stats hypothesis testing (p value method)

P-Value in Statistical Hypothesis Tests: What is it?

P value definition.

A p value is used in hypothesis testing to help you support or reject the null hypothesis . The p value is the evidence against a null hypothesis . The smaller the p-value, the stronger the evidence that you should reject the null hypothesis.

P values are expressed as decimals although it may be easier to understand what they are if you convert them to a percentage . For example, a p value of 0.0254 is 2.54%. This means there is a 2.54% chance your results could be random (i.e. happened by chance). That’s pretty tiny. On the other hand, a large p-value of .9(90%) means your results have a 90% probability of being completely random and not due to anything in your experiment. Therefore, the smaller the p-value, the more important (“ significant “) your results.

When you run a hypothesis test , you compare the p value from your test to the alpha level you selected when you ran the test. Alpha levels can also be written as percentages.

P Value vs Alpha level

Alpha levels are controlled by the researcher and are related to confidence levels . You get an alpha level by subtracting your confidence level from 100%. For example, if you want to be 98 percent confident in your research, the alpha level would be 2% (100% – 98%). When you run the hypothesis test, the test will give you a value for p. Compare that value to your chosen alpha level. For example, let’s say you chose an alpha level of 5% (0.05). If the results from the test give you:

• A small p (≤ 0.05), reject the null hypothesis . This is strong evidence that the null hypothesis is invalid.
• A large p (> 0.05) means the alternate hypothesis is weak, so you do not reject the null.

P Values and Critical Values

What if I Don’t Have an Alpha Level?

In an ideal world, you’ll have an alpha level. But if you do not, you can still use the following rough guidelines in deciding whether to support or reject the null hypothesis:

• If p > .10 → “not significant”
• If p ≤ .10 → “marginally significant”
• If p ≤ .05 → “significant”
• If p ≤ .01 → “highly significant.”

How to Calculate a P Value on the TI 83

Example question: The average wait time to see an E.R. doctor is said to be 150 minutes. You think the wait time is actually less. You take a random sample of 30 people and find their average wait is 148 minutes with a standard deviation of 5 minutes. Assume the distribution is normal. Find the p value for this test.

• Press STAT then arrow over to TESTS.
• Press ENTER for Z-Test .
• Arrow over to Stats. Press ENTER.
• Arrow down to μ0 and type 150. This is our null hypothesis mean.
• Arrow down to σ. Type in your std dev: 5.
• Arrow down to xbar. Type in your sample mean : 148.
• Arrow down to n. Type in your sample size : 30.
• Arrow to <μ0 for a left tail test . Press ENTER.
• Arrow down to Calculate. Press ENTER. P is given as .014, or about 1%.

The probability that you would get a sample mean of 148 minutes is tiny, so you should reject the null hypothesis.

Note : If you don’t want to run a test, you could also use the TI 83 NormCDF function to get the area (which is the same thing as the probability value).

Dodge, Y. (2008). The Concise Encyclopedia of Statistics . Springer. Gonick, L. (1993). The Cartoon Guide to Statistics . HarperPerennial.

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• Knowledge Base
• Choosing the Right Statistical Test | Types & Examples

Choosing the Right Statistical Test | Types & Examples

Published on January 28, 2020 by Rebecca Bevans . Revised on June 22, 2023.

Statistical tests are used in hypothesis testing . They can be used to:

• determine whether a predictor variable has a statistically significant relationship with an outcome variable.
• estimate the difference between two or more groups.

Statistical tests assume a null hypothesis of no relationship or no difference between groups. Then they determine whether the observed data fall outside of the range of values predicted by the null hypothesis.

If you already know what types of variables you’re dealing with, you can use the flowchart to choose the right statistical test for your data.

Statistical tests flowchart

Table of contents

What does a statistical test do, when to perform a statistical test, choosing a parametric test: regression, comparison, or correlation, choosing a nonparametric test, flowchart: choosing a statistical test, other interesting articles, frequently asked questions about statistical tests.

Statistical tests work by calculating a test statistic – a number that describes how much the relationship between variables in your test differs from the null hypothesis of no relationship.

It then calculates a p value (probability value). The p -value estimates how likely it is that you would see the difference described by the test statistic if the null hypothesis of no relationship were true.

If the value of the test statistic is more extreme than the statistic calculated from the null hypothesis, then you can infer a statistically significant relationship between the predictor and outcome variables.

If the value of the test statistic is less extreme than the one calculated from the null hypothesis, then you can infer no statistically significant relationship between the predictor and outcome variables.

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You can perform statistical tests on data that have been collected in a statistically valid manner – either through an experiment , or through observations made using probability sampling methods .

For a statistical test to be valid , your sample size needs to be large enough to approximate the true distribution of the population being studied.

To determine which statistical test to use, you need to know:

• whether your data meets certain assumptions.
• the types of variables that you’re dealing with.

Statistical assumptions

Statistical tests make some common assumptions about the data they are testing:

• Independence of observations (a.k.a. no autocorrelation): The observations/variables you include in your test are not related (for example, multiple measurements of a single test subject are not independent, while measurements of multiple different test subjects are independent).
• Homogeneity of variance : the variance within each group being compared is similar among all groups. If one group has much more variation than others, it will limit the test’s effectiveness.
• Normality of data : the data follows a normal distribution (a.k.a. a bell curve). This assumption applies only to quantitative data .

If your data do not meet the assumptions of normality or homogeneity of variance, you may be able to perform a nonparametric statistical test , which allows you to make comparisons without any assumptions about the data distribution.

If your data do not meet the assumption of independence of observations, you may be able to use a test that accounts for structure in your data (repeated-measures tests or tests that include blocking variables).

Types of variables

The types of variables you have usually determine what type of statistical test you can use.

Quantitative variables represent amounts of things (e.g. the number of trees in a forest). Types of quantitative variables include:

• Continuous (aka ratio variables): represent measures and can usually be divided into units smaller than one (e.g. 0.75 grams).
• Discrete (aka integer variables): represent counts and usually can’t be divided into units smaller than one (e.g. 1 tree).

Categorical variables represent groupings of things (e.g. the different tree species in a forest). Types of categorical variables include:

• Ordinal : represent data with an order (e.g. rankings).
• Nominal : represent group names (e.g. brands or species names).
• Binary : represent data with a yes/no or 1/0 outcome (e.g. win or lose).

Choose the test that fits the types of predictor and outcome variables you have collected (if you are doing an experiment , these are the independent and dependent variables ). Consult the tables below to see which test best matches your variables.

Parametric tests usually have stricter requirements than nonparametric tests, and are able to make stronger inferences from the data. They can only be conducted with data that adheres to the common assumptions of statistical tests.

The most common types of parametric test include regression tests, comparison tests, and correlation tests.

Regression tests

Regression tests look for cause-and-effect relationships . They can be used to estimate the effect of one or more continuous variables on another variable.

Comparison tests

Comparison tests look for differences among group means . They can be used to test the effect of a categorical variable on the mean value of some other characteristic.

T-tests are used when comparing the means of precisely two groups (e.g., the average heights of men and women). ANOVA and MANOVA tests are used when comparing the means of more than two groups (e.g., the average heights of children, teenagers, and adults).

Correlation tests

Correlation tests check whether variables are related without hypothesizing a cause-and-effect relationship.

These can be used to test whether two variables you want to use in (for example) a multiple regression test are autocorrelated.

Non-parametric tests don’t make as many assumptions about the data, and are useful when one or more of the common statistical assumptions are violated. However, the inferences they make aren’t as strong as with parametric tests.

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This flowchart helps you choose among parametric tests. For nonparametric alternatives, check the table above.

If you want to know more about statistics , methodology , or research bias , make sure to check out some of our other articles with explanations and examples.

• Normal distribution
• Descriptive statistics
• Measures of central tendency
• Correlation coefficient
• Null hypothesis

Methodology

• Cluster sampling
• Stratified sampling
• Types of interviews
• Cohort study
• Thematic analysis

Research bias

• Implicit bias
• Cognitive bias
• Survivorship bias
• Availability heuristic
• Nonresponse bias
• Regression to the mean

Statistical tests commonly assume that:

• the data are normally distributed
• the groups that are being compared have similar variance
• the data are independent

If your data does not meet these assumptions you might still be able to use a nonparametric statistical test , which have fewer requirements but also make weaker inferences.

A test statistic is a number calculated by a  statistical test . It describes how far your observed data is from the  null hypothesis  of no relationship between  variables or no difference among sample groups.

The test statistic tells you how different two or more groups are from the overall population mean , or how different a linear slope is from the slope predicted by a null hypothesis . Different test statistics are used in different statistical tests.

Statistical significance is a term used by researchers to state that it is unlikely their observations could have occurred under the null hypothesis of a statistical test . Significance is usually denoted by a p -value , or probability value.

Statistical significance is arbitrary – it depends on the threshold, or alpha value, chosen by the researcher. The most common threshold is p < 0.05, which means that the data is likely to occur less than 5% of the time under the null hypothesis .

When the p -value falls below the chosen alpha value, then we say the result of the test is statistically significant.

Quantitative variables are any variables where the data represent amounts (e.g. height, weight, or age).

Categorical variables are any variables where the data represent groups. This includes rankings (e.g. finishing places in a race), classifications (e.g. brands of cereal), and binary outcomes (e.g. coin flips).

You need to know what type of variables you are working with to choose the right statistical test for your data and interpret your results .

Discrete and continuous variables are two types of quantitative variables :

• Discrete variables represent counts (e.g. the number of objects in a collection).
• Continuous variables represent measurable amounts (e.g. water volume or weight).

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Hypothesis Testing Calculator

Type II Error

The first step in hypothesis testing is to calculate the test statistic. The formula for the test statistic depends on whether the population standard deviation (σ) is known or unknown. If σ is known, our hypothesis test is known as a z test and we use the z distribution. If σ is unknown, our hypothesis test is known as a t test and we use the t distribution. Use of the t distribution relies on the degrees of freedom, which is equal to the sample size minus one. Furthermore, if the population standard deviation σ is unknown, the sample standard deviation s is used instead. To switch from σ known to σ unknown, click on $\boxed{\sigma}$ and select $\boxed{s}$ in the Hypothesis Testing Calculator.

Next, the test statistic is used to conduct the test using either the p-value approach or critical value approach. The particular steps taken in each approach largely depend on the form of the hypothesis test: lower tail, upper tail or two-tailed. The form can easily be identified by looking at the alternative hypothesis (H a ). If there is a less than sign in the alternative hypothesis then it is a lower tail test, greater than sign is an upper tail test and inequality is a two-tailed test. To switch from a lower tail test to an upper tail or two-tailed test, click on $\boxed{\geq}$ and select $\boxed{\leq}$ or $\boxed{=}$, respectively.

In the p-value approach, the test statistic is used to calculate a p-value. If the test is a lower tail test, the p-value is the probability of getting a value for the test statistic at least as small as the value from the sample. If the test is an upper tail test, the p-value is the probability of getting a value for the test statistic at least as large as the value from the sample. In a two-tailed test, the p-value is the probability of getting a value for the test statistic at least as unlikely as the value from the sample.

To test the hypothesis in the p-value approach, compare the p-value to the level of significance. If the p-value is less than or equal to the level of signifance, reject the null hypothesis. If the p-value is greater than the level of significance, do not reject the null hypothesis. This method remains unchanged regardless of whether it's a lower tail, upper tail or two-tailed test. To change the level of significance, click on $\boxed{.05}$. Note that if the test statistic is given, you can calculate the p-value from the test statistic by clicking on the switch symbol twice.

In the critical value approach, the level of significance ($\alpha$) is used to calculate the critical value. In a lower tail test, the critical value is the value of the test statistic providing an area of $\alpha$ in the lower tail of the sampling distribution of the test statistic. In an upper tail test, the critical value is the value of the test statistic providing an area of $\alpha$ in the upper tail of the sampling distribution of the test statistic. In a two-tailed test, the critical values are the values of the test statistic providing areas of $\alpha / 2$ in the lower and upper tail of the sampling distribution of the test statistic.

To test the hypothesis in the critical value approach, compare the critical value to the test statistic. Unlike the p-value approach, the method we use to decide whether to reject the null hypothesis depends on the form of the hypothesis test. In a lower tail test, if the test statistic is less than or equal to the critical value, reject the null hypothesis. In an upper tail test, if the test statistic is greater than or equal to the critical value, reject the null hypothesis. In a two-tailed test, if the test statistic is less than or equal the lower critical value or greater than or equal to the upper critical value, reject the null hypothesis.

When conducting a hypothesis test, there is always a chance that you come to the wrong conclusion. There are two types of errors you can make: Type I Error and Type II Error. A Type I Error is committed if you reject the null hypothesis when the null hypothesis is true. Ideally, we'd like to accept the null hypothesis when the null hypothesis is true. A Type II Error is committed if you accept the null hypothesis when the alternative hypothesis is true. Ideally, we'd like to reject the null hypothesis when the alternative hypothesis is true.

Hypothesis testing is closely related to the statistical area of confidence intervals. If the hypothesized value of the population mean is outside of the confidence interval, we can reject the null hypothesis. Confidence intervals can be found using the Confidence Interval Calculator . The calculator on this page does hypothesis tests for one population mean. Sometimes we're interest in hypothesis tests about two population means. These can be solved using the Two Population Calculator . The probability of a Type II Error can be calculated by clicking on the link at the bottom of the page.

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6a.2 - steps for hypothesis tests, the logic of hypothesis testing section  .

A hypothesis, in statistics, is a statement about a population parameter, where this statement typically is represented by some specific numerical value. In testing a hypothesis, we use a method where we gather data in an effort to gather evidence about the hypothesis.

How do we decide whether to reject the null hypothesis?

• If the sample data are consistent with the null hypothesis, then we do not reject it.
• If the sample data are inconsistent with the null hypothesis, but consistent with the alternative, then we reject the null hypothesis and conclude that the alternative hypothesis is true.

Six Steps for Hypothesis Tests Section  

In hypothesis testing, there are certain steps one must follow. Below these are summarized into six such steps to conducting a test of a hypothesis.

• Set up the hypotheses and check conditions : Each hypothesis test includes two hypotheses about the population. One is the null hypothesis, notated as \(H_0 \), which is a statement of a particular parameter value. This hypothesis is assumed to be true until there is evidence to suggest otherwise. The second hypothesis is called the alternative, or research hypothesis, notated as \(H_a \). The alternative hypothesis is a statement of a range of alternative values in which the parameter may fall. One must also check that any conditions (assumptions) needed to run the test have been satisfied e.g. normality of data, independence, and number of success and failure outcomes.
• Decide on the significance level, \(\alpha \): This value is used as a probability cutoff for making decisions about the null hypothesis. This alpha value represents the probability we are willing to place on our test for making an incorrect decision in regards to rejecting the null hypothesis. The most common \(\alpha \) value is 0.05 or 5%. Other popular choices are 0.01 (1%) and 0.1 (10%).
• Calculate the test statistic: Gather sample data and calculate a test statistic where the sample statistic is compared to the parameter value. The test statistic is calculated under the assumption the null hypothesis is true and incorporates a measure of standard error and assumptions (conditions) related to the sampling distribution.
• Calculate probability value (p-value), or find the rejection region: A p-value is found by using the test statistic to calculate the probability of the sample data producing such a test statistic or one more extreme. The rejection region is found by using alpha to find a critical value; the rejection region is the area that is more extreme than the critical value. We discuss the p-value and rejection region in more detail in the next section.
• Make a decision about the null hypothesis: In this step, we decide to either reject the null hypothesis or decide to fail to reject the null hypothesis. Notice we do not make a decision where we will accept the null hypothesis.
• State an overall conclusion : Once we have found the p-value or rejection region, and made a statistical decision about the null hypothesis (i.e. we will reject the null or fail to reject the null), we then want to summarize our results into an overall conclusion for our test.

We will follow these six steps for the remainder of this Lesson. In the future Lessons, the steps will be followed but may not be explained explicitly.

Step 1 is a very important step to set up correctly. If your hypotheses are incorrect, your conclusion will be incorrect. In this next section, we practice with Step 1 for the one sample situations.

A Beginner's Guide to Hypothesis Testing: Key Concepts and Applications

• September 27, 2024

In our everyday lives, we often encounter statements and claims that we can't instantly verify. 

Have you ever questioned how to determine which statements are factual or validate them with certainty? 

Fortunately, there's a systematic way to find answers: Hypothesis Testing.

Hypothesis Testing is a fundamental concept in analytics and statistics, yet it remains a mystery to many. This method helps us understand and validate data and supports decision-making in various fields. 

Are you curious about how it works and why it's so crucial? 

Let's understand the hypothesis testing basics and explore its applications together.

What is hypothesis testing in statistics?

Hypothesis evaluation is a statistical method used to determine whether there is enough evidence in a sample of data to support a particular assumption. 

A statistical hypothesis test generally involves calculating a test statistic. The decision is then made by either comparing the test statistic to a crucial value or assessing the p-value derived from the test statistic.

The P-value in Hypothesis Testing

P-value helps determine whether to accept or reject the null hypothesis (H₀) during hypothesis testing.

Two types of errors in this process are:

• Type I error (α):

This happens when the null hypothesis is incorrectly rejected, meaning we think there's an effect or difference when there isn't.

It is denoted by α (significance level).

• Type II error (β)

This occurs when the null hypothesis gets incorrectly accepted, meaning we fail to detect an effect or difference that exists.

It is denoted by β (power level).

• Type I error: Rejecting something that's true.
• Type II error: Accepting something that's false.

Here's a simplified breakdown of the key components of hypothesis testing :

• Null Hypothesis (H₀): The default assumption that there's no significant effect or difference
• Alternative Hypothesis (H₁): The statement that challenges the null hypothesis, suggesting a significant effect
• P-Value : This tells you how likely it is that your results happened by chance. 
• Significance Level (α): Typically set at 0.05, this is the threshold used to conclude whether to reject the null hypothesis.

This process is often used in financial analysis to test the effectiveness of trading strategies, assess portfolio performance, or predict market trends.

Statistical Hypothesis Testing for Beginners: A Step-by-Step Guide

Applying hypothesis testing in finance requires a clear understanding of the steps involved. 

Here's a practical approach for beginners:

STEP 1: Define the Hypothesis

Start by formulating your null and alternative hypotheses. For example, you might hypothesise that a certain stock's returns outperform the market average.

STEP 2: Collect Data

Gather relevant financial data from reliable sources, ensuring that your sample size is appropriate to draw meaningful conclusions.

STEP 3: Choose the Right Test

Select a one-tailed or two-tailed test depending on the data type and your hypothesis. Two-tailed tests are commonly used for financial analysis to assess whether a parameter differs in either direction.

STEP 4: Calculate the Test Statistic

Use statistical software or a financial calculator to compute your test statistic and compare it to the critical value.

STEP 5: Interpret the Results

Based on the p-value, decide whether to reject or fail to reject the null hypothesis. If the p-value is below the significance level, it indicates that the null hypothesis is unlikely, and you may accept the alternative hypothesis.

Here's a quick reference table to help with your decisions:

  Real-Life Applications of Hypothesis Testing in Finance

The concept of hypothesis testing basics might sound theoretical, but its real-world applications are vast in the financial sector. 

Here's how professionals use it:

• Investment Portfolio Performance : Analysts often use statistical hypothesis testing for beginners to determine whether one investment portfolio performs better than another.
• Risk Assessment: Statistical testing helps evaluate market risk by testing assumptions about asset price movements and volatility.
• Forecasting Market Trends : Predicting future market trends using past data can be tricky, but research testing allows professionals to make more informed predictions by validating their assumptions.

Common Pitfalls to Avoid in Hypothesis Testing

Even seasoned professionals sometimes need to correct their theory testing analysis.

Here are some common mistakes you'll want to avoid:

Misinterpreting P-Values

A common misunderstanding is that a low p-value proves that the alternative hypothesis is correct. It just means there's strong evidence against the null hypothesis.

Ignoring Sample Size

Small sample sizes can also lead to misleading results, so ensuring that your data set is large enough to provide reliable insights is crucial.

Overfitting the Model

This happens when you tailor your hypothesis too closely to the sample data, resulting in a model that only holds up under different conditions.

By being aware of these pitfalls, you'll be better positioned to conduct accurate hypothesis tests in any financial scenario.

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Q: What is hypothesis testing in finance?

A: This is a statistical method used in finance to validate assumptions or hypotheses about financial data, such as testing the performance of investment strategies.

Q: What are the types of hypothesis testing?

A: The two primary types are one-tailed and two-tailed tests. You can use one-tailed tests to assess a specific direction of effect, while you can use two-tailed tests to determine if there is any significant difference, regardless of the direction.

Q: What is a p-value in hypothesis testing?

A: A p-value indicates the probability that your observed results occurred by chance. A lower p-value suggests stronger evidence against the null hypothesis.

Q: Why is sample size important in hypothesis testing?

A: A larger sample size increases the reliability of results, reducing the risk of errors and providing more accurate conclusions in hypothesis testing.

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Statistics By Jim

Making statistics intuitive

Statistical Hypothesis Testing Overview

By Jim Frost 59 Comments

In this blog post, I explain why you need to use statistical hypothesis testing and help you navigate the essential terminology. Hypothesis testing is a crucial procedure to perform when you want to make inferences about a population using a random sample. These inferences include estimating population properties such as the mean, differences between means, proportions, and the relationships between variables.

This post provides an overview of statistical hypothesis testing. If you need to perform hypothesis tests, consider getting my book, Hypothesis Testing: An Intuitive Guide .

Why You Should Perform Statistical Hypothesis Testing

Hypothesis testing is a form of inferential statistics that allows us to draw conclusions about an entire population based on a representative sample. You gain tremendous benefits by working with a sample. In most cases, it is simply impossible to observe the entire population to understand its properties. The only alternative is to collect a random sample and then use statistics to analyze it.

While samples are much more practical and less expensive to work with, there are trade-offs. When you estimate the properties of a population from a sample, the sample statistics are unlikely to equal the actual population value exactly.  For instance, your sample mean is unlikely to equal the population mean. The difference between the sample statistic and the population value is the sample error.

Differences that researchers observe in samples might be due to sampling error rather than representing a true effect at the population level. If sampling error causes the observed difference, the next time someone performs the same experiment the results might be different. Hypothesis testing incorporates estimates of the sampling error to help you make the correct decision. Learn more about Sampling Error .

For example, if you are studying the proportion of defects produced by two manufacturing methods, any difference you observe between the two sample proportions might be sample error rather than a true difference. If the difference does not exist at the population level, you won’t obtain the benefits that you expect based on the sample statistics. That can be a costly mistake!

Let’s cover some basic hypothesis testing terms that you need to know.

Background information : Difference between Descriptive and Inferential Statistics and Populations, Parameters, and Samples in Inferential Statistics

Hypothesis Testing

Hypothesis testing is a statistical analysis that uses sample data to assess two mutually exclusive theories about the properties of a population. Statisticians call these theories the null hypothesis and the alternative hypothesis. A hypothesis test assesses your sample statistic and factors in an estimate of the sample error to determine which hypothesis the data support.

When you can reject the null hypothesis, the results are statistically significant, and your data support the theory that an effect exists at the population level.

The effect is the difference between the population value and the null hypothesis value. The effect is also known as population effect or the difference. For example, the mean difference between the health outcome for a treatment group and a control group is the effect.

Typically, you do not know the size of the actual effect. However, you can use a hypothesis test to help you determine whether an effect exists and to estimate its size. Hypothesis tests convert your sample effect into a test statistic, which it evaluates for statistical significance. Learn more about Test Statistics .

An effect can be statistically significant, but that doesn’t necessarily indicate that it is important in a real-world, practical sense. For more information, read my post about Statistical vs. Practical Significance .

Null Hypothesis

The null hypothesis is one of two mutually exclusive theories about the properties of the population in hypothesis testing. Typically, the null hypothesis states that there is no effect (i.e., the effect size equals zero). The null is often signified by H 0 .

In all hypothesis testing, the researchers are testing an effect of some sort. The effect can be the effectiveness of a new vaccination, the durability of a new product, the proportion of defect in a manufacturing process, and so on. There is some benefit or difference that the researchers hope to identify.

However, it’s possible that there is no effect or no difference between the experimental groups. In statistics, we call this lack of an effect the null hypothesis. Therefore, if you can reject the null, you can favor the alternative hypothesis, which states that the effect exists (doesn’t equal zero) at the population level.

You can think of the null as the default theory that requires sufficiently strong evidence against in order to reject it.

For example, in a 2-sample t-test, the null often states that the difference between the two means equals zero.

When you can reject the null hypothesis, your results are statistically significant. Learn more about Statistical Significance: Definition & Meaning .

Related post : Understanding the Null Hypothesis in More Detail

Alternative Hypothesis

The alternative hypothesis is the other theory about the properties of the population in hypothesis testing. Typically, the alternative hypothesis states that a population parameter does not equal the null hypothesis value. In other words, there is a non-zero effect. If your sample contains sufficient evidence, you can reject the null and favor the alternative hypothesis. The alternative is often identified with H 1 or H A .

For example, in a 2-sample t-test, the alternative often states that the difference between the two means does not equal zero.

You can specify either a one- or two-tailed alternative hypothesis:

If you perform a two-tailed hypothesis test, the alternative states that the population parameter does not equal the null value. For example, when the alternative hypothesis is H A : μ ≠ 0, the test can detect differences both greater than and less than the null value.

A one-tailed alternative has more power to detect an effect but it can test for a difference in only one direction. For example, H A : μ > 0 can only test for differences that are greater than zero.

Related posts : Understanding T-tests and One-Tailed and Two-Tailed Hypothesis Tests Explained

P-values are the probability that you would obtain the effect observed in your sample, or larger, if the null hypothesis is correct. In simpler terms, p-values tell you how strongly your sample data contradict the null. Lower p-values represent stronger evidence against the null. You use P-values in conjunction with the significance level to determine whether your data favor the null or alternative hypothesis.

Related post : Interpreting P-values Correctly

Significance Level (Alpha)

For instance, a significance level of 0.05 signifies a 5% risk of deciding that an effect exists when it does not exist.

Use p-values and significance levels together to help you determine which hypothesis the data support. If the p-value is less than your significance level, you can reject the null and conclude that the effect is statistically significant. In other words, the evidence in your sample is strong enough to be able to reject the null hypothesis at the population level.

Related posts : Graphical Approach to Significance Levels and P-values and Conceptual Approach to Understanding Significance Levels

Types of Errors in Hypothesis Testing

Statistical hypothesis tests are not 100% accurate because they use a random sample to draw conclusions about entire populations. There are two types of errors related to drawing an incorrect conclusion.

• False positives: You reject a null that is true. Statisticians call this a Type I error . The Type I error rate equals your significance level or alpha (α).
• False negatives: You fail to reject a null that is false. Statisticians call this a Type II error. Generally, you do not know the Type II error rate. However, it is a larger risk when you have a small sample size , noisy data, or a small effect size. The type II error rate is also known as beta (β).

Statistical power is the probability that a hypothesis test correctly infers that a sample effect exists in the population. In other words, the test correctly rejects a false null hypothesis. Consequently, power is inversely related to a Type II error. Power = 1 – β. Learn more about Power in Statistics .

Related posts : Types of Errors in Hypothesis Testing and Estimating a Good Sample Size for Your Study Using Power Analysis

Which Type of Hypothesis Test is Right for You?

There are many different types of procedures you can use. The correct choice depends on your research goals and the data you collect. Do you need to understand the mean or the differences between means? Or, perhaps you need to assess proportions. You can even use hypothesis testing to determine whether the relationships between variables are statistically significant.

To choose the proper statistical procedure, you’ll need to assess your study objectives and collect the correct type of data . This background research is necessary before you begin a study.

Related Post : Hypothesis Tests for Continuous, Binary, and Count Data

Statistical tests are crucial when you want to use sample data to make conclusions about a population because these tests account for sample error. Using significance levels and p-values to determine when to reject the null hypothesis improves the probability that you will draw the correct conclusion.

To see an alternative approach to these traditional hypothesis testing methods, learn about bootstrapping in statistics !

If you want to see examples of hypothesis testing in action, I recommend the following posts that I have written:

• How Effective Are Flu Shots? This example shows how you can use statistics to test proportions.
• Fatality Rates in Star Trek . This example shows how to use hypothesis testing with categorical data.
• Busting Myths About the Battle of the Sexes . A fun example based on a Mythbusters episode that assess continuous data using several different tests.
• Are Yawns Contagious? Another fun example inspired by a Mythbusters episode.

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Reader Interactions

January 14, 2024 at 8:43 am

Hello professor Jim, how are you doing! Pls. What are the properties of a population and their examples? Thanks for your time and understanding.

January 14, 2024 at 12:57 pm

Please read my post about Populations vs. Samples for more information and examples.

Also, please note there is a search bar in the upper-right margin of my website. Use that to search for topics.

July 5, 2023 at 7:05 am

Hello, I have a question as I read your post. You say in p-values section

“P-values are the probability that you would obtain the effect observed in your sample, or larger, if the null hypothesis is correct. In simpler terms, p-values tell you how strongly your sample data contradict the null. Lower p-values represent stronger evidence against the null.”

But according to your definition of effect, the null states that an effect does not exist, correct? So what I assume you want to say is that “P-values are the probability that you would obtain the effect observed in your sample, or larger, if the null hypothesis is **incorrect**.”

July 6, 2023 at 5:18 am

Hi Shrinivas,

The correct definition of p-value is that it is a probability that exists in the context of a true null hypothesis. So, the quotation is correct in stating “if the null hypothesis is correct.”

Essentially, the p-value tells you the likelihood of your observed results (or more extreme) if the null hypothesis is true. It gives you an idea of whether your results are surprising or unusual if there is no effect.

Hence, with sufficiently low p-values, you reject the null hypothesis because it’s telling you that your sample results were unlikely to have occurred if there was no effect in the population.

I hope that helps make it more clear. If not, let me know I’ll attempt to clarify!

May 8, 2023 at 12:47 am

Thanks a lot Ny best regards

May 7, 2023 at 11:15 pm

Hi Jim Can you tell me something about size effect? Thanks

May 8, 2023 at 12:29 am

Here’s a post that I’ve written about Effect Sizes that will hopefully tell you what you need to know. Please read that. Then, if you have any more specific questions about effect sizes, please post them there. Thanks!

January 7, 2023 at 4:19 pm

Hi Jim, I have only read two pages so far but I am really amazed because in few paragraphs you made me clearly understand the concepts of months of courses I received in biostatistics! Thanks so much for this work you have done it helps a lot!

January 10, 2023 at 3:25 pm

Thanks so much!

June 17, 2021 at 1:45 pm

Can you help in the following question: Rocinante36 is priced at ₹7 lakh and has been designed to deliver a mileage of 22 km/litre and a top speed of 140 km/hr. Formulate the null and alternative hypotheses for mileage and top speed to check whether the new models are performing as per the desired design specifications.

April 19, 2021 at 1:51 pm

Its indeed great to read your work statistics.

I have a doubt regarding the one sample t-test. So as per your book on hypothesis testing with reference to page no 45, you have mentioned the difference between “the sample mean and the hypothesised mean is statistically significant”. So as per my understanding it should be quoted like “the difference between the population mean and the hypothesised mean is statistically significant”. The catch here is the hypothesised mean represents the sample mean.

Please help me understand this.

Regards Rajat

April 19, 2021 at 3:46 pm

Thanks for buying my book. I’m so glad it’s been helpful!

The test is performed on the sample but the results apply to the population. Hence, if the difference between the sample mean (observed in your study) and the hypothesized mean is statistically significant, that suggests that population does not equal the hypothesized mean.

For one sample tests, the hypothesized mean is not the sample mean. It is a mean that you want to use for the test value. It usually represents a value that is important to your research. In other words, it’s a value that you pick for some theoretical/practical reasons. You pick it because you want to determine whether the population mean is different from that particular value.

I hope that helps!

November 5, 2020 at 6:24 am

Jim, you are such a magnificent statistician/economist/econometrician/data scientist etc whatever profession. Your work inspires and simplifies the lives of so many researchers around the world. I truly admire you and your work. I will buy a copy of each book you have on statistics or econometrics. Keep doing the good work. Remain ever blessed

November 6, 2020 at 9:47 pm

Hi Renatus,

Thanks so much for you very kind comments. You made my day!! I’m so glad that my website has been helpful. And, thanks so much for supporting my books! 🙂

November 2, 2020 at 9:32 pm

Hi Jim, I hope you are aware of 2019 American Statistical Association’s official statement on Statistical Significance: https://www.tandfonline.com/doi/full/10.1080/00031305.2019.1583913 In case you do not bother reading the full article, may I quote you the core message here: “We conclude, based on our review of the articles in this special issue and the broader literature, that it is time to stop using the term “statistically significant” entirely. Nor should variants such as “significantly different,” “p < 0.05,” and “nonsignificant” survive, whether expressed in words, by asterisks in a table, or in some other way."

With best wishes,

November 3, 2020 at 2:09 am

I’m definitely aware of the debate surrounding how to use p-values most effectively. However, I need to correct you on one point. The link you provide is NOT a statement by the American Statistical Association. It is an editorial by several authors.

There is considerable debate over this issue. There are problems with p-values. However, as the authors state themselves, much of the problem is over people’s mindsets about how to use p-values and their incorrect interpretations about what statistical significance does and does not mean.

If you were to read my website more thoroughly, you’d be aware that I share many of their concerns and I address them in multiple posts. One of the authors’ key points is the need to be thoughtful and conduct thoughtful research and analysis. I emphasize this aspect in multiple posts on this topic. I’ll ask you to read the following three because they all address some of the authors’ concerns and suggestions. But you might run across others to read as well.

Five Tips for Using P-values to Avoid Being Misled How to Interpret P-values Correctly P-values and the Reproducibility of Experimental Results

September 24, 2020 at 11:52 pm

HI Jim, i just want you to know that you made explanation for Statistics so simple! I should say lesser and fewer words that reduce the complexity. All the best! 🙂

September 25, 2020 at 1:03 am

Thanks, Rene! Your kind words mean a lot to me! I’m so glad it has been helpful!

September 23, 2020 at 2:21 am

Honestly, I never understood stats during my entire M.Ed course and was another nightmare for me. But how easily you have explained each concept, I have understood stats way beyond my imagination. Thank you so much for helping ignorant research scholars like us. Looking forward to get hardcopy of your book. Kindly tell is it available through flipkart?

September 24, 2020 at 11:14 pm

I’m so happy to hear that my website has been helpful!

I checked on flipkart and it appears like my books are not available there. I’m never exactly sure where they’re available due to the vagaries of different distribution channels. They are available on Amazon in India.

Introduction to Statistics: An Intuitive Guide (Amazon IN) Hypothesis Testing: An Intuitive Guide (Amazon IN)

July 26, 2020 at 11:57 am

Dear Jim I am a teacher from India . I don’t have any background in statistics, and still I should tell that in a single read I can follow your explanations . I take my entire biostatistics class for botany graduates with your explanations. Thanks a lot. May I know how I can avail your books in India

July 28, 2020 at 12:31 am

Right now my books are only available as ebooks from my website. However, soon I’ll have some exciting news about other ways to obtain it. Stay tuned! I’ll announce it on my email list. If you’re not already on it, you can sign up using the form that is in the right margin of my website.

June 22, 2020 at 2:02 pm

Also can you please let me if this book covers topics like EDA and principal component analysis?

June 22, 2020 at 2:07 pm

This book doesn’t cover principal components analysis. Although, I wouldn’t really classify that as a hypothesis test. In the future, I might write a multivariate analysis book that would cover this and others. But, that’s well down the road.

My Introduction to Statistics covers EDA. That’s the largely graphical look at your data that you often do prior to hypothesis testing. The Introduction book perfectly leads right into the Hypothesis Testing book.

June 22, 2020 at 1:45 pm

Thanks for the detailed explanation. It does clear my doubts. I saw that your book related to hypothesis testing has the topics that I am studying currently. I am looking forward to purchasing it.

Regards, Take Care

June 19, 2020 at 1:03 pm

For this particular article I did not understand a couple of statements and it would great if you could help: 1)”If sample error causes the observed difference, the next time someone performs the same experiment the results might be different.” 2)”If the difference does not exist at the population level, you won’t obtain the benefits that you expect based on the sample statistics.”

I discovered your articles by chance and now I keep coming back to read & understand statistical concepts. These articles are very informative & easy to digest. Thanks for the simplifying things.

June 20, 2020 at 9:53 pm

I’m so happy to hear that you’ve found my website to be helpful!

To answer your questions, keep in mind that a central tenant of inferential statistics is that the random sample that a study drew was only one of an infinite number of possible it could’ve drawn. Each random sample produces different results. Most results will cluster around the population value assuming they used good methodology. However, random sampling error always exists and makes it so that population estimates from a sample almost never exactly equal the correct population value.

So, imagine that we’re studying a medication and comparing the treatment and control groups. Suppose that the medicine is truly not effect and that the population difference between the treatment and control group is zero (i.e., no difference.) Despite the true difference being zero, most sample estimates will show some degree of either a positive or negative effect thanks to random sampling error. So, just because a study has an observed difference does not mean that a difference exists at the population level. So, on to your questions:

1. If the observed difference is just random error, then it makes sense that if you collected another random sample, the difference could change. It could change from negative to positive, positive to negative, more extreme, less extreme, etc. However, if the difference exists at the population level, most random samples drawn from the population will reflect that difference. If the medicine has an effect, most random samples will reflect that fact and not bounce around on both sides of zero as much.

2. This is closely related to the previous answer. If there is no difference at the population level, but say you approve the medicine because of the observed effects in a sample. Even though your random sample showed an effect (which was really random error), that effect doesn’t exist. So, when you start using it on a larger scale, people won’t benefit from the medicine. That’s why it’s important to separate out what is easily explained by random error versus what is not easily explained by it.

I think reading my post about how hypothesis tests work will help clarify this process. Also, in about 24 hours (as I write this), I’ll be releasing my new ebook about Hypothesis Testing!

May 29, 2020 at 5:23 am

Hi Jim, I really enjoy your blog. Can you please link me on your blog where you discuss about Subgroup analysis and how it is done? I need to use non parametric and parametric statistical methods for my work and also do subgroup analysis in order to identify potential groups of patients that may benefit more from using a treatment than other groups.

May 29, 2020 at 2:12 pm

Hi, I don’t have a specific article about subgroup analysis. However, subgroup analysis is just the dividing up of a larger sample into subgroups and then analyzing those subgroups separately. You can use the various analyses I write about on the subgroups.

Alternatively, you can include the subgroups in regression analysis as an indicator variable and include that variable as a main effect and an interaction effect to see how the relationships vary by subgroup without needing to subdivide your data. I write about that approach in my article about comparing regression lines . This approach is my preferred approach when possible.

April 19, 2020 at 7:58 am

sir is confidence interval is a part of estimation?

April 17, 2020 at 3:36 pm

Sir can u plz briefly explain alternatives of hypothesis testing? I m unable to find the answer

April 18, 2020 at 1:22 am

Assuming you want to draw conclusions about populations by using samples (i.e., inferential statistics ), you can use confidence intervals and bootstrap methods as alternatives to the traditional hypothesis testing methods.

March 9, 2020 at 10:01 pm

Hi JIm, could you please help with activities that can best teach concepts of hypothesis testing through simulation, Also, do you have any question set that would enhance students intuition why learning hypothesis testing as a topic in introductory statistics. Thanks.

March 5, 2020 at 3:48 pm

Hi Jim, I’m studying multiple hypothesis testing & was wondering if you had any material that would be relevant. I’m more trying to understand how testing multiple samples simultaneously affects your results & more on the Bonferroni Correction

March 5, 2020 at 4:05 pm

I write about multiple comparisons (aka post hoc tests) in the ANOVA context . I don’t talk about Bonferroni Corrections specifically but I cover related types of corrections. I’m not sure if that exactly addresses what you want to know but is probably the closest I have already written. I hope it helps!

January 14, 2020 at 9:03 pm

Thank you! Have a great day/evening.

January 13, 2020 at 7:10 pm

Any help would be greatly appreciated. What is the difference between The Hypothesis Test and The Statistical Test of Hypothesis?

January 14, 2020 at 11:02 am

They sound like the same thing to me. Unless this is specialized terminology for a particular field or the author was intending something specific, I’d guess they’re one and the same.

April 1, 2019 at 10:00 am

so these are the only two forms of Hypothesis used in statistical testing?

April 1, 2019 at 10:02 am

Are you referring to the null and alternative hypothesis? If so, yes, that’s those are the standard hypotheses in a statistical hypothesis test.

April 1, 2019 at 9:57 am

year very insightful post, thanks for the write up

October 27, 2018 at 11:09 pm

hi there, am upcoming statistician, out of all blogs that i have read, i have found this one more useful as long as my problem is concerned. thanks so much

October 27, 2018 at 11:14 pm

Hi Stano, you’re very welcome! Thanks for your kind words. They mean a lot! I’m happy to hear that my posts were able to help you. I’m sure you will be a fantastic statistician. Best of luck with your studies!

October 26, 2018 at 11:39 am

Dear Jim, thank you very much for your explanations! I have a question. Can I use t-test to compare two samples in case each of them have right bias?

October 26, 2018 at 12:00 pm

Hi Tetyana,

You’re very welcome!

The term “right bias” is not a standard term. Do you by chance mean right skewed distributions? In other words, if you plot the distribution for each group on a histogram they have longer right tails? These are not the symmetrical bell-shape curves of the normal distribution.

If that’s the case, yes you can as long as you exceed a specific sample size within each group. I include a table that contains these sample size requirements in my post about nonparametric vs parametric analyses .

Bias in statistics refers to cases where an estimate of a value is systematically higher or lower than the true value. If this is the case, you might be able to use t-tests, but you’d need to be sure to understand the nature of the bias so you would understand what the results are really indicating.

I hope this helps!

April 2, 2018 at 7:28 am

Simple and upto the point 👍 Thank you so much.

April 2, 2018 at 11:11 am

Hi Kalpana, thanks! And I’m glad it was helpful!

March 26, 2018 at 8:41 am

Am I correct if I say: Alpha – Probability of wrongly rejection of null hypothesis P-value – Probability of wrongly acceptance of null hypothesis

March 28, 2018 at 3:14 pm

You’re correct about alpha. Alpha is the probability of rejecting the null hypothesis when the null is true.

Unfortunately, your definition of the p-value is a bit off. The p-value has a fairly convoluted definition. It is the probability of obtaining the effect observed in a sample, or more extreme, if the null hypothesis is true. The p-value does NOT indicate the probability that either the null or alternative is true or false. Although, those are very common misinterpretations. To learn more, read my post about how to interpret p-values correctly .

March 2, 2018 at 6:10 pm

I recently started reading your blog and it is very helpful to understand each concept of statistical tests in easy way with some good examples. Also, I recommend to other people go through all these blogs which you posted. Specially for those people who have not statistical background and they are facing to many problems while studying statistical analysis.

Thank you for your such good blogs.

March 3, 2018 at 10:12 pm

Hi Amit, I’m so glad that my blog posts have been helpful for you! It means a lot to me that you took the time to write such a nice comment! Also, thanks for recommending by blog to others! I try really hard to write posts about statistics that are easy to understand.

January 17, 2018 at 7:03 am

I recently started reading your blog and I find it very interesting. I am learning statistics by my own, and I generally do many google search to understand the concepts. So this blog is quite helpful for me, as it have most of the content which I am looking for.

January 17, 2018 at 3:56 pm

Hi Shashank, thank you! And, I’m very glad to hear that my blog is helpful!

January 2, 2018 at 2:28 pm

thank u very much sir.

January 2, 2018 at 2:36 pm

You’re very welcome, Hiral!

November 21, 2017 at 12:43 pm

Thank u so much sir….your posts always helps me to be a #statistician

November 21, 2017 at 2:40 pm

Hi Sachin, you’re very welcome! I’m happy that you find my posts to be helpful!

November 19, 2017 at 8:22 pm

great post as usual, but it would be nice to see an example.

November 19, 2017 at 8:27 pm

Thank you! At the end of this post, I have links to four other posts that show examples of hypothesis tests in action. You’ll find what you’re looking for in those posts!

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• v.20(4); Winter 2019

Why, When and How to Adjust Your P Values?

Mohieddin jafari.

1 Drug Design and Bioinformatics Unit, Medical Biotechnology Department, Biotechnology Research Center, Pasteur Institute of Iran, Tehran, Iran

Naser Ansari-Pour

2 Faculty of New Sciences and Technologies, University of Tehran, Tehran, Iran

Currently, numerous papers are published reporting analysis of biological data at different omics levels by making statistical inferences. Of note, many studies, as those published in this Journal, report association of gene(s) at the genomic and transcriptomic levels by undertaking appropriate statistical tests. For instance, genotype, allele or haplotype frequencies at the genomic level or normalized expression levels at the transcriptomic level are compared between the case and control groups using the Chi-square/Fisher’s exact test or independent (i.e. two-sampled) t-test respectively, with this culminating into a single numeric, namely the P value (or the degree of the false positive rate), which is used to make or break the outcome of the association test. This approach has flaws but nevertheless remains a standard and convenient approach in association studies. However, what becomes a critical issue is that the same cut-off is used when ‘multiple’ tests are undertaken on the same case-control (or any pairwise) comparison. Here, in brevity, we present what the P value represents, and why and when it should be adjusted. We also show, with worked examples, how to adjust P values for multiple testing in the R environment for statistical computing (http://www.R-project.org).

Biological data is currently being generated on a massive scale, which has resulted not only in an avalanche of raw data, but has also led to the testing of multiple hypotheses. To test these hypotheses, inferential statistics is applied to relevant sample datasets, leading to further biological insights and possible discoveries. Essentially, hypothesis testing is a statistical method which computes the probability of the strength of evidence based on the sampled data for or against the null (i.e. no difference or no change) hypothesis, which is culminated in a single numeric, namely the P value. Here, we discuss P values, but more importantly, with a focus on association studies, discuss why, when and how they should be adjusted. We hope that this short guide results in more accurate reporting of P values and the respective inferences.

When you want to statistically infer whether a result is significant, you quantify the probability of that result occurring by pure random chance given the null hypothesis. A historical and intuitive cut-off to reject the null hypothesis (thus a meaningful non-random event) is 0.05 ( 1 ). Accordingly, if the probability of testing the null hypothesis of equality of the mean of normalized expression levels of gene X in the case and control groups (µ 1 , µ 2 ) is <0.05, one would say (absolutely arbitrarily) that it is their eureka moment by shrugging off (reject) the null hypothesis (µ 1 =µ 2 ), and embracing (accept) the alternative hypothesis (µ 1 .µ 2 ). However, what we are actually quantifying is the probability of observing data as or more extreme than what we have observed given the null hypothesis is true ( 2 - 4 ). Meanwhile, it should be noted that in statistical hypothesis testing, we should not only report the P value, but to also include power of test, confidence intervals and effect size ( 5 - 8 ).

P value issues

There is a matter of considerable controversy surrounding the position of Pvalue in scientific inference and this has become even more heightened by the emergence of big data analysis, which mainly revolves around its misunderstanding and misuse ( 9 , 10 ). The first flaw is that the 0.05 cut-off is completely arbitrary and merely a convention. This, therefore, indicates that this value is not necessarily appropriate for all variables and for all research settings. For instance, in disease association studies, a more stringent cut-off of 0.01 is recommended to be applied. Moreover, two common biases further affect the integrity of research findings, namely selective reporting and P-hacking ( 7 ). In brief, selective reporting addresses the bias of substantially under-reported negative results (i.e. non-significant P values). This bias is apparent in the skewed distribution of reported results toward positive findings ( 11 ). In contrast, P-hacking describes the biased selection of data to signify non-significant results when this is desirable. Although this is technically true, it is a far more unrepresented form of direct data manipulation ( 12 ).

Assuming that all the flaws mentioned are addressed, the last but the most important issue that remains in P value quantification is when multiple testing occurs, but what constitutes multiplicity? Imagine a scenario where the expression of twenty genes at the transcript level have been compared between a fixed set of cases and controls or, at the genomic level, genotype/allele frequencies of twenty single nucleotide polymorphisms (SNPs) have been compared. By pure chance, assuming independence of tests, one would expect, on average, one in twenty of transcripts or SNPs to appear significant at the 5% level. This is because the ‘probability’ of a false positive in this scenario is now inflated and clearly requires adjusting the original single test significance level of 0.05. In other words, the probability of observing a false positive (i.e. type I error) generated by all tests undertaken should not exceed the 5% level ( 2 ). This issue has become ever more apparent after the emergence of omics science, in which large number of independent variables are tested simultaneously and computing the fraction of true positives is crucial ( 5 ). As a simple calculation, suppose the probability of a type I error in a single test is α single =5×10 -2 . The probability of not observing a type I error in a single test is then p single =1-α=1-5×10-2=0.95. Accordingly, the probability of not observing a type I error in multiple (e.g. 20) tests is p multiple =(1-α)m=(1- 5×10-2)20≈3.6e-01 and thus α multiple =1-(1-α)m ≈ 0.64, therefore showing the substantial increase in type I error after multiple testing. If the number of tests increases dramatically, the inflated type I error rate (α multiple ) would reach 1. For instance, α multiple = 0.9941 if α=0.05 and m=100.

So how one ought to correct this inflation of the false positive rate? The first solution is to control type I error by minimising the significance threshold (i.e. calculating α’). Say the probability of a type I error in a single test is the standard α single =α´. The probability of not observing a type I error in a single test is then p single =1-α´. For independent tests, this probability would be p multiple =(1-α´)m. Next, the probability of type I error for multiple tests is α multiple =1-(1-α´)m. Rearrangment of the equation leads to the approximated Bonferroni correction for multiple testing α´≈ α/m. Following the same scenario, the α´ for each of the twenty tests would be 0.05/20=2.5×10-3. By applying the same rule, when 1,000,000 SNPs are tested in a genome-wide association study (GWAS) αˊ would be 5×10-8 and when expression dysregulation is examined for 20,000 genes on a whole-transcriptome microarray, αˊ would be 2.5×10 -6 .

Here we provide worked examples for the two most commonly used methods without in-depth mathematical detail and formulae. This approach is analytically more convenient compared with the first method, in which, after setting an adjusted threshold, raw P values have to be checked against a' one at a time. The function used here is p.adjust from the stats package in R. Imagine you have tested the level of gene dysregulation between two groups (e.g. cases and controls) for ten genes at the transcript level and below is the vector of raw P values obtained by implementing the independent t test (assuming normality of expression data).

P_value <- c(0.0001, 0.001, 0.006, 0.03, 0.095, 0.117, 0.234, 0.552, 0.751, 0.985).

The simplest way to adjust your P values is to use the conservative Bonferroni correction method which multiplies the raw P values by the number of tests m (i.e. length of the vector P_values). Using the p.adjust function and the ‘method’ argument set to "bonferroni", we get a vector of same length but with adjusted P values. This adjustment approach corrects according to the family-wise error rate of at least one false positive (FamilywiseErrorRate (FWER)=Probability (FalsePositive≥1)).

p.adjust (P_values, method="bonferroni") ## [1] 0.001 0.010 0.060 0.300 0.950 1.000 1.000 1.000 1.000 1.000

The results show that only two out of ten genes remain significantly dysregulated. Had we not undertaken this multiple testing correction, we would have reported significant dysregulation for another two genes. This correction method is the most conservative of all and due to its strict filtering, potentially increases the false negative rate ( 5 ) which simply means rejecting true positives among false positives.

A philosophically different and more powerful adjustment method is that proposed by Benjamini and Hochberg ( 13 ). This method, rather than controlling the false positive rate (a.k.a FWER) as in the Bonferroni method, controls the false discovery rate (FalseDiscoveryRate (FDR)=Expected (FalsePositive/ (FalsePositive+TruePositive))). In other words, FDR is the expected proportion of false positives among all positives which rejected the null hypothesis and not among all the tests undertaken. In the FDR method, P values are ranked in an ascending array and multiplied by m/k where k is the position of a P value in the sorted vector and m is the number of independent tests.

p.adjust (P_values, method="fdr")

## [1] 0.001 0.005 0.02 0.075 0.19 0.195

## [7] 0.334 0.690 0.834 0.985

A quick comparison of the results show that FDR identifies one more dysregulated gene compared with the Bonferroni method. This third gene (corrected P=0.02) is what would be called a false negative as it shows no significance when the conservative Bonferroni method is used but remains significant under FDR.

To better compare these two multiple testing correction methods, a large array of random P values (n=500) were adjusted ( Fig .1 ). The frequency distributions show that the Bonferroni method dramatically reduces the number of significant P values and substantially increases large (close or equal to 1) P values. However, the FDR method retains more significant P values while increasing non- significant P values with a peak at around P=0.8. This is consistent with a higher correlation between raw and FDR-adjusted P values than any other pairwise combination. Although a number of different multiple testing correction methods exists (for instance see p.adjust documentation in R or permutation-based correction methods), the most preferable approach is controlling FDR as it not only reduces false positives, but also minimises false negatives.

Comparison of the two multiple testing adjustment methods in a matrix plot. The distribution of 500 random P values before and after adjustment is represented on the diagonal. The upper and lower triangles show the pairwise correlation coefficients and scatter plot between raw and adjusted P values respectively.

The take home message is that it does not matter whether you are interested in identifying a significant association with SNPs, differentially expressed genes (DEG) or enriched gene ontology (GO) terms, the moment you conduct multiple tests on the same samples or gene sets respectively, it would be essential to address the multiple testing issue by adjusting the overall false positive rate through calculating a´ or adjusting your raw P values (as shown here based on Bonferroni or FDR) for true positives to be teased out. This will in no doubt enhance reliability and reproducibility of research findings.

Acknowledgments

The authors have no financial support to disclose with respect to this manuscript. The authors declare no conflict of interest.

Author’s Contributions

N.A-P.; Conceived and planned the overall structure of the paper. M.J.; Carried out computational analysis. Both authors discussed the main conceptual ideas to be presented, contributed to the writing of the manuscript and approved the final draft. All authors read and approved the final manuscript.

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P-Value: Comprehensive Guide to Understand, Apply, and Interpret

A p-value is a statistical metric used to assess a hypothesis by comparing it with observed data.

This article delves into the concept of p-value, its calculation, interpretation, and significance. It also explores the factors that influence p-value and highlights its limitations.

Table of Content

• What is P-value?

How P-value is calculated?

How to interpret p-value, p-value in hypothesis testing, implementing p-value in python, applications of p-value, what is the p-value.

The p-value, or probability value, is a statistical measure used in hypothesis testing to assess the strength of evidence against a null hypothesis. It represents the probability of obtaining results as extreme as, or more extreme than, the observed results under the assumption that the null hypothesis is true.

In simpler words, it is used to reject or support the null hypothesis during hypothesis testing. In data science, it gives valuable insights on the statistical significance of an independent variable in predicting the dependent variable. 

Calculating the p-value typically involves the following steps:

• Formulate the Null Hypothesis (H0) : Clearly state the null hypothesis, which typically states that there is no significant relationship or effect between the variables.
• Choose an Alternative Hypothesis (H1) : Define the alternative hypothesis, which proposes the existence of a significant relationship or effect between the variables.
• Determine the Test Statistic : Calculate the test statistic, which is a measure of the discrepancy between the observed data and the expected values under the null hypothesis. The choice of test statistic depends on the type of data and the specific research question.
• Identify the Distribution of the Test Statistic : Determine the appropriate sampling distribution for the test statistic under the null hypothesis. This distribution represents the expected values of the test statistic if the null hypothesis is true.
• Calculate the Critical-value : Based on the observed test statistic and the sampling distribution, find the probability of obtaining the observed test statistic or a more extreme one, assuming the null hypothesis is true.
• Interpret the results: Compare the critical-value with t-statistic. If the t-statistic is larger than the critical value, it provides evidence to reject the null hypothesis, and vice-versa.

Its interpretation depends on the specific test and the context of the analysis. Several popular methods for calculating test statistics that are utilized in p-value calculations.

In general, a small p-value indicates that the observed data is unlikely to have occurred by random chance alone, which leads to the rejection of the null hypothesis. However, it’s crucial to choose the appropriate test based on the nature of the data and the research question, as well as to interpret the p-value in the context of the specific test being used.

The table given below shows the importance of p-value and shows the various kinds of errors that occur during hypothesis testing.

Type I error: Incorrect rejection of the null hypothesis. It is denoted by α (significance level). Type II error: Incorrect acceptance of the null hypothesis. It is denoted by β (power level)

Let’s consider an example to illustrate the process of calculating a p-value for Two Sample T-Test:

A researcher wants to investigate whether there is a significant difference in mean height between males and females in a population of university students.

Suppose we have the following data:

Starting with interpreting the process of calculating p-value

Step 1 : Formulate the Null Hypothesis (H0):

H0: There is no significant difference in mean height between males and females.

Step 2 : Choose an Alternative Hypothesis (H1):

H1: There is a significant difference in mean height between males and females.

Step 3 : Determine the Test Statistic:

The appropriate test statistic for this scenario is the two-sample t-test, which compares the means of two independent groups.

The t-statistic is a measure of the difference between the means of two groups relative to the variability within each group. It is calculated as the difference between the sample means divided by the standard error of the difference. It is also known as the t-value or t-score.

• s1 = First sample’s standard deviation
• s2 = Second sample’s standard deviation
• n1 = First sample’s sample size
• n2 = Second sample’s sample size

So, the calculated two-sample t-test statistic (t) is approximately 5.13.

Step 4 : Identify the Distribution of the Test Statistic:

The t-distribution is used for the two-sample t-test . The degrees of freedom for the t-distribution are determined by the sample sizes of the two groups.

 The t-distribution is a probability distribution with tails that are thicker than those of the normal distribution.

• where, n1 is total number of values for 1st category.
• n2 is total number of values for 2nd category.

The degrees of freedom (63) represent the variability available in the data to estimate the population parameters. In the context of the two-sample t-test, higher degrees of freedom provide a more precise estimate of the population variance, influencing the shape and characteristics of the t-distribution.

T-Statistic

The t-distribution is symmetric and bell-shaped, similar to the normal distribution. As the degrees of freedom increase, the t-distribution approaches the shape of the standard normal distribution. Practically, it affects the critical values used to determine statistical significance and confidence intervals.

Step 5 : Calculate Critical Value.

To find the critical t-value with a t-statistic of 5.13 and 63 degrees of freedom, we can either consult a t-table or use statistical software.

We can use scipy.stats module in Python to find the critical t-value using below code.

Comparing with T-Statistic:

The larger t-statistic suggests that the observed difference between the sample means is unlikely to have occurred by random chance alone. Therefore, we reject the null hypothesis.

• p ≤ (α = 0.05) : Reject the null hypothesis. There is sufficient evidence to conclude that the observed effect or relationship is statistically significant, meaning it is unlikely to have occurred by chance alone.
• p > (α = 0.05) : reject alternate hypothesis (or accept null hypothesis). The observed effect or relationship does not provide enough evidence to reject the null hypothesis. This does not necessarily mean there is no effect; it simply means the sample data does not provide strong enough evidence to rule out the possibility that the effect is due to chance.

In case the significance level is not specified, consider the below general inferences while interpreting your results. 

• If p > .10: not significant
• If p ≤ .10: slightly significant
• If p ≤ .05: significant
• If p ≤ .001: highly significant

Graphically, the p-value is located at the tails of any confidence interval. [As shown in fig 1]

Fig 1: Graphical Representation 

What influences p-value?

The p-value in hypothesis testing is influenced by several factors:

• Sample Size : Larger sample sizes tend to yield smaller p-values, increasing the likelihood of detecting significant effects.
• Effect Size: A larger effect size results in smaller p-values, making it easier to detect a significant relationship.
• Variability in the Data : Greater variability often leads to larger p-values, making it harder to identify significant effects.
• Significance Level : A lower chosen significance level increases the threshold for considering p-values as significant.
• Choice of Test: Different statistical tests may yield different p-values for the same data.
• Assumptions of the Test : Violations of test assumptions can impact p-values.

Understanding these factors is crucial for interpreting p-values accurately and making informed decisions in hypothesis testing.

Significance of P-value

• The p-value provides a quantitative measure of the strength of the evidence against the null hypothesis.
• Decision-Making in Hypothesis Testing
• P-value serves as a guide for interpreting the results of a statistical test. A small p-value suggests that the observed effect or relationship is statistically significant, but it does not necessarily mean that it is practically or clinically meaningful.

Limitations of P-value

• The p-value is not a direct measure of the effect size, which represents the magnitude of the observed relationship or difference between variables. A small p-value does not necessarily mean that the effect size is large or practically meaningful.
• Influenced by Various Factors

The p-value is a crucial concept in statistical hypothesis testing, serving as a guide for making decisions about the significance of the observed relationship or effect between variables.

Let’s consider a scenario where a tutor believes that the average exam score of their students is equal to the national average (85). The tutor collects a sample of exam scores from their students and performs a one-sample t-test to compare it to the population mean (85).

• The code performs a one-sample t-test to compare the mean of a sample data set to a hypothesized population mean.
• It utilizes the scipy.stats library to calculate the t-statistic and p-value. SciPy is a Python library that provides efficient numerical routines for scientific computing.
• The p-value is compared to a significance level (alpha) to determine whether to reject the null hypothesis.

Since, 0.7059>0.05 , we would conclude to fail to reject the null hypothesis. This means that, based on the sample data, there isn’t enough evidence to claim a significant difference in the exam scores of the tutor’s students compared to the national average. The tutor would accept the null hypothesis, suggesting that the average exam score of their students is statistically consistent with the national average.

• During Forward and Backward propagation: When fitting a model (say a Multiple Linear Regression model), we use the p-value in order to find the most significant variables that contribute significantly in predicting the output.
• Effects of various drug medicines: It is highly used in the field of medical research in determining whether the constituents of any drug will have the desired effect on humans or not. P-value is a very strong statistical tool used in hypothesis testing. It provides a plethora of valuable information while making an important decision like making a business intelligence inference or determining whether a drug should be used on humans or not, etc. For any doubt/query, comment below.

The p-value is a crucial concept in statistical hypothesis testing, providing a quantitative measure of the strength of evidence against the null hypothesis. It guides decision-making by comparing the p-value to a chosen significance level, typically 0.05. A small p-value indicates strong evidence against the null hypothesis, suggesting a statistically significant relationship or effect. However, the p-value is influenced by various factors and should be interpreted alongside other considerations, such as effect size and context.

Frequently Based Questions (FAQs)

Why is p-value greater than 1.

A p-value is a probability, and probabilities must be between 0 and 1. Therefore, a p-value greater than 1 is not possible.

What does P 0.01 mean?

It means that the observed test statistic is unlikely to occur by chance if the null hypothesis is true. It represents a 1% chance of observing the test statistic or a more extreme one under the null hypothesis.

Is 0.9 a good p-value?

A good p-value is typically less than or equal to 0.05, indicating that the null hypothesis is likely false and the observed relationship or effect is statistically significant.

What is p-value in a model?

It is a measure of the statistical significance of a parameter in the model. It represents the probability of obtaining the observed value of the parameter or a more extreme one, assuming the null hypothesis is true.

Why is p-value so low?

A low p-value means that the observed test statistic is unlikely to occur by chance if the null hypothesis is true. It suggests that the observed relationship or effect is statistically significant and not due to random sampling variation.

How Can You Use P-value to Compare Two Different Results of a Hypothesis Test?

Compare p-values: Lower p-value indicates stronger evidence against null hypothesis, favoring results with smaller p-values in hypothesis testing.

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