

0.5
0.09682

Testing of Hypothesis

Test of Significance of a Sample Proportion

In order to test whether there is significant difference between the sample proportion and the population proportion, the
test statistic is defined as

p E ( p) p E ( p )

S .E p
PQ
n

Where, p = observed sample proportion of success = X/n, X = number of success relating to the given attribute, n =
sample size, E (p) = expected value of sample proportion and E(p) =P,
P = population proportion of success, Q = population proportion of failure such that P + Q = 1
Hence, for the large samples, the test statistic is

p E ( p) p E ( p )

S .E p
PQ N(0,1)
n

If a sample is drawn for a finite population of size N without replacement

N n PQ
, if population proportion P is known
.
N 1 n
If P is unknown, then for large samples its estimate provided by the sample proportion p is used and unbiased estimate
of S.E (p) is given by
N n pq
= p for large sample]
[P
Est[ S .E ( p )]
.
N 1 n
S .E ( p )

Steps in Testing the Significance of a Sample Proportion

Step 1. Formulate the null hypothesis (Ho)
Ho: P = Po i.e the sample has been drawn from the population with proportion P o or the population proportion has
specified value Po or there is no significant difference between the sample proportion (p) and the population
proportion (P)
Step 2. Formulate the alternative hypothesis (H1)
H1: P Po i.e the sample has not been drawn from the population with proportion P o or the population proportion is
not equal to Po or there is significant difference between the sample proportion (p) and the population proportion
(P) [two tailed test]
or
H1: P > Po, i.e. population proportion is greater than Po [right tailed test]
or
H1: P < Po, i.e. population proportion is less than Po [left tailed test]
Step 3. Compute the test statistic:
Under the null hypothesis Ho, the test statistic is given by

p E ( p)
pP

S .E p
PQ
n

[ calculated value of Z]

Z N (0,1) i.e. Z follows the normal distribution with mean 0 and the standard deviation 1
Step 4. Select the level of significance . The most commonly used is = 5% unless otherwise is stated. Decide
whether one tail or two tailed test is to be applied.
Step 5. Obtain tabulated value or critical value of Z according as whether alternative hypothesis is one tailed or two
tailed test.
Step 6. Draw conclusion by comparing the calculated and tabulated value of Z.
If calculated value of Z tabulated value of Z, then Ho is accepted. Thus, we may conclude that there is no
significant difference between sample proportion (p) and population proportion (P) or the sample has been drawn from
the given population.

Testing of Hypothesis

If calculated value of Z > tabulated value of Z, then Ho is rejected. Thus, we may conclude that there is significant
difference between sample proportion (p) and population proportion (P) or the sample has not been drawn from the
given population.
#Eg.1: A sample of 600 persons selected at randomly from a large city gives the result that males are 53%. Is there reason to doubt
the hypothesis that males and females are in equal number in the city?
Solution,
Here, sample size (n) = 600, sample proportion of males (p) = 53% = 0.53,
Population proportion of males (P) = 0.5, Q = 1-0.5 = 0.5
Step 1: Null hypothesis, Ho: P = 0.5 i.e. population proportion of males and females are same
Step 2: Alternative hypothesis, H1: P 0.5 i.e. population proportion of males and females are different.
Step 3: Test Statistic, Under Ho, the test statistic is

pP
PQ
n

0.53 0.5

0.5 0.5
600

0.03
0.25
600

0.03
1.47
0.0204

The calculated value of Z = 1.47

Step 4: Level of significance () =5%. ( as is not mentioned)
Step 5: Critical value, The tabulated value of Z for two tailed test at 5% level of significance is 1.96. Thus, the tabulated value Z =
1.96
Step 6: Decision, Since calculated value of Z < tabulated value Z (Zcal < Ztab) at 5% level of significance for two tailed test, it is not
significant and the null hypothesis Ho is accepted which means that the population proportion of males and females are same.
#Eg.2: A manufacturer claimed that at least 90 percent of the machine parts that is supplied to a factory conformed to specifications.
An examination of a sample of 200 such parts revealed that 160 parts were not faulty. Determine if the manufacturers claim is
legitimate at 1% level of significance.
Solution:
Here, sample size (n) = 200, sample proportion of faulty parts (p) =

160
0.08
200

Population proportion of faulty parts (P) = 0.90, Q = 1-0.9 = 0.1

Step 1: Null hypothesis, Ho: P 0.9 i.e. at least 90% of the machine parts conformed to specification.
Step 2: Alternative hypothesis, H1: P < 0.9 i.e. less than 90% of the machine parts conformed to specification. [left tailed test]
Step 3: Test Statistic, Under Ho, the test statistic is

pP
0.8 0.9
0.1
0.1

4.72
PQ
0.9 0.1
0.09 0.0212
n
200
200

The calculated value of Z = -4.72 = 4.72

Step 4: Level of significance () =1 %
Step 5: Critical value, The tabulated value of Z for left tailed test at 1 % level of significance is
-2.33. Thus, the tabulated value Z = -2.33 = 2.33
Step 6: Decision, Since calculated value of Z > tabulated value Z (Zcal > Ztab) at 1% level of significance for left tailed test, it is
significant and the null hypothesis Ho is rejected which means that less than 90% of the machine parts conformed to specification.

Test of Significance for Difference of Two Proportions

If we want to draw the inferences about the difference between two populations, we take two independent samples of
sizes n1 & n2 from first population and second population respectively. If X 1 and X2 be the number of success
respectively, then sample proportions of success are p1

X1
X2
and p 2
with population proportions P1 and P2,
n1
n2

then the corresponding sample proportion provide unbiased estimates for them. i.e.

Testing of Hypothesis

E (p1) = P1 & E (p2) = P2 and Var ( p1 )

P1Q1
n1

&

Var ( p 2 )

P21Q2
n2

Since for large samples, p1 and p2 are normally distributed, then difference (p 1-p2) is also normally distributed with
mean (p1-p2) and variance Var (p1) + Var (p2).
Since the samples are independent
E (p1-p2) = E (p1) E (p2) = P1 P2 and Var (p1-p2) = Var (p1) + Var (p2) =
Thus, S.E (p1-p2) =

P1Q1 P1Q1
+
n1
n1

P1Q1 P2 Q2

n1
n2

Then, the test statistic is given by

p1 p2 E p1 p 2 p1 p 2 P1 P2
S .E.( p1 p 2 )

P1Q1 P2 Q2

n1
n2

N (0,1)

The steps in test of significance for difference of two proportions are as follows.
Step 1. Null hypothesis : Ho: P1 = P2 = P i.e. two population proportions are same or there is no significant different
between the sample proportions.
Step 2. Alternative hypothesis: H1: P1 P2 i.e. two population proportions are not same or there is significant
difference between the sample proportions.( two tailed test) or
H1: P1 > P2 i.e. the proportion of first population is greater than the proportion of the second population (right tail test)
or
H1: P1 < P2 i.e. the proportion of first population is less than the mean of the second population ( left tail test)
Step 3. Test statistic: Under the null hypothesis Ho: P1 = P2, then the test statistic Z for the difference of proportions (p 1
p2) becomes

p1 p2 E p1 p 2 p1 p2 P1 P2

S .E p1 p2
P1Q1 P2 Q2
n1

n2

p1 p2
1 1

n
1 n2

PQ

( P1- P2 = 0 as P1 = P2)

Z N (0,1) i.e. Z follows the normal distribution with mean 0 and the standard deviation 1
If the common population proportion P is unknown, then we use its unbiased estimate provided by both samples taken
together which is given by

X X 2 n1 p1 n2 p 2
P 1

and
n1 n2
n1 n2

1 P

If P is unknown, then the test statistic is

p1 p2

1 1
P Q

n1 n2

Step 4. Select the level of significance . The most commonly used is = 5% unless otherwise is stated. Decide
whether one tail or two tailed test is to be applied.
Step 5. Obtain tabulated value or critical value of Z according as whether alternative hypothesis is one tailed or two
tailed test.
Step 6. Draw conclusion by comparing the calculated and tabulated value of Z.
If calculated value of Z tabulated value of Z, then Ho is accepted. Thus, we may conclude that there is no
significant difference between two sample proportions.
If calculated value of Z > tabulated value of Z, then Ho is rejected. Thus, we may conclude that there is significant
difference between two sample proportions.
10

Testing of Hypothesis

Eg.3: In a public opinion poll of 400 men and 600 women, 70% of the men and 80% of the women expressed that they
were pro-choice. At 0.05 level of significance, can we conclude that the observed difference between the two
proportions is significant?
Solution,
Here, Sample proportion of men (p1) = 70% = 0.7, Sample proportion of women (p2) = 80% = 0.8,
Number of men (n1) = 400, Number of women (n2) = 600

n1 p1 n2 p 2 400 0.7 600 0.8 280 480

0.76
Now, estimated population proportion, P
n1 n 2

400 600

1000

1 P
1 0.76 0.24
Q

i.e. there is no significance difference between population proportion of men

Step 1: Null hypothesis, Ho: P1 = P2 = P
and women.
Step 2: Alternative hypothesis, H1: P1 P2 i.e. there is significance difference between population proportion of men
and women.
Step 3: Test Statistic, Under Ho, the test statistic is

p1 p2
1
1
P Q

n1 n2

0.7 0.8
1
1
0.76 0.24

400 600

0.1
0.1824 1 1

200 2 3

0.1
0.1824
0.83
200

0.1
3.63
0.0275

The calculated value of Z = -3.63 = 3.63

Step 4: Level of significance () =5%.
Step 5: Critical value, The tabulated value of Z for two tailed test at 5% level of significance is 1.96. Thus, the
tabulated value Z = 1.96
Step 6: Decision, Since calculated value of Z > tabulated value Z (Zcal > Ztab) at 5% level of significance for two tailed
test, it is significant and the null hypothesis H o is rejected which means that the population proportion of men and
women are same.
Eg.4: A firm found with the help of a sample survey of a city (size of sample 900) that th of the population consumes
things produced by them. The firm then advertised the goods in paper and on radio. After one year, a sample of size
1000 reveals that proportion of consumers of the goods produced by the firm is 4/5 th. Is this rise significant to indicate
that the advertisement was effective?
Solution,
Here, Before advertisement, sample size (n1) = 900, Sample proportion (p1) = = 0.75
After advertisement, sample size (n2) = 1000, Sample proportion (p2) = 4/5 = 0.8

n1 p1 n 2 p 2 900 0.75 1000 0.8 675 800

0.77
Now, estimated population proportion, P
n1 n 2

900 1000

1900

1 P
1 0.77 0.23
Q

i.e. the advertisement was not effective

Step 1: Null hypothesis, Ho: P1 = P2 = P
Step 2: Alternative hypothesis, H1: P1 < P2 i.e. the advertisement was effective.
Step 3: Test Statistic, Under Ho, the test statistic is

p1 p2
1
1
P Q

n1 n2

0.75 0.8
1
1
0.77 0.23

900 1000

0.05
19
0.1771

9000

0.05
3.3679
9000

The calculated value of Z = -2.59 = 2.59

Step 4: Level of significance () =5%. [ as is not mentioned]
Step 5: Critical value, The tabulated value of Z for left tailed test at 5% level of significance is
-1.64. Thus, the tabulated value Z = -1.64 = 1.64
11

0.05
2.59
0.019

Testing of Hypothesis

Step 6: Decision, Since calculated value of Z > tabulated value Z (Zcal > Ztab) at 5% level of significance for left tailed
test, it is significant and the null hypothesis H o is rejected which means that the rise of proportion is significant to
indicate that the advertisement was effective.
Eg.5: Two groups A and B consist of 100 people each who have a disease. A serum is given to group A but not to group
B. if is found that in group A and B, 75 and 65 people, respectively recover from the disease. Was the serum treatment
effective to cure the disease?
Here, Group A , sample size (n1) = 100, Sample proportion (p1) = 75/100 = 0.75
Group B, sample size (n2) = 100, Sample proportion (p2) = 65/100 = 0.65

n1 p1 n2 p2 100 0.75 100 0.65 75 65 140

0.7
Now, estimated population proportion, P
n1 n2

100 100

200

200

1 P
1 0.7 0.3
Q

i.e. the serum treatment was not effective to cure the disease.
Step 1: Null hypothesis, Ho: P1 = P2 = P
Step 2: Alternative hypothesis, H1: P1 > P2 i.e. the serum treatment was effective to cure the disease.
Step 3: Test Statistic, Under Ho, the test statistic is

p1 p2
1
1
P Q

n1 n2

0.75 0.65
1
1
0.7 0.3

100 100

0.1
2
0.21

100

0.1
0.42
100

0.1 10
1

1.54
0.649
0.649

The calculated value of Z = 1.54

Step 4: Level of significance () =5%. [ as is not mentioned]
Step 5: Critical value, The tabulated value of Z for right tailed test at 5% level of significance is
1.64. Thus, the tabulated value Z = 1.64
Step 6: Decision, Since calculated value of Z < tabulated value Z (Zcal < Ztab) at 5% level of significance for right tailed
test, it is not significant and the null hypothesis H o is accepted which means that the serum treatment was not effective
to cure the disease.

12