## Lesson 12: Significance Testing

October 3, 2024

Review:

- Small Sample Estimation
**Exam 2 on Thu, Oct 17**

Presentation:

**Significance Testing**- aka Hypothesis Testing
- Purpose: to evaluate data for evidence of significant agreement or disagreement

**Significance testing is like paternity testing.**- When you check father-child DNA for a match you can prove one person is or is not the father.
- The same test does not prove another person is the father.
- You’re evaluating only one possibility at a time.

**Step 1.**Setup the null hypothesis (Ho) and alternate hypothesis (Ha)**Step 2.**Calculate the appropriate test statistic**Step 3.**Find the P-value (probability of obtaining result by chance)**Step 4.**Compare P-value to α = 0.05 ; if P-value < 0.05, “Reject Ho” else “Fail to Reject Ho”

- Significance Testing video (unit 25)

**Example A**:**Do Math SAT scores improve significantly with coaching?**- National Math SAT scores are normally distributed with mean = 505 and stdev = 62.
- Sample of 1,000 students who received coaching.
- Sample mean score was 509.
- Are these results significantly better than the national average?
**Step 1**: Setup the hypothesis test**μ = 505, σ = 62****, x̅ = 509, n = 1,000****Ho: μ = 505**

Ha: μ > 505

**Step 2**: Calculate the appropriate test statistic**Z-test =****(x̅ – μ)/(σ/√n)**- (509 – 505)/(62/√1000) = 4/1.96 =
**2.04**

**Step 3**: Find P-value- P = 1 – P(Z<2.04) = 1 – 0.9793 =
**0.0207**

- P = 1 – P(Z<2.04) = 1 – 0.9793 =
**Step 4**: Interpret results- 0.0207 ≅ 2.07% probability of getting this result by chance
- 0.0207 < 0.05
**Reject Ho**- Coaching seems to improve scores significantly

Activity:

- Portfolio Check
- Problem 1.1. More than 200,000 people worldwide take the GMAT examination each year as they apply for MBA programs. Their scores vary Normally with mean about
**μ = 525**and standard deviation about**σ = 100**. One hundred students,**n = 100**, go through a rigorous training program designed to raise their GMAT scores. The students who go through the program have an average score of**x̅ = 541.4**. Is there evidence to suggest the training program significantly improves GMAT scores? - Problem 1.2. A newly installed rooftop solar system has been producing energy for
**n = 100**days. Average energy production is**41.8**kWh per day with a standard deviation of**13.9**kWh. The solar panel manufacturer claims the panels typically produce**40**kWh per day. Is the newly installed system producing significantly more energy than estimated by the manufacturer?

* Most example and activity problems presented above are derived from* Moore, D.S., McCabe, G.P., and Craig, B.A., 2009. Introduction to the Practice of Statistics, 6th Edition. New York: W.H. Freeman and Company. *