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Statistics By Jim

Making statistics intuitive

Z Test: Uses, Formula & Examples

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What is a Z Test?

Use a Z test when you need to compare group means. Use the 1-sample analysis to determine whether a population mean is different from a hypothesized value. Or use the 2-sample version to determine whether two population means differ.

A Z test is a form of inferential statistics . It uses samples to draw conclusions about populations.

For example, use Z tests to assess the following:

• One sample : Do students in an honors program have an average IQ score different than a hypothesized value of 100?
• Two sample : Do two IQ boosting programs have different mean scores?

In this post, learn about when to use a Z test vs T test. Then we’ll review the Z test’s hypotheses, assumptions, interpretation, and formula. Finally, we’ll use the formula in a worked example.

Related post : Difference between Descriptive and Inferential Statistics

Z test vs T test

Z tests and t tests are similar. They both assess the means of one or two groups, have similar assumptions, and allow you to draw the same conclusions about population means.

However, there is one critical difference.

Z tests require you to know the population standard deviation, while t tests use a sample estimate of the standard deviation. Learn more about Population Parameters vs. Sample Statistics .

In practice, analysts rarely use Z tests because it’s rare that they’ll know the population standard deviation. It’s even rarer that they’ll know it and yet need to assess an unknown population mean!

A Z test is often the first hypothesis test students learn because its results are easier to calculate by hand and it builds on the standard normal distribution that they probably already understand. Additionally, students don’t need to know about the degrees of freedom .

Z and T test results converge as the sample size approaches infinity. Indeed, for sample sizes greater than 30, the differences between the two analyses become small.

William Sealy Gosset developed the t test specifically to account for the additional uncertainty associated with smaller samples. Conversely, Z tests are too sensitive to mean differences in smaller samples and can produce statistically significant results incorrectly (i.e., false positives).

When to use a T Test vs Z Test

Let’s put a button on it.

When you know the population standard deviation, use a Z test.

When you have a sample estimate of the standard deviation, which will be the vast majority of the time, the best statistical practice is to use a t test regardless of the sample size.

However, the difference between the two analyses becomes trivial when the sample size exceeds 30.

Learn more about a T-Test Overview: How to Use & Examples and How T-Tests Work .

Z Test Hypotheses

This analysis uses sample data to evaluate hypotheses that refer to population means (µ). The hypotheses depend on whether you’re assessing one or two samples.

One-Sample Z Test Hypotheses

• Null hypothesis (H 0 ): The population mean equals a hypothesized value (µ = µ 0 ).
• Alternative hypothesis (H A ): The population mean DOES NOT equal a hypothesized value (µ ≠ µ 0 ).

When the p-value is less or equal to your significance level (e.g., 0.05), reject the null hypothesis. The difference between your sample mean and the hypothesized value is statistically significant. Your sample data support the notion that the population mean does not equal the hypothesized value.

Related posts : Null Hypothesis: Definition, Rejecting & Examples and Understanding Significance Levels

Two-Sample Z Test Hypotheses

• Null hypothesis (H 0 ): Two population means are equal (µ 1 = µ 2 ).
• Alternative hypothesis (H A ): Two population means are not equal (µ 1 ≠ µ 2 ).

Again, when the p-value is less than or equal to your significance level, reject the null hypothesis. The difference between the two means is statistically significant. Your sample data support the idea that the two population means are different.

These hypotheses are for two-sided analyses. You can use one-sided, directional hypotheses instead. Learn more in my post, One-Tailed and Two-Tailed Hypothesis Tests Explained .

Related posts : How to Interpret P Values and Statistical Significance

Z Test Assumptions

For reliable results, your data should satisfy the following assumptions:

You have a random sample

Drawing a random sample from your target population helps ensure that the sample represents the population. Representative samples are crucial for accurately inferring population properties. The Z test results won’t be valid if your data do not reflect the population.

Related posts : Random Sampling and Representative Samples

Continuous data

Z tests require continuous data . Continuous variables can assume any numeric value, and the scale can be divided meaningfully into smaller increments, such as fractional and decimal values. For example, weight, height, and temperature are continuous.

Other analyses can assess additional data types. For more information, read Comparing Hypothesis Tests for Continuous, Binary, and Count Data .

Your sample data follow a normal distribution, or you have a large sample size

All Z tests assume your data follow a normal distribution . However, due to the central limit theorem, you can ignore this assumption when your sample is large enough.

The following sample size guidelines indicate when normality becomes less of a concern:

• One-Sample : 20 or more observations.
• Two-Sample : At least 15 in each group.

Related posts : Central Limit Theorem and Skewed Distributions

Independent samples

For the two-sample analysis, the groups must contain different sets of items. This analysis compares two distinct samples.

Related post : Independent and Dependent Samples

Population standard deviation is known

As I mention in the Z test vs T test section, use a Z test when you know the population standard deviation. However, when n > 30, the difference between the analyses becomes trivial.

Related post : Standard Deviations

Z Test Formula

These Z test formulas allow you to calculate the test statistic. Use the Z statistic to determine statistical significance by comparing it to the appropriate critical values and use it to find p-values.

The correct formula depends on whether you’re performing a one- or two-sample analysis. Both formulas require sample means (x̅) and sample sizes (n) from your sample. Additionally, you specify the population standard deviation (σ) or variance (σ 2 ), which does not come from your sample.

I present a worked example using the Z test formula at the end of this post.

Learn more about Z-Scores and Test Statistics .

One Sample Z Test Formula

The one sample Z test formula is a ratio.

The numerator is the difference between your sample mean and a hypothesized value for the population mean (µ 0 ). This value is often a strawman argument that you hope to disprove.

The denominator is the standard error of the mean. It represents the uncertainty in how well the sample mean estimates the population mean.

Learn more about the Standard Error of the Mean .

Two Sample Z Test Formula

The two sample Z test formula is also a ratio.

The numerator is the difference between your two sample means.

The denominator calculates the pooled standard error of the mean by combining both samples. In this Z test formula, enter the population variances (σ 2 ) for each sample.

Z Test Critical Values

As I mentioned in the Z vs T test section, a Z test does not use degrees of freedom. It evaluates Z-scores in the context of the standard normal distribution. Unlike the t-distribution , the standard normal distribution doesn’t change shape as the sample size changes. Consequently, the critical values don’t change with the sample size.

To find the critical value for a Z test, you need to know the significance level and whether it is one- or two-tailed.

Learn more about Critical Values: Definition, Finding & Calculator .

Z Test Worked Example

Let’s close this post by calculating the results for a Z test by hand!

Suppose we randomly sampled subjects from an honors program. We want to determine whether their mean IQ score differs from the general population. The general population’s IQ scores are defined as having a mean of 100 and a standard deviation of 15.

We’ll determine whether the difference between our sample mean and the hypothesized population mean of 100 is statistically significant.

Specifically, we’ll use a two-tailed analysis with a significance level of 0.05. Looking at the table above, you’ll see that this Z test has critical values of ± 1.960. Our results are statistically significant if our Z statistic is below –1.960 or above +1.960.

The hypotheses are the following:

• Null (H 0 ): µ = 100
• Alternative (H A ): µ ≠ 100

Entering Our Results into the Formula

Here are the values from our study that we need to enter into the Z test formula:

• IQ score sample mean (x̅): 107
• Sample size (n): 25
• Hypothesized population mean (µ 0 ): 100
• Population standard deviation (σ): 15

The Z-score is 2.333. This value is greater than the critical value of 1.960, making the results statistically significant. Below is a graphical representation of our Z test results showing how the Z statistic falls within the critical region.

We can reject the null and conclude that the mean IQ score for the population of honors students does not equal 100. Based on the sample mean of 107, we know their mean IQ score is higher.

Now let’s find the p-value. We could use technology to do that, such as an online calculator. However, let’s go old school and use a Z table.

To find the p-value that corresponds to a Z-score from a two-tailed analysis, we need to find the negative value of our Z-score (even when it’s positive) and double it.

In the truncated Z-table below, I highlight the cell corresponding to a Z-score of -2.33.

The cell value of 0.00990 represents the area or probability to the left of the Z-score -2.33. We need to double it to include the area > +2.33 to obtain the p-value for a two-tailed analysis.

P-value = 0.00990 * 2 = 0.0198

That p-value is an approximation because it uses a Z-score of 2.33 rather than 2.333. Using an online calculator, the p-value for our Z test is a more precise 0.0196. This p-value is less than our significance level of 0.05, which reconfirms the statistically significant results.

See my full Z-table , which explains how to use it to solve other types of problems.

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Z-test : Formula, Types, Examples

Z-test is especially useful when you have a large sample size and know the population’s standard deviation. Different tests are used in statistics to compare distinct samples or groups and make conclusions about populations. These tests, also referred to as statistical tests, concentrate on examining the probability or possibility of acquiring the observed data under particular premises or hypotheses. They offer a framework for evaluating the evidence for or against a given hypothesis.

Table of Content

What is Z-Test?

Z-test formula, when to use z-test, hypothesis testing, steps to perform z-test, type of z-test, practice problems.

Z-test is a statistical test that is used to determine whether the mean of a sample is significantly different from a known population mean when the population standard deviation is known. It is particularly useful when the sample size is large (>30).

Z-test can also be defined as a statistical method that is used to determine whether the distribution of the test statistics can be approximated using the normal distribution or not. It is the method to determine whether two sample means are approximately the same or different when their variance is known and the sample size is large (should be >= 30).

The Z-test compares the difference between the sample mean and the population means by considering the standard deviation of the sampling distribution. The resulting Z-score represents the number of standard deviations that the sample mean deviates from the population mean. This Z-Score is also known as Z-Statistics, and can be formulated as:

[Tex]\text{Z-Score} = \frac{\bar{x}-\mu}{\sigma} [/Tex]

• [Tex]\bar{x}  [/Tex] : mean of the sample.
• [Tex]\mu  [/Tex] : mean of the population.
• [Tex]\sigma  [/Tex] : Standard deviation of the population.

z-test assumes that the test statistic (z-score) follows a standard normal distribution.

The average family annual income in India is 200k, with a standard deviation of 5k, and the average family annual income in Delhi is 300k.

Then Z-Score for Delhi will be.

[Tex]\begin{aligned} \text{Z-Score}&=\frac{\bar{x}-\mu}{\sigma} \\&=\frac{300-200}{5} \\&=20 \end{aligned} [/Tex]

This indicates that the average family’s annual income in Delhi is 20 standard deviations above the mean of the population (India).

• The sample size should be greater than 30. Otherwise, we should use the t-test.
• Samples should be drawn at random from the population.
• The standard deviation of the population should be known.
• Samples that are drawn from the population should be independent of each other.
• The data should be normally distributed , however, for a large sample size, it is assumed to have a normal distribution because central limit theorem

A hypothesis is an educated guess/claim about a particular property of an object. Hypothesis testing is a way to validate the claim of an experiment.

• Null Hypothesis: The null hypothesis is a statement that the value of a population parameter (such as proportion, mean, or standard deviation) is equal to some claimed value. We either reject or fail to reject the null hypothesis. The null hypothesis is denoted by H 0 .
• Alternate Hypothesis: The alternative hypothesis is the statement that the parameter has a value that is different from the claimed value. It is denoted by H A .
• Level of significance: It means the degree of significance in which we accept or reject the null hypothesis. Since in most of the experiments 100% accuracy is not possible for accepting or rejecting a hypothesis, we, therefore, select a level of significance. It is denoted by alpha (∝).
• First, identify the null and alternate hypotheses.
• Determine the level of significance (∝).
• Find the critical value of z in the z-test using
• n: sample size.
• Now compare with the hypothesis and decide whether to reject or not reject the null hypothesis

Left-tailed Test

In this test, our region of rejection is located to the extreme left of the distribution. Here our null hypothesis is that the claimed value is less than or equal to the mean population value.

Right-tailed Test

In this test, our region of rejection is located to the extreme right of the distribution. Here our null hypothesis is that the claimed value is less than or equal to the mean population value.

One-Tailed Test

 A school claimed that the students who study that are more intelligent than the average school. On calculating the IQ scores of 50 students, the average turns out to be 110. The mean of the population IQ is 100 and the standard deviation is 15. State whether the claim of the principal is right or not at a 5% significance level.

• First, we define the null hypothesis and the alternate hypothesis. Our null hypothesis will be: [Tex]H_0 : \mu  = 100        [/Tex] and our alternate hypothesis. [Tex]H_A : \mu > 100 [/Tex]
• State the level of significance. Here, our level of significance is given in this question ( [Tex]\alpha [/Tex]  =0.05), if not given then we take ∝=0.05 in general.
• Now, we compute the Z-Score: X = 110 Mean = 100 Standard Deviation = 15 Number of samples = 50 [Tex]\begin{aligned} \text{Z-Score}&=\frac{\bar{x}-\mu}{\sigma/\sqrt{n}} \\&=\frac{110-100}{15/\sqrt{50}} \\&=\frac{10}{2.12} \\&=4.71 \end{aligned} [/Tex]
• Now, we look up to the z-table. For the value of ∝=0.05, the z-score for the right-tailed test is 1.645.
• Here 4.71 >1.645, so we reject the null hypothesis. 
• If the z-test statistics are less than the z-score, then we will not reject the null hypothesis.

Code Implementations of One-Tailed Z-Test

# Import the necessary libraries import numpy as np import scipy.stats as stats # Given information sample_mean = 110 population_mean = 100 population_std = 15 sample_size = 50 alpha = 0.05 # compute the z-score z_score = ( sample_mean - population_mean ) / ( population_std / np . sqrt ( 50 )) print ( 'Z-Score :' , z_score ) # Approach 1: Using Critical Z-Score # Critical Z-Score z_critical = stats . norm . ppf ( 1 - alpha ) print ( 'Critical Z-Score :' , z_critical ) # Hypothesis if z_score > z_critical : print ( "Reject Null Hypothesis" ) else : print ( "Fail to Reject Null Hypothesis" ) # Approach 2: Using P-value # P-Value : Probability of getting less than a Z-score p_value = 1 - stats . norm . cdf ( z_score ) print ( 'p-value :' , p_value ) # Hypothesis if p_value < alpha : print ( "Reject Null Hypothesis" ) else : print ( "Fail to Reject Null Hypothesis" )

Z-Score : 4.714045207910317Critical Z-Score : 1.6448536269514722Reject Null Hypothesisp-value : 1.2142337364462463e-06Reject Null Hypothesis

Two-tailed test

In this test, our region of rejection is located to both extremes of the distribution. Here our null hypothesis is that the claimed value is equal to the mean population value.

Below is an example of performing the z-test:

Two-sampled z-test

In this test, we have provided 2 normally distributed and independent populations, and we have drawn samples at random from both populations. Here, we consider u 1 and u 2 to be the population mean, and X 1 and X 2 to be the observed sample mean. Here, our null hypothesis could be like this:

[Tex]H_{0} : \mu_{1} -\mu_{2} = 0    [/Tex]

and alternative hypothesis

[Tex]H_{1} :  \mu_{1} – \mu_{2} \ne 0    [/Tex]

and the formula for calculating the z-test score:

[Tex]Z = \frac{\left ( \overline{X_{1}} – \overline{X_{2}} \right ) – \left ( \mu_{1} – \mu_{2} \right )}{\sqrt{\frac{\sigma_{1}^2}{n_{1}} + \frac{\sigma_{2}^2}{n_{2}}}}    [/Tex]

where  [Tex]\sigma_1 [/Tex]   and  [Tex]\sigma_2 [/Tex]   are the standard deviation and n 1 and n 2 are the sample size of population corresponding to u 1 and u 2 .  

There are two groups of students preparing for a competition: Group A and Group B. Group A has studied offline classes, while Group B has studied online classes. After the examination, the score of each student comes. Now we want to determine whether the online or offline classes are better.

Group A: Sample size = 50, Sample mean = 75, Sample standard deviation = 10 Group B: Sample size = 60, Sample mean = 80, Sample standard deviation = 12

Assuming a 5% significance level, perform a two-sample z-test to determine if there is a significant difference between the online and offline classes.

Step 1: Null & Alternate Hypothesis

• Null Hypothesis: There is no significant difference between the mean score between the online and offline classes [Tex] \mu_1 -\mu_2 = 0 [/Tex]
• Alternate Hypothesis: There is a significant difference in the mean scores between the online and offline classes. [Tex] \mu_1 -\mu_2 \neq 0 [/Tex]

Step 2: Significance Label

• Significance Label: 5%  [Tex]\alpha = 0.05 [/Tex]

Step 3: Z-Score

[Tex]\begin{aligned} \text{Z-score} &= \frac{(x_1-x_2)-(\mu_1 -\mu_2)} {\sqrt{\frac{\sigma_1^2}{n_1}+\frac{\sigma_2^2}{n_1}}} \\ &= \frac{(75-80)-0} {\sqrt{\frac{10^2}{50}+\frac{12^2}{60}}} \\ &= \frac{-5} {\sqrt{2+2.4}} \\ &= \frac{-5} {2.0976} \\&=-2.384 \end{aligned} [/Tex]

Step 4: Check to Critical Z-Score value in the Z-Table for apha/2 = 0.025

•  Critical Z-Score = 1.96

Step 5: Compare with the absolute Z-Score value

• absolute(Z-Score) > Critical Z-Score
• Reject the null hypothesis. There is a significant difference between the online and offline classes.

Code Implementations on Two-sampled Z-test

import numpy as np import scipy.stats as stats # Group A (Offline Classes) n1 = 50 x1 = 75 s1 = 10 # Group B (Online Classes) n2 = 60 x2 = 80 s2 = 12 # Null Hypothesis = mu_1-mu_2 = 0 # Hypothesized difference (under the null hypothesis) D = 0 # Set the significance level alpha = 0.05 # Calculate the test statistic (z-score) z_score = (( x1 - x2 ) - D ) / np . sqrt (( s1 ** 2 / n1 ) + ( s2 ** 2 / n2 )) print ( 'Z-Score:' , np . abs ( z_score )) # Calculate the critical value z_critical = stats . norm . ppf ( 1 - alpha / 2 ) print ( 'Critical Z-Score:' , z_critical ) # Compare the test statistic with the critical value if np . abs ( z_score ) > z_critical : print ( """Reject the null hypothesis. There is a significant difference between the online and offline classes.""" ) else : print ( """Fail to reject the null hypothesis. There is not enough evidence to suggest a significant difference between the online and offline classes.""" ) # Approach 2: Using P-value # P-Value : Probability of getting less than a Z-score p_value = 2 * ( 1 - stats . norm . cdf ( np . abs ( z_score ))) print ( 'P-Value :' , p_value ) # Compare the p-value with the significance level if p_value < alpha : print ( """Reject the null hypothesis. There is a significant difference between the online and offline classes.""" ) else : print ( """Fail to reject the null hypothesis. There is not enough evidence to suggest significant difference between the online and offline classes.""" )

Z-Score: 2.3836564731139807 Critical Z-Score: 1.959963984540054 Reject the null hypothesis. There is a significant difference between the online and offline classes. P-Value : 0.01714159544079563 Reject the null hypothesis. There is a significant difference between the online and offline classes.

Solved examples :

Example 1: One-sample Z-test

Problem: A company claims that the average battery life of their new smartphone is 12 hours. A consumer group tests 100 phones and finds the average battery life to be 11.8 hours with a population standard deviation of 0.5 hours. At a 5% significance level, is there evidence to refute the company’s claim?

Solution: Step 1: State the hypotheses H₀: μ = 12 (null hypothesis) H₁: μ ≠ 12 (alternative hypothesis) Step 2: Calculate the Z-score Z = (x̄ – μ) / (σ / √n) = (11.8 – 12) / (0.5 / √100) = -0.2 / 0.05 = -4 Step 3: Find the critical value (two-tailed test at 5% significance) Z₀.₀₂₅ = ±1.96 Step 4: Compare Z-score with critical value |-4| > 1.96, so we reject the null hypothesis. Conclusion: There is sufficient evidence to refute the company’s claim about battery life.

Problem: A researcher wants to compare the effectiveness of two different medications for reducing blood pressure. Medication A is tested on 50 patients, resulting in a mean reduction of 15 mmHg with a standard deviation of 3 mmHg. Medication B is tested on 60 patients, resulting in a mean reduction of 13 mmHg with a standard deviation of 4 mmHg. At a 1% significance level, is there a significant difference between the two medications?

Step 1: State the hypotheses H₀: μ₁ – μ₂ = 0 (null hypothesis) H₁: μ₁ – μ₂ ≠ 0 (alternative hypothesis) Step 2: Calculate the Z-score Z = (x̄₁ – x̄₂) / √((σ₁²/n₁) + (σ₂²/n₂)) = (15 – 13) / √((3²/50) + (4²/60)) = 2 / √(0.18 + 0.2667) = 2 / 0.6455 = 3.10 Step 3: Find the critical value (two-tailed test at 1% significance) Z₀.₀₀₅ = ±2.576 Step 4: Compare Z-score with critical value 3.10 > 2.576, so we reject the null hypothesis. Conclusion: There is a significant difference between the effectiveness of the two medications at the 1% significance level.

Problem 3 : A polling company claims that 60% of voters support a new policy. In a sample of 1000 voters, 570 support the policy. At a 5% significance level, is there evidence to support the company’s claim?

Step 1: State the hypotheses H₀: p = 0.60 (null hypothesis) H₁: p ≠ 0.60 (alternative hypothesis) Step 2: Calculate the Z-score p̂ = 570/1000 = 0.57 (sample proportion) Z = (p̂ – p) / √(p(1-p)/n) = (0.57 – 0.60) / √(0.60(1-0.60)/1000) = -0.03 / √(0.24/1000) = -0.03 / 0.0155 = -1.94 Step 3: Find the critical value (two-tailed test at 5% significance) Z₀.₀₂₅ = ±1.96 Step 4: Compare Z-score with critical value |-1.94| < 1.96, so we fail to reject the null hypothesis. Conclusion: There is not enough evidence to refute the polling company’s claim at the 5% significance level.

Problem 4 : A manufacturer claims that their light bulbs last an average of 1000 hours. A sample of 100 bulbs has a mean life of 985 hours. The population standard deviation is known to be 50 hours. At a 5% significance level, is there evidence to reject the manufacturer’s claim?

Solution: H₀: μ = 1000 H₁: μ ≠ 1000 Z = (x̄ – μ) / (σ / √n) = (985 – 1000) / (50 / √100) = -15 / 5 = -3 Critical value (α = 0.05, two-tailed): ±1.96 |-3| > 1.96, so reject H₀. Conclusion: There is sufficient evidence to reject the manufacturer’s claim at the 5% significance level.

Example 5 : Two factories produce semiconductors. Factory A’s chips have a mean resistance of 100 ohms with a standard deviation of 5 ohms. Factory B’s chips have a mean resistance of 98 ohms with a standard deviation of 4 ohms. Samples of 50 chips from each factory are tested. At a 1% significance level, is there a difference in mean resistance between the two factories?

H₀: μA – μB = 0 H₁: μA – μB ≠ 0 Z = (x̄A – x̄B) / √((σA²/nA) + (σB²/nB)) = (100 – 98) / √((5²/50) + (4²/50)) = 2 / √(0.5 + 0.32) = 2 / 0.872 = 2.29 Critical value (α = 0.01, two-tailed): ±2.576 |2.29| < 2.576, so fail to reject H₀. Conclusion: There is not enough evidence to conclude a difference in mean resistance at the 1% significance level.

Problem 6 : A political analyst claims that 40% of voters in a certain district support a new tax policy. In a random sample of 500 voters, 220 support the policy. At a 5% significance level, is there evidence to reject the analyst’s claim?

H₀: p = 0.40 H₁: p ≠ 0.40 p̂ = 220/500 = 0.44 Z = (p̂ – p) / √(p(1-p)/n) = (0.44 – 0.40) / √(0.40(1-0.40)/500) = 0.04 / 0.0219 = 1.83 Critical value (α = 0.05, two-tailed): ±1.96 |1.83| < 1.96, so fail to reject H₀. Conclusion: There is not enough evidence to reject the analyst’s claim at the 5% significance level.

Problem 7 : Two advertising methods are compared. Method A results in 150 sales out of 1000 contacts. Method B results in 180 sales out of 1200 contacts. At a 5% significance level, is there a difference in the effectiveness of the two methods?

H₀: pA – pB = 0 H₁: pA – pB ≠ 0 p̂A = 150/1000 = 0.15 p̂B = 180/1200 = 0.15 p̂ = (150 + 180) / (1000 + 1200) = 0.15 Z = (p̂A – p̂B) / √(p̂(1-p̂)(1/nA + 1/nB)) = (0.15 – 0.15) / √(0.15(1-0.15)(1/1000 + 1/1200)) = 0 / 0.0149 = 0 Critical value (α = 0.05, two-tailed): ±1.96 |0| < 1.96, so fail to reject H₀. Conclusion: There is no significant difference in the effectiveness of the two advertising methods at the 5% significance level.

Problem 8 : A new treatment for a disease is tested in two cities. In City A, 120 out of 400 patients recover. In City B, 140 out of 500 patients recover. At a 5% significance level, is there a difference in the recovery rates between the two cities?

H₀: pA – pB = 0 H₁: pA – pB ≠ 0 p̂A = 120/400 = 0.30 p̂B = 140/500 = 0.28 p̂ = (120 + 140) / (400 + 500) = 0.2889 Z = (p̂A – p̂B) / √(p̂(1-p̂)(1/nA + 1/nB)) = (0.30 – 0.28) / √(0.2889(1-0.2889)(1/400 + 1/500)) = 0.02 / 0.0316 = 0.633 Critical value (α = 0.05, two-tailed): ±1.96 |0.633| < 1.96, so fail to reject H₀. Conclusion: There is not enough evidence to conclude a difference in recovery rates between the two cities at the 5% significance level.

Problem 9 : Two advertising methods are compared. Method A results in 150 sales out of 1000 contacts. Method B results in 180 sales out of 1200 contacts. At a 5% significance level, is there a difference in the effectiveness of the two methods?

Problem 10 : A company claims that their product weighs 500 grams on average. A sample of 64 products has a mean weight of 498 grams. The population standard deviation is known to be 8 grams. At a 1% significance level, is there evidence to reject the company’s claim?

H₀: μ = 500 H₁: μ ≠ 500 Z = (x̄ – μ) / (σ / √n) = (498 – 500) / (8 / √64) = -2 / 1 = -2 Critical value (α = 0.01, two-tailed): ±2.576 |-2| < 2.576, so fail to reject H₀. Conclusion: There is not enough evidence to reject the company’s claim at the 1% significance level.

1).A cereal company claims that their boxes contain an average of 350 grams of cereal. A consumer group tests 100 boxes and finds a mean weight of 345 grams with a known population standard deviation of 15 grams. At a 5% significance level, is there evidence to refute the company’s claim?

2).A study compares the effect of two different diets on cholesterol levels. Diet A is tested on 50 people, resulting in a mean reduction of 25 mg/dL with a standard deviation of 8 mg/dL. Diet B is tested on 60 people, resulting in a mean reduction of 22 mg/dL with a standard deviation of 7 mg/dL. At a 1% significance level, is there a significant difference between the two diets?

3).A politician claims that 60% of voters in her district support her re-election. In a random sample of 1000 voters, 570 support her. At a 5% significance level, is there evidence to reject the politician’s claim?

4).Two different teaching methods are compared. Method A results in 80 students passing out of 120 students. Method B results in 90 students passing out of 150 students. At a 5% significance level, is there a difference in the effectiveness of the two methods?

5).A company claims that their new energy-saving light bulbs last an average of 10,000 hours. A sample of 64 bulbs has a mean life of 9,800 hours. The population standard deviation is known to be 500 hours. At a 1% significance level, is there evidence to reject the company’s claim?

6).The mean salary of employees in a large corporation is said to be $75,000 per year. A union representative suspects this is too high and surveys 100 randomly selected employees, finding a mean salary of $72,500. The population standard deviation is known to be $8,000. At a 5% significance level, is there evidence to support the union representative’s suspicion?

7).Two factories produce computer chips. Factory A’s chips have a mean processing speed of 3.2 GHz with a standard deviation of 0.2 GHz. Factory B’s chips have a mean processing speed of 3.3 GHz with a standard deviation of 0.25 GHz. Samples of 100 chips from each factory are tested. At a 5% significance level, is there a difference in mean processing speed between the two factories?

8).A new vaccine is claimed to be 90% effective. In a clinical trial with 500 participants, 440 develop immunity. At a 1% significance level, is there evidence to reject the claim about the vaccine’s effectiveness?

9).Two different advertising campaigns are tested. Campaign A results in 250 sales out of 2000 views. Campaign B results in 300 sales out of 2500 views. At a 5% significance level, is there a difference in the effectiveness of the two campaigns?

10).A quality control manager claims that the defect rate in a production line is 5%. In a sample of 1000 items, 65 are found to be defective. At a 5% significance level, is there evidence to suggest that the actual defect rate is different from the claimed 5%?

Type 1 error and Type II error

• Type I error: Type 1 error has occurred when we reject the null hypothesis, even when the hypothesis is true. This error is denoted by alpha.
• Type II error: Type II error occurred when we didn’t reject the null hypothesis, even when the hypothesis is false. This error is denoted by beta.

Z-tests are used to determine whether there is a statistically significant difference between a sample statistic and a population parameter, or between two population parameters.Z-tests are statistical tools used to determine if there’s a significant difference between a sample statistic and a population parameter, or between two population parameters. They’re applicable when dealing with large sample sizes (typically n > 30) and known population standard deviations. Z-tests can be used for analyzing means or proportions in both one-sample and two-sample scenarios. The process involves stating hypotheses, calculating a Z-score, comparing it to a critical value based on the chosen significance level (often 5% or 1%), and then making a decision to reject or fail to reject the null hypothesis.

What is the main limitation of the z-test?

The limitation of Z-Tests is that we don’t usually know the population standard deviation. What we do is: When we don’t know the population’s variability, we assume that the sample’s variability is a good basis for estimating the population’s variability.

What is the minimum sample for z-test?

A z-test can only be used if the population standard deviation is known and the sample size is 30 data points or larger. Otherwise, a t-test should be employed.

What is the application of z-test?

It is also used to determine if there is a significant difference between the mean of two independent samples. The z-test can also be used to compare the population proportion to an assumed proportion or to determine the difference between the population proportion of two samples.

What is the theory of the z-test?

The z test is a commonly used hypothesis test in inferential statistics that allows us to compare two populations using the mean values of samples from those populations, or to compare the mean of one population to a hypothesized value, when what we are interested in comparing is a continuous variable.

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Z test is a statistical test that is conducted on data that approximately follows a normal distribution. The z test can be performed on one sample, two samples, or on proportions for hypothesis testing. It checks if the means of two large samples are different or not when the population variance is known.

A z test can further be classified into left-tailed, right-tailed, and two-tailed hypothesis tests depending upon the parameters of the data. In this article, we will learn more about the z test, its formula, the z test statistic, and how to perform the test for different types of data using examples.

What is Z Test?

A z test is a test that is used to check if the means of two populations are different or not provided the data follows a normal distribution. For this purpose, the null hypothesis and the alternative hypothesis must be set up and the value of the z test statistic must be calculated. The decision criterion is based on the z critical value.

Z Test Definition

A z test is conducted on a population that follows a normal distribution with independent data points and has a sample size that is greater than or equal to 30. It is used to check whether the means of two populations are equal to each other when the population variance is known. The null hypothesis of a z test can be rejected if the z test statistic is statistically significant when compared with the critical value.

Z Test Formula

The z test formula compares the z statistic with the z critical value to test whether there is a difference in the means of two populations. In hypothesis testing , the z critical value divides the distribution graph into the acceptance and the rejection regions. If the test statistic falls in the rejection region then the null hypothesis can be rejected otherwise it cannot be rejected. The z test formula to set up the required hypothesis tests for a one sample and a two-sample z test are given below.

One-Sample Z Test

A one-sample z test is used to check if there is a difference between the sample mean and the population mean when the population standard deviation is known. The formula for the z test statistic is given as follows:

z = \(\frac{\overline{x}-\mu}{\frac{\sigma}{\sqrt{n}}}\). \(\overline{x}\) is the sample mean, \(\mu\) is the population mean, \(\sigma\) is the population standard deviation and n is the sample size.

The algorithm to set a one sample z test based on the z test statistic is given as follows:

Left Tailed Test:

Null Hypothesis: \(H_{0}\) : \(\mu = \mu_{0}\)

Alternate Hypothesis: \(H_{1}\) : \(\mu < \mu_{0}\)

Decision Criteria: If the z statistic < z critical value then reject the null hypothesis.

Right Tailed Test:

Alternate Hypothesis: \(H_{1}\) : \(\mu > \mu_{0}\)

Decision Criteria: If the z statistic > z critical value then reject the null hypothesis.

Two Tailed Test:

Alternate Hypothesis: \(H_{1}\) : \(\mu \neq \mu_{0}\)

Two Sample Z Test

A two sample z test is used to check if there is a difference between the means of two samples. The z test statistic formula is given as follows:

z = \(\frac{(\overline{x_{1}}-\overline{x_{2}})-(\mu_{1}-\mu_{2})}{\sqrt{\frac{\sigma_{1}^{2}}{n_{1}}+\frac{\sigma_{2}^{2}}{n_{2}}}}\). \(\overline{x_{1}}\), \(\mu_{1}\), \(\sigma_{1}^{2}\) are the sample mean, population mean and population variance respectively for the first sample. \(\overline{x_{2}}\), \(\mu_{2}\), \(\sigma_{2}^{2}\) are the sample mean, population mean and population variance respectively for the second sample.

The two-sample z test can be set up in the same way as the one-sample test. However, this test will be used to compare the means of the two samples. For example, the null hypothesis is given as \(H_{0}\) : \(\mu_{1} = \mu_{2}\).

Z Test for Proportions

A z test for proportions is used to check the difference in proportions. A z test can either be used for one proportion or two proportions. The formulas are given as follows.

One Proportion Z Test

A one proportion z test is used when there are two groups and compares the value of an observed proportion to a theoretical one. The z test statistic for a one proportion z test is given as follows:

z = \(\frac{p-p_{0}}{\sqrt{\frac{p_{0}(1-p_{0})}{n}}}\). Here, p is the observed value of the proportion, \(p_{0}\) is the theoretical proportion value and n is the sample size.

The null hypothesis is that the two proportions are the same while the alternative hypothesis is that they are not the same.

Two Proportion Z Test

A two proportion z test is conducted on two proportions to check if they are the same or not. The test statistic formula is given as follows:

z =\(\frac{p_{1}-p_{2}-0}{\sqrt{p(1-p)\left ( \frac{1}{n_{1}} +\frac{1}{n_{2}}\right )}}\)

where p = \(\frac{x_{1}+x_{2}}{n_{1}+n_{2}}\)

\(p_{1}\) is the proportion of sample 1 with sample size \(n_{1}\) and \(x_{1}\) number of trials.

\(p_{2}\) is the proportion of sample 2 with sample size \(n_{2}\) and \(x_{2}\) number of trials.

How to Calculate Z Test Statistic?

The most important step in calculating the z test statistic is to interpret the problem correctly. It is necessary to determine which tailed test needs to be conducted and what type of test does the z statistic belong to. Suppose a teacher claims that his section's students will score higher than his colleague's section. The mean score is 22.1 for 60 students belonging to his section with a standard deviation of 4.8. For his colleague's section, the mean score is 18.8 for 40 students and the standard deviation is 8.1. Test his claim at \(\alpha\) = 0.05. The steps to calculate the z test statistic are as follows:

• Identify the type of test. In this example, the means of two populations have to be compared in one direction thus, the test is a right-tailed two-sample z test.
• Set up the hypotheses. \(H_{0}\): \(\mu_{1} = \mu_{2}\), \(H_{1}\): \(\mu_{1} > \mu_{2}\).
• Find the critical value at the given alpha level using the z table. The critical value is 1.645.
• Determine the z test statistic using the appropriate formula. This is given by z = \(\frac{(\overline{x_{1}}-\overline{x_{2}})-(\mu_{1}-\mu_{2})}{\sqrt{\frac{\sigma_{1}^{2}}{n_{1}}+\frac{\sigma_{2}^{2}}{n_{2}}}}\). Substitute values in this equation. \(\overline{x_{1}}\) = 22.1, \(\sigma_{1}\) = 4.8, \(n_{1}\) = 60, \(\overline{x_{2}}\) = 18.8, \(\sigma_{2}\) = 8.1, \(n_{2}\) = 40 and \(\mu_{1} - \mu_{2} = 0\). Thus, z = 2.32
• Compare the critical value and test statistic to arrive at a conclusion. As 2.32 > 1.645 thus, the null hypothesis can be rejected. It can be concluded that there is enough evidence to support the teacher's claim that the scores of students are better in his class.

Z Test vs T-Test

Both z test and t-test are univariate tests used on the means of two datasets. The differences between both tests are outlined in the table given below:

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• Probability and Statistics
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Important Notes on Z Test

• Z test is a statistical test that is conducted on normally distributed data to check if there is a difference in means of two data sets.
• The sample size should be greater than 30 and the population variance must be known to perform a z test.
• The one-sample z test checks if there is a difference in the sample and population mean,
• The two sample z test checks if the means of two different groups are equal.

Examples on Z Test

Example 1: A teacher claims that the mean score of students in his class is greater than 82 with a standard deviation of 20. If a sample of 81 students was selected with a mean score of 90 then check if there is enough evidence to support this claim at a 0.05 significance level.

Solution: As the sample size is 81 and population standard deviation is known, this is an example of a right-tailed one-sample z test.

\(H_{0}\) : \(\mu = 82\)

\(H_{1}\) : \(\mu > 82\)

From the z table the critical value at \(\alpha\) = 1.645

z = \(\frac{\overline{x}-\mu}{\frac{\sigma}{\sqrt{n}}}\)

\(\overline{x}\) = 90, \(\mu\) = 82, n = 81, \(\sigma\) = 20

As 3.6 > 1.645 thus, the null hypothesis is rejected and it is concluded that there is enough evidence to support the teacher's claim.

Answer: Reject the null hypothesis

Example 2: An online medicine shop claims that the mean delivery time for medicines is less than 120 minutes with a standard deviation of 30 minutes. Is there enough evidence to support this claim at a 0.05 significance level if 49 orders were examined with a mean of 100 minutes?

Solution: As the sample size is 49 and population standard deviation is known, this is an example of a left-tailed one-sample z test.

\(H_{0}\) : \(\mu = 120\)

\(H_{1}\) : \(\mu < 120\)

From the z table the critical value at \(\alpha\) = -1.645. A negative sign is used as this is a left tailed test.

\(\overline{x}\) = 100, \(\mu\) = 120, n = 49, \(\sigma\) = 30

As -4.66 < -1.645 thus, the null hypothesis is rejected and it is concluded that there is enough evidence to support the medicine shop's claim.

Example 3: A company wants to improve the quality of products by reducing defects and monitoring the efficiency of assembly lines. In assembly line A, there were 18 defects reported out of 200 samples while in line B, 25 defects out of 600 samples were noted. Is there a difference in the procedures at a 0.05 alpha level?

Solution: This is an example of a two-tailed two proportion z test.

\(H_{0}\): The two proportions are the same.

\(H_{1}\): The two proportions are not the same.

As this is a two-tailed test the alpha level needs to be divided by 2 to get 0.025.

Using this, the critical value from the z table is 1.96.

\(n_{1}\) = 200, \(n_{2}\) = 600

\(p_{1}\) = 18 / 200 = 0.09

\(p_{2}\) = 25 / 600 = 0.0416

p = (18 + 25) / (200 + 600) = 0.0537

z =\(\frac{p_{1}-p_{2}-0}{\sqrt{p(1-p)\left ( \frac{1}{n_{1}} +\frac{1}{n_{2}}\right )}}\) = 2.62

As 2.62 > 1.96 thus, the null hypothesis is rejected and it is concluded that there is a significant difference between the two lines.

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FAQs on Z Test

What is a z test in statistics.

A z test in statistics is conducted on data that is normally distributed to test if the means of two datasets are equal. It can be performed when the sample size is greater than 30 and the population variance is known.

What is a One-Sample Z Test?

A one-sample z test is used when the population standard deviation is known, to compare the sample mean and the population mean. The z test statistic is given by the formula \(\frac{\overline{x}-\mu}{\frac{\sigma}{\sqrt{n}}}\).

What is the Two-Sample Z Test Formula?

The two sample z test is used when the means of two populations have to be compared. The z test formula is given as \(\frac{(\overline{x_{1}}-\overline{x_{2}})-(\mu_{1}-\mu_{2})}{\sqrt{\frac{\sigma_{1}^{2}}{n_{1}}+\frac{\sigma_{2}^{2}}{n_{2}}}}\).

What is a One Proportion Z test?

A one proportion z test is used to check if the value of the observed proportion is different from the value of the theoretical proportion. The z statistic is given by \(\frac{p-p_{0}}{\sqrt{\frac{p_{0}(1-p_{0})}{n}}}\).

What is a Two Proportion Z Test?

When the proportions of two samples have to be compared then the two proportion z test is used. The formula is given by \(\frac{p_{1}-p_{2}-0}{\sqrt{p(1-p)\left ( \frac{1}{n_{1}} +\frac{1}{n_{2}}\right )}}\).

How Do You Find the Z Test?

The steps to perform the z test are as follows:

• Set up the null and alternative hypotheses.
• Find the critical value using the alpha level and z table.
• Calculate the z statistic.
• Compare the critical value and the test statistic to decide whether to reject or not to reject the null hypothesis.

What is the Difference Between the Z Test and the T-Test?

A z test is used on large samples n ≥ 30 and normally distributed data while a t-test is used on small samples (n < 30) following a student t distribution . Both tests are used to check if the means of two datasets are the same.

Z-Test for Statistical Hypothesis Testing Explained

The Z-test is a statistical hypothesis test that determines where the distribution of the statistic we are measuring, like the mean, is part of the normal distribution.

The Z-test is a statistical hypothesis test used to determine where the distribution of the test statistic we are measuring, like the mean , is part of the normal distribution .

There are multiple types of Z-tests, however, we’ll focus on the easiest and most well known one, the one sample mean test. This is used to determine if the difference between the mean of a sample and the mean of a population is statistically significant.

What Is a Z-Test?

A Z-test is a type of statistical hypothesis test where the test-statistic follows a normal distribution.  

The name Z-test comes from the Z-score of the normal distribution. This is a measure of how many standard deviations away a raw score or sample statistics is from the populations’ mean.

Z-tests are the most common statistical tests conducted in fields such as healthcare and data science . Therefore, it’s an essential concept to understand.

Requirements for a Z-Test

In order to conduct a Z-test, your statistics need to meet a few requirements, including:

• A Sample size that’s greater than 30. This is because we want to ensure our sample mean comes from a distribution that is normal. As stated by the c entral limit theorem , any distribution can be approximated as normally distributed if it contains more than 30 data points.
• The standard deviation and mean of the population is known .
• The sample data is collected/acquired randomly .

More on Data Science:   What Is Bootstrapping Statistics?

Z-Test Steps

There are four steps to complete a Z-test. Let’s examine each one.

4 Steps to a Z-Test

• State the null hypothesis.
• State the alternate hypothesis.
• Choose your critical value.
• Calculate your Z-test statistics. 

1. State the Null Hypothesis

The first step in a Z-test is to state the null hypothesis, H_0 . This what you believe to be true from the population, which could be the mean of the population, μ_0 :

2. State the Alternate Hypothesis

Next, state the alternate hypothesis, H_1 . This is what you observe from your sample. If the sample mean is different from the population’s mean, then we say the mean is not equal to μ_0:

3. Choose Your Critical Value

Then, choose your critical value, α , which determines whether you accept or reject the null hypothesis. Typically for a Z-test we would use a statistical significance of 5 percent which is z = +/- 1.96 standard deviations from the population’s mean in the normal distribution:

This critical value is based on confidence intervals.

4. Calculate Your Z-Test Statistic

Compute the Z-test Statistic using the sample mean, μ_1 , the population mean, μ_0 , the number of data points in the sample, n and the population’s standard deviation, σ :

If the test statistic is greater (or lower depending on the test we are conducting) than the critical value, then the alternate hypothesis is true because the sample’s mean is statistically significant enough from the population mean.

Another way to think about this is if the sample mean is so far away from the population mean, the alternate hypothesis has to be true or the sample is a complete anomaly.

More on Data Science: Basic Probability Theory and Statistics Terms to Know

Z-Test Example

Let’s go through an example to fully understand the one-sample mean Z-test.

A school says that its pupils are, on average, smarter than other schools. It takes a sample of 50 students whose average IQ measures to be 110. The population, or the rest of the schools, has an average IQ of 100 and standard deviation of 20. Is the school’s claim correct?

The null and alternate hypotheses are:

Where we are saying that our sample, the school, has a higher mean IQ than the population mean.

Now, this is what’s called a right-sided, one-tailed test as our sample mean is greater than the population’s mean. So, choosing a critical value of 5 percent, which equals a Z-score of 1.96 , we can only reject the null hypothesis if our Z-test statistic is greater than 1.96.

If the school claimed its students’ IQs were an average of 90, then we would use a left-tailed test, as shown in the figure above. We would then only reject the null hypothesis if our Z-test statistic is less than -1.96.

Computing our Z-test statistic, we see:

Therefore, we have sufficient evidence to reject the null hypothesis, and the school’s claim is right.

Hope you enjoyed this article on Z-tests. In this post, we only addressed the most simple case, the one-sample mean test. However, there are other types of tests, but they all follow the same process just with some small nuances.  

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Z Test: Definition & Two Proportion Z-Test

What is a z test.

For example, if someone said they had found a new drug that cures cancer, you would want to be sure it was probably true. A hypothesis test will tell you if it’s probably true, or probably not true. A Z test, is used when your data is approximately normally distributed (i.e. the data has the shape of a bell curve when you graph it).

When you can run a Z Test.

Several different types of tests are used in statistics (i.e. f test , chi square test , t test ). You would use a Z test if:

• Your sample size is greater than 30 . Otherwise, use a t test .
• Data points should be independent from each other. In other words, one data point isn’t related or doesn’t affect another data point.
• Your data should be normally distributed . However, for large sample sizes (over 30) this doesn’t always matter.
• Your data should be randomly selected from a population, where each item has an equal chance of being selected.
• Sample sizes should be equal if at all possible.

How do I run a Z Test?

Running a Z test on your data requires five steps:

• State the null hypothesis and alternate hypothesis .
• Choose an alpha level .
• Find the critical value of z in a z table .
• Calculate the z test statistic (see below).
• Compare the test statistic to the critical z value and decide if you should support or reject the null hypothesis .

You could perform all these steps by hand. For example, you could find a critical value by hand , or calculate a z value by hand . For a step by step example, watch the following video: Watch the video for an example:

Can’t see the video? Click here to watch it on YouTube. You could also use technology, for example:

• Two sample z test in Excel .
• Find a critical z value on the TI 83 .
• Find a critical value on the TI 89 (left-tail) .

Two Proportion Z-Test

Watch the video to see a two proportion z-test:

Can’t see the video? Click here to watch it on YouTube.

A Two Proportion Z-Test (or Z-interval) allows you to calculate the true difference in proportions of two independent groups to a given confidence interval .

There are a few familiar conditions that need to be met for the Two Proportion Z-Interval to be valid.

• The groups must be independent. Subjects can be in one group or the other, but not both – like teens and adults.
• The data must be selected randomly and independently from a homogenous population. A survey is a common example.
• The population should be at least ten times bigger than the sample size. If the population is teenagers for example, there should be at least ten times as many total teenagers as the number of teenagers being surveyed.
• The null hypothesis (H 0 ) for the test is that the proportions are the same.
• The alternate hypothesis (H 1 ) is that the proportions are not the same.

Example question: let’s say you’re testing two flu drugs A and B. Drug A works on 41 people out of a sample of 195. Drug B works on 351 people in a sample of 605. Are the two drugs comparable? Use a 5% alpha level .

Step 1: Find the two proportions:

• P 1 = 41/195 = 0.21 (that’s 21%)
• P 2 = 351/605 = 0.58 (that’s 58%).

Set these numbers aside for a moment.

Step 2: Find the overall sample proportion . The numerator will be the total number of “positive” results for the two samples and the denominator is the total number of people in the two samples.

• p = (41 + 351) / (195 + 605) = 0.49.

Set this number aside for a moment.

Solving the formula, we get: Z = 8.99

We need to find out if the z-score falls into the “ rejection region .”

Step 5: Compare the calculated z-score from Step 3 with the table z-score from Step 4. If the calculated z-score is larger, you can reject the null hypothesis.

8.99 > 1.96, so we can reject the null hypothesis .

Example 2:  Suppose that in a survey of 700 women and 700 men, 35% of women and 30% of men indicated that they support a particular presidential candidate. Let’s say we wanted to find the true difference in proportions of these two groups to a 95% confidence interval .

At first glance the survey indicates that women support the candidate more than men by about 5% . However, for this statistical inference to be valid we need to construct a range of values to a given confidence interval.

To do this, we use the formula for Two Proportion Z-Interval:

Plugging in values we find the true difference in proportions to be

Based on the results of the survey, we are 95% confident that the difference in proportions of women and men that support the presidential candidate is between about 0 % and 10% .

Check out our YouTube channel for more stats help and tips!

Introduction to Statistics and Data Analysis

Chapter 6 hypothesis testing: the z-test.

We’ve all had the experience of standing at a crosswalk waiting staring at a pedestrian traffic light showing the little red man. You’re waiting for the little green man so you can cross. After a little while you’re still waiting and there aren’t any cars around. You might think ‘this light is really taking a long time’, but you continue waiting. Minutes pass and there’s still no little green man. At some point you come to the conclusion that the light is broken and you’ll never see that little green man. You cross on the little red man when it’s clear.

You may not have known this but you just conducted a hypothesis test. When you arrived at the crosswalk, you assumed that the light was functioning properly, although you will always entertain the possibility that it’s broken. In terms of hypothesis testing, your ‘null hypothesis’ is that the light is working and your ‘alternative hypothesis’ is that it’s broken. As time passes, it seems less and less likely that light is working properly. Eventually, the probability of the light working given how long you’ve been waiting becomes so low that you reject the null hypothesis in favor of the alternative hypothesis.

This sort of reasoning is the backbone of hypothesis testing and inferential statistics. It’s also the point in the course where we turn the corner from descriptive statistics to inferential statistics. Rather than describing our data in terms of means and plots, we will now start using our data to make inferences, or generalizations, about the population that our samples are drawn from. In this course we’ll focus on standard hypothesis testing where we set up a null hypothesis and determine the probability of our observed data under the assumption that the null hypothesis is true (the much maligned p-value). If this probability is small enough, then we conclude that our data suggests that the null hypothesis is false, so we reject it.

In this chapter, we’ll introduce hypothesis testing with examples from a ‘z-test’, when we’re comparing a single mean to what we’d expect from a population with known mean and standard deviation. In this case, we can convert our observed mean into a z-score for the standard normal distribution. Hence the name z-test.

It’s time to introduce the hypothesis test flow chart . It’s pretty self explanatory, even if you’re not familiar with all of these hypothesis tests. The z-test is (1) based on means, (2) with only one mean, and (3) where we know \(\sigma\) , the standard deviation of the population. Here’s how to find the z-test in the flow chart:

6.1 Women’s height example

Let’s work with the example from the end of the last chapter where we started with the fact that the heights of US women has a mean of 63 and a standard deviation of 2.5 inches. We calculated that the average height of the 122 women in Psych 315 is 64.7 inches. We then used the central limit theorem and calculated the probability of a random sample 122 heights from this population having a mean of 64.7 or greater is 2.4868996^{-14}. This is a very, very small number.

Here’s how we do it using R:

Let’s think of our sample as a random sample of UW psychology students, which is a reasonable assumption since all psychology students have to take a statistics class. What does this sample say about the psychology students that are women at UW compared to the US population? It could be that these psychology students at UW have the same mean and standard deviation as the US population, but our sample just happens to have an unusual number of tall women, but we calculated that the probability of this happening is really low. Instead, it makes more sense that the population that we’re drawing from has a mean that’s greater than the US population mean. Notice that we’re making a conclusion about the whole population of women psychology students based on our one sample.

Using the terminology of hypothesis testing, we first assumed the null hypothesis that UW women psych students have the same mean (and standard deviation) as the US population. The null hypothesis is written as:

\[ H_{0}: \mu = 63 \] In this example, our alternative hypothesis is that the mean of our population is larger than the mean of null hypothesis population. We write this as:

\[ H_{A}: \mu > 63 \]

Next, after obtaining a random sample and calculate the mean, we calculate the probability of drawing a mean this large (or larger) from the null hypothesis distribution.

If this probability is low enough, we reject the null hypothesis in favor of the alternative hypothesis. When our probability allows us to reject the null hypothesis, we say that our observed results are ‘statistically significant’.

In statistics terms, we never say we ‘accept that alternative hypothesis’ as true. All we can say is that we don’t think the null hypothesis is true. I know it’s subtle, but in science can never prove that a hypothesis is true or not. There’s always the possibility that we just happened to grab an unusual sample from the null hypothesis distribution.

6.2 The hated p<.05

The probability that we obtain our observed mean or greater given that the null hypothesis is true is called the p-value. How improbable is improbable enough to reject the null hypothesis? The p-value for our example above on women’s heights is astronomically low, so it’s clear that we should reject \(H_{0}\) .

The p-value that’s on the border of rejection is called the alpha ( \(\alpha\) ) value. We reject \(H_{0}\) when our p-value is less than \(\alpha\) .

You probably know that the most common value of alpha is \(\alpha = .05\) .

The first publication of this value dates back to Sir Ronald Fisher, in his seminal 1925 book Statistical Methods for Research Workers where he states:

“It is convenient to take this point as a limit in judging whether a deviation is considered significant or not. Deviations exceeding twice the standard deviation are thus formally regarded as significant.” (p. 47)

If you read the chapter on the normal distribution, then you should know that 95% of the area under the normal distribution lies within \(\pm\) two standard deviations of the mean. So the probability of obtaining a sample that exceeds two standard deviations from the mean (in either direction) is .05.

6.3 IQ example

Let’s do an example using IQ scores. IQ scores are normalized to have a mean of 100 and a standard deviation of 15 points. Because they’re normalized, they are a rare example of a population which has a known mean and standard deviation. In the next chapter we’ll discuss the t-test, which is used in the more common situation when we don’t know the population standard deviation.

Suppose you have the suspicion that graduate students have higher IQ’s than the general population. You have enough time to go and measure the IQ’s of 25 randomly sampled grad students and obtain a mean of 105. Is this difference between our this observed mean and 100 statistically significant using an alpha value of \(\alpha = 0.05\) ?

Here the null hypothesis is:

\[ H_{0}: \mu = 100\]

And the alternative hypothesis is:

\[ H_{A}: \mu > 100 \]

We know that the parameters for the null hypothesis are:

\[ \mu = 100 \] and \[ \sigma = 15 \]

From this, we can calculate the probability of observing our mean of 105 or higher using the central limit theorem and what we know about the normal distribution:

\[ \sigma_{\bar{x}} = \frac{\sigma_{x}}{\sqrt{n}} = \frac{15}{\sqrt{25}} = 3 \] From this, we can calculate the probability of our observed mean using R’s ‘pnorm’ function. Here’s how to do the whole thing in R.

Since our p-value of 0.0478 is (just barely) less than our chosen value of \(\alpha = 0.05\) as our criterion, we reject \(H_{0}\) for this (contrived) example and conclude that our observed mean of 105 is significantly greater than 100, so our study suggests that the average graduate student has a higher IQ than the overall population.

You should feel uncomfortable making such a hard, binary decision for such a borderline case. After all, if we had chosen our second favorite value of alpha, \(\alpha = .01\) , we would have failed to reject \(H_{0}\) . This discomfort is a primary reason why statisticians are moving away from this discrete decision making process. Later on we’ll discuss where things are going, including reporting effect sizes, and using confidence intervals.

6.4 Alpha values vs. critical values

Using R’s qnorm function, we can find the z-score for which only 5% of the area lies above:

So the probability of a randomly sampled z-score exceeding 1.644854 is less than 5%. It follows that if we convert our observed mean into z-score values, we will reject \(H_{0}\) if and only if our z-score is greater than 1.644854. This value is called the ‘critical value’ because it lies on the boundary between rejecting and failing to reject \(H_{0}\) .

In our last example, the z-score for our observed mean is:

\[ z = \frac{X-\mu}{\frac{\sigma}{\sqrt{n}}} = \frac{105 - 100}{3} = 1.67 \] Our z-score is just barely greater than the critical value of 1.644854, which makes sense because our p-value is just barely less than 0.05.

Sometimes you’ll see textbooks will compare critical values to observed scores for the decision making process in hypothesis testing. This dates back to days were computers were less available and we had to rely on tables instead. There wasn’t enough space in a book to hold complete tables which prohibited the ability to look up a p-value for any observed value. Instead only critical values for specific values of alpha were included. If you look at really old papers, you’ll see statistics reported as \(p<.05\) or \(p<.01\) instead of actual p-values for this reason.

It may help to visualize the relationship between p-values, alpha values and critical values like this:

The red shaded region is the upper 5% of the standard normal distribution which starts at the critical value of z=1.644854. This is sometimes called the ‘rejection region’. The blue vertical line is drawn at our observed value of z=1.67. You can see that the red line falls just inside the rejection region, so we Reject \(H_{0}\) !

6.5 One vs. two-tailed tests

Recall that our alternative hypothesis was to reject if our mean IQ was significantly greater than the null hypothesis mean: \(H_{A}: \mu > 100\) . This implies that the situation where \(\mu < 100\) is never even in consideration, which is weird. In science, we’re trying to understand the true state of the world. Although we have a hunch that grad student IQ’s are higher than average, there is always the possibility that they are lower than average. If our sample came up with an IQ well below 100, we’d simply fail to reject \(H_{0}\) and move on. This feels like throwing out important information.

The test we just ran is called a ‘one-tailed’ test because we only reject \(H_{0}\) if our results fall in one of the two tails of the population distribution.

Instead, it might make more sense to reject \(H_{0}\) if we get either an unusually large or small score. This means we need two critical values - one above and one below zero. At first thought you might think we just duplicate our critical value from a one-tailed test to the other side. But will double the area of the rejection region. That’s not a good thing because if \(H_{0}\) is true, there’s actually a \(2\alpha\) probability that we’ll draw a score in the rejection region.

Instead, we divide the area into two tails, each containing an area of \(\frac{\alpha}{2}\) . For \(\alpha\) = 0.05, we can find the critical value of z with qnorm:

So with a two-tailed test at \(\alpha = 0.05\) we reject \(H_{0}\) if our observed z-score is either above z = 1.96 or less than -1.96. This is that value around 2 that Sir Ronald Fischer was talking about!

Here’s what the critical regions and observed value of z looks like for our example with a two-tailed test:

You can see that splitting the area of \(\alpha = 0.05\) into two halves increased the critical value in the positive direction from 1.64 to 1.96, making it harder to reject \(H_{0}\) . For our example, this changes our decision: our observed value of z = 1.67 no longer falls into the rejection region, so now we fail to reject \(H_{0}\) .

If we now fail to reject \(H_{0}\) , what about the p-value? Remember, for a one-tailed test, p = \(\alpha\) if our observed z-score lands right on the critical value of z. The same is true for a two-tailed test. But the z-score moved so that the area above that score is \(\frac{\alpha}{2}\) . So for a two-tailed test, in order to have a p-value of \(\alpha\) when our z-score lands right on the critical value, we need to double p-value hat we’d get for a one-tailed test.

For our example, the p-value for the one tailed test was \(p=0.0478\) . So if we use a two-tailed test, our p-value is \((2)(0.0478) = 0.0956\) . This value is greater than \(\alpha\) = 0.05, which makes sense because we just showed above that we fail to reject \(H_{0}\) with a two tailed test.

Which is the right test, one-tailed or two-tailed? Ideally, as scientists, we should be agnostic about the results of our experiment. But in reality, we all know that the results are more interesting if they are statistically significant. So you can imagine that for this example, given a choice between one and two-tailed, we’d choose a one-tailed test so that we can reject \(H_{0}\) .

There are two problems with this. First, we should never adjust our choice of hypothesis test after we observe the data. That would be an example of ‘p-hacking’, a topic we’ll discuss later. Second, most statisticians these days strongly recommend against one-tailed tests. The only reason for a one-tailed test is if there is no logical or physical possibility for a population mean to fall below the null hypothesis mean.

10 Chapter 10: Hypothesis Testing with Z

Setting up the hypotheses.

When setting up the hypotheses with z, the parameter is associated with a sample mean (in the previous chapter examples the parameters for the null used 0). Using z is an occasion in which the null hypothesis is a value other than 0. For example, if we are working with mothers in the U.S. whose children are at risk of low birth weight, we can use 7.47 pounds, the average birth weight in the US, as our null value and test for differences against that. For now, we will focus on testing a value of a single mean against what we expect from the population.

Using birthweight as an example, our null hypothesis takes the form: H 0 : μ = 7.47 Notice that we are testing the value for μ, the population parameter, NOT the sample statistic ̅X (or M). We are referring to the data right now in raw form (we have not standardized it using z yet). Again, using inferential statistics, we are interested in understanding the population, drawing from our sample observations. For the research question, we have a mean value from the sample to use, we have specific data is – it is observed and used as a comparison for a set point.

As mentioned earlier, the alternative hypothesis is simply the reverse of the null hypothesis, and there are three options, depending on where we expect the difference to lie. We will set the criteria for rejecting the null hypothesis based on the directionality (greater than, less than, or not equal to) of the alternative.

If we expect our obtained sample mean to be above or below the null hypothesis value (knowing which direction), we set a directional hypothesis. O ur alternative hypothesis takes the form based on the research question itself. In our example with birthweight, this could be presented as H A : μ > 7.47 or H A : μ < 7.47. 

Note that we should only use a directional hypothesis if we have a good reason, based on prior observations or research, to suspect a particular direction. When we do not know the direction, such as when we are entering a new area of research, we use a non-directional alternative hypothesis. In our birthweight example, this could be set as H A : μ ≠ 7.47

In working with data for this course we will need to set a critical value of the test statistic for alpha (α) for use of test statistic tables in the back of the book. This is determining the critical rejection region that has a set critical value based on α.

Determining Critical Value from α

We set alpha (α) before collecting data in order to determine whether or not we should reject the null hypothesis. We set this value beforehand to avoid biasing ourselves by viewing our results and then determining what criteria we should use.

When a research hypothesis predicts an effect but does not predict a direction for the effect, it is called a non-directional hypothesis . To test the significance of a non-directional hypothesis, we have to consider the possibility that the sample could be extreme at either tail of the comparison distribution. We call this a two-tailed test .

Figure 1. showing a 2-tail test for non-directional hypothesis for z for area C is the critical rejection region.

When a research hypothesis predicts a direction for the effect, it is called a directional hypothesis . To test the significance of a directional hypothesis, we have to consider the possibility that the sample could be extreme at one-tail of the comparison distribution. We call this a one-tailed test .

Figure 2. showing a 1-tail test for a directional hypothesis (predicting an increase) for z for area C is the critical rejection region.

Determining Cutoff Scores with Two-Tailed Tests

Typically we specify an α level before analyzing the data. If the data analysis results in a probability value below the α level, then the null hypothesis is rejected; if it is not, then the null hypothesis is not rejected. In other words, if our data produce values that meet or exceed this threshold, then we have sufficient evidence to reject the null hypothesis ; if not, we fail to reject the null (we never “accept” the null). According to this perspective, if a result is significant, then it does not matter how significant it is. Moreover, if it is not significant, then it does not matter how close to being significant it is. Therefore, if the 0.05 level is being used, then probability values of 0.049 and 0.001 are treated identically. Similarly, probability values of 0.06 and 0.34 are treated identically. Note we will discuss ways to address effect size (which is related to this challenge of NHST).

When setting the probability value, there is a special complication in a two-tailed test. We have to divide the significance percentage between the two tails. For example, with a 5% significance level, we reject the null hypothesis only if the sample is so extreme that it is in either the top 2.5% or the bottom 2.5% of the comparison distribution. This keeps the overall level of significance at a total of 5%. A one-tailed test does have such an extreme value but with a one-tailed test only one side of the distribution is considered.

Figure 3. Critical value differences in one and two-tail tests. Photo Credit

Let’s re view th e set critical values for Z.

We discussed z-scores and probability in chapter 8.  If we revisit the z-score for 5% and 1%, we can identify the critical regions for the critical rejection areas from the unit standard normal table.

• A two-tailed test at the 5% level has a critical boundary Z score of +1.96 and -1.96
• A one-tailed test at the 5% level has a critical boundary Z score of +1.64 or -1.64
• A two-tailed test at the 1% level has a critical boundary Z score of +2.58 and -2.58
• A one-tailed test at the 1% level has a critical boundary Z score of +2.33 or -2.33.

Review: Critical values, p-values, and significance level

There are two criteria we use to assess whether our data meet the thresholds established by our chosen significance level, and they both have to do with our discussions of probability and distributions. Recall that probability refers to the likelihood of an event, given some situation or set of conditions. In hypothesis testing, that situation is the assumption that the null hypothesis value is the correct value, or that there is no effec t. The value laid out in H 0 is our condition under which we interpret our results. To reject this assumption, and thereby reject the null hypothesis, we need results that would be very unlikely if the null was true.

Now recall that values of z which fall in the tails of the standard normal distribution represent unlikely values. That is, the proportion of the area under the curve as or more extreme than z is very small as we get into the tails of the distribution. Our significance level corresponds to the area under the tail that is exactly equal to α: if we use our normal criterion of α = .05, then 5% of the area under the curve becomes what we call the rejection region (also called the critical region) of the distribution. This is illustrated in Figure 4.

Figure 4: The rejection region for a one-tailed test

The shaded rejection region takes us 5% of the area under the curve. Any result which falls in that region is sufficient evidence to reject the null hypothesis.

The rejection region is bounded by a specific z-value, as is any area under the curve. In hypothesis testing, the value corresponding to a specific rejection region is called the critical value, z crit (“z-crit”) or z* (hence the other name “critical region”). Finding the critical value works exactly the same as finding the z-score corresponding to any area under the curve like we did in Unit 1. If we go to the normal table, we will find that the z-score corresponding to 5% of the area under the curve is equal to 1.645 (z = 1.64 corresponds to 0.0405 and z = 1.65 corresponds to 0.0495, so .05 is exactly in between them) if we go to the right and -1.645 if we go to the left. The direction must be determined by your alternative hypothesis, and drawing then shading the distribution is helpful for keeping directionality straight.

Suppose, however, that we want to do a non-directional test. We need to put the critical region in both tails, but we don’t want to increase the overall size of the rejection region (for reasons we will see later). To do this, we simply split it in half so that an equal proportion of the area under the curve falls in each tail’s rejection region. For α = .05, this means 2.5% of the area is in each tail, which, based on the z-table, corresponds to critical values of z* = ±1.96. This is shown in Figure 5.

Figure 5: Two-tailed rejection region

Thus, any z-score falling outside ±1.96 (greater than 1.96 in absolute value) falls in the rejection region. When we use z-scores in this way, the obtained value of z (sometimes called z-obtained) is something known as a test statistic, which is simply an inferential statistic used to test a null hypothesis.

Calculate the test statistic: Z

Now that we understand setting up the hypothesis and determining the outcome, let’s examine hypothesis testing with z!  The next step is to carry out the study and get the actual results for our sample. Central to hypothesis test is comparison of the population and sample means. To make our calculation and determine where the sample is in the hypothesized distribution we calculate the Z for the sample data.

Make a decision

To decide whether to reject the null hypothesis, we compare our sample’s Z score to the Z score that marks our critical boundary. If our sample Z score falls inside the rejection region of the comparison distribution (is greater than the z-score critical boundary) we reject the null hypothesis.

The formula for our z- statistic has not changed:

To formally test our hypothesis, we compare our obtained z-statistic to our critical z-value. If z obt > z crit , that means it falls in the rejection region (to see why, draw a line for z = 2.5 on Figure 1 or Figure 2) and so we reject H 0 . If z obt < z crit , we fail to reject. Remember that as z gets larger, the corresponding area under the curve beyond z gets smaller. Thus, the proportion, or p-value, will be smaller than the area for α, and if the area is smaller, the probability gets smaller. Specifically, the probability of obtaining that result, or a more extreme result, under the condition that the null hypothesis is true gets smaller.

Conversely, if we fail to reject, we know that the proportion will be larger than α because the z-statistic will not be as far into the tail. This is illustrated for a one- tailed test in Figure 6.

Figure 6. Relation between α, z obt , and p

When the null hypothesis is rejected, the effect is said to be statistically significant . Do not confuse statistical significance with practical significance. A small effect can be highly significant if the sample size is large enough.

Why does the word “significant” in the phrase “statistically significant” mean something so different from other uses of the word? Interestingly, this is because the meaning of “significant” in everyday language has changed. It turns out that when the procedures for hypothesis testing were developed, something was “significant” if it signified something. Thus, finding that an effect is statistically significant signifies that the effect is real and not due to chance. Over the years, the meaning of “significant” changed, leading to the potential misinterpretation.

Review: Steps of the Hypothesis Testing Process

The process of testing hypotheses follows a simple four-step procedure. This process will be what we use for the remained of the textbook and course, and though the hypothesis and statistics we use will change, this process will not.

Step 1: State the Hypotheses

Your hypotheses are the first thing you need to lay out. Otherwise, there is nothing to test! You have to state the null hypothesis (which is what we test) and the alternative hypothesis (which is what we expect). These should be stated mathematically as they were presented above AND in words, explaining in normal English what each one means in terms of the research question.

Step 2: Find the Critical Values

Next, we formally lay out the criteria we will use to test our hypotheses. There are two pieces of information that inform our critical values: α, which determines how much of the area under the curve composes our rejection region, and the directionality of the test, which determines where the region will be.

Step 3: Compute the Test Statistic

Once we have our hypotheses and the standards we use to test them, we can collect data and calculate our test statistic, in this case z . This step is where the vast majority of differences in future chapters will arise: different tests used for different data are calculated in different ways, but the way we use and interpret them remains the same.

Step 4: Make the Decision

Finally, once we have our obtained test statistic, we can compare it to our critical value and decide whether we should reject or fail to reject the null hypothesis. When we do this, we must interpret the decision in relation to our research question, stating what we concluded, what we based our conclusion on, and the specific statistics we obtained.

Example: Movie Popcorn

Let’s see how hypothesis testing works in action by working through an example. Say that a movie theater owner likes to keep a very close eye on how much popcorn goes into each bag sold, so he knows that the average bag has 8 cups of popcorn and that this varies a little bit, about half a cup. That is, the known population mean is μ = 8.00 and the known population standard deviation is σ =0.50. The owner wants to make sure that the newest employee is filling bags correctly, so over the course of a week he randomly assesses 25 bags filled by the employee to test for a difference (n = 25). He doesn’t want bags overfilled or under filled, so he looks for differences in both directions. This scenario has all of the information we need to begin our hypothesis testing procedure.

Our manager is looking for a difference in the mean cups of popcorn bags compared to the population mean of 8. We will need both a null and an alternative hypothesis written both mathematically and in words. We’ll always start with the null hypothesis:

H 0 : There is no difference in the cups of popcorn bags from this employee H 0 : μ = 8.00

Notice that we phrase the hypothesis in terms of the population parameter μ, which in this case would be the true average cups of bags filled by the new employee.

Our assumption of no difference, the null hypothesis, is that this mean is exactly

the same as the known population mean value we want it to match, 8.00. Now let’s do the alternative:

H A : There is a difference in the cups of popcorn bags from this employee H A : μ ≠ 8.00

In this case, we don’t know if the bags will be too full or not full enough, so we do a two-tailed alternative hypothesis that there is a difference.

Our critical values are based on two things: the directionality of the test and the level of significance. We decided in step 1 that a two-tailed test is the appropriate directionality. We were given no information about the level of significance, so we assume that α = 0.05 is what we will use. As stated earlier in the chapter, the critical values for a two-tailed z-test at α = 0.05 are z* = ±1.96. This will be the criteria we use to test our hypothesis. We can now draw out our distribution so we can visualize the rejection region and make sure it makes sense

Figure 7: Rejection region for z* = ±1.96

Step 3: Calculate the Test Statistic

Now we come to our formal calculations. Let’s say that the manager collects data and finds that the average cups of this employee’s popcorn bags is ̅X = 7.75 cups. We can now plug this value, along with the values presented in the original problem, into our equation for z:

So our test statistic is z = -2.50, which we can draw onto our rejection region distribution:

Figure 8: Test statistic location

Looking at Figure 5, we can see that our obtained z-statistic falls in the rejection region. We can also directly compare it to our critical value: in terms of absolute value, -2.50 > -1.96, so we reject the null hypothesis. We can now write our conclusion:

When we write our conclusion, we write out the words to communicate what it actually means, but we also include the average sample size we calculated (the exact location doesn’t matter, just somewhere that flows naturally and makes sense) and the z-statistic and p-value. We don’t know the exact p-value, but we do know that because we rejected the null, it must be less than α.

Effect Size

When we reject the null hypothesis, we are stating that the difference we found was statistically significant, but we have mentioned several times that this tells us nothing about practical significance. To get an idea of the actual size of what we found, we can compute a new statistic called an effect size. Effect sizes give us an idea of how large, important, or meaningful a statistically significant effect is.

For mean differences like we calculated here, our effect size is Cohen’s d :

Effect sizes are incredibly useful and provide important information and clarification that overcomes some of the weakness of hypothesis testing. Whenever you find a significant result, you should always calculate an effect size

Table 1. Interpretation of Cohen’s d

Example: Office Temperature

Let’s do another example to solidify our understanding. Let’s say that the office building you work in is supposed to be kept at 74 degree Fahrenheit but is allowed

to vary by 1 degree in either direction. You suspect that, as a cost saving measure, the temperature was secretly set higher. You set up a formal way to test your hypothesis.

You start by laying out the null hypothesis:

H 0 : There is no difference in the average building temperature H 0 : μ = 74

Next you state the alternative hypothesis. You have reason to suspect a specific direction of change, so you make a one-tailed test:

H A : The average building temperature is higher than claimed H A : μ > 74

Now that you have everything set up, you spend one week collecting temperature data:

You calculate the average of these scores to be 𝑋̅ = 76.6 degrees. You use this to calculate the test statistic, using μ = 74 (the supposed average temperature), σ = 1.00 (how much the temperature should vary), and n = 5 (how many data points you collected):

z = 76.60 − 74.00 = 2.60    = 5.78

          1.00/√5            0.45

This value falls so far into the tail that it cannot even be plotted on the distribution!

Figure 7: Obtained z-statistic

You compare your obtained z-statistic, z = 5.77, to the critical value, z* = 1.645, and find that z > z*. Therefore you reject the null hypothesis, concluding: Based on 5 observations, the average temperature (𝑋̅ = 76.6 degrees) is statistically significantly higher than it is supposed to be, z = 5.77, p < .05.

d = (76.60-74.00)/ 1= 2.60

The effect size you calculate is definitely large, meaning someone has some explaining to do!

Example: Different Significance Level

First, let’s take a look at an example phrased in generic terms, rather than in the context of a specific research question, to see the individual pieces one more time. This time, however, we will use a stricter significance level, α = 0.01, to test the hypothesis.

We will use 60 as an arbitrary null hypothesis value: H 0 : The average score does not differ from the population H 0 : μ = 50

We will assume a two-tailed test: H A : The average score does differ H A : μ ≠ 50

We have seen the critical values for z-tests at α = 0.05 levels of significance several times. To find the values for α = 0.01, we will go to the standard normal table and find the z-score cutting of 0.005 (0.01 divided by 2 for a two-tailed test) of the area in the tail, which is z crit * = ±2.575. Notice that this cutoff is much higher than it was for α = 0.05. This is because we need much less of the area in the tail, so we need to go very far out to find the cutoff. As a result, this will require a much larger effect or much larger sample size in order to reject the null hypothesis.

We can now calculate our test statistic.  The average of 10 scores is M = 60.40 with a µ = 60. We will use σ = 10 as our known population standard deviation. From this information, we calculate our z-statistic as:

Our obtained z-statistic, z = 0.13, is very small. It is much less than our critical value of 2.575. Thus, this time, we fail to reject the null hypothesis. Our conclusion would look something like:

Notice two things about the end of the conclusion. First, we wrote that p is greater than instead of p is less than, like we did in the previous two examples. This is because we failed to reject the null hypothesis. We don’t know exactly what the p- value is, but we know it must be larger than the α level we used to test our hypothesis. Second, we used 0.01 instead of the usual 0.05, because this time we tested at a different level. The number you compare to the p-value should always be the significance level you test at. Because we did not detect a statistically significant effect, we do not need to calculate an effect size. Note: some statisticians will suggest to always calculate effects size as a possibility of Type II error. Although insignificant, calculating d = (60.4-60)/10 = .04 which suggests no effect (and not a possibility of Type II error).

Review Considerations in Hypothesis Testing

Errors in hypothesis testing.

Keep in mind that rejecting the null hypothesis is not an all-or-nothing decision. The Type I error rate is affected by the α level: the lower the α level the lower the Type I error rate. It might seem that α is the probability of a Type I error. However, this is not correct. Instead, α is the probability of a Type I error given that the null hypothesis is true. If the null hypothesis is false, then it is impossible to make a Type I error. The second type of error that can be made in significance testing is failing to reject a false null hypothesis. This kind of error is called a Type II error.

Statistical Power

The statistical power of a research design is the probability of rejecting the null hypothesis given the sample size and expected relationship strength. Statistical power is the complement of the probability of committing a Type II error. Clearly, researchers should be interested in the power of their research designs if they want to avoid making Type II errors. In particular, they should make sure their research design has adequate power before collecting data. A common guideline is that a power of .80 is adequate. This means that there is an 80% chance of rejecting the null hypothesis for the expected relationship strength.

Given that statistical power depends primarily on relationship strength and sample size, there are essentially two steps you can take to increase statistical power: increase the strength of the relationship or increase the sample size. Increasing the strength of the relationship can sometimes be accomplished by using a stronger manipulation or by more carefully controlling extraneous variables to reduce the amount of noise in the data (e.g., by using a within-subjects design rather than a between-subjects design). The usual strategy, however, is to increase the sample size. For any expected relationship strength, there will always be some sample large enough to achieve adequate power.

Inferential statistics uses data from a sample of individuals to reach conclusions about the whole population. The degree to which our inferences are valid depends upon how we selected the sample (sampling technique) and the characteristics (parameters) of population data. Statistical analyses assume that sample(s) and population(s) meet certain conditions called statistical assumptions.

It is easy to check assumptions when using statistical software and it is important as a researcher to check for violations; if violations of statistical assumptions are not appropriately addressed then results may be interpreted incorrectly.

Learning Objectives

Having read the chapter, students should be able to:

• Conduct a hypothesis test using a z-score statistics, locating critical region, and make a statistical decision including.
• Explain the purpose of measuring effect size and power, and be able to compute Cohen’s d.

Exercises – Ch. 10

• List the main steps for hypothesis testing with the z-statistic. When and why do you calculate an effect size?
• z = 1.99, two-tailed test at α = 0.05
• z = 1.99, two-tailed test at α = 0.01
• z = 1.99, one-tailed test at α = 0.05
• You are part of a trivia team and have tracked your team’s performance since you started playing, so you know that your scores are normally distributed with μ = 78 and σ = 12. Recently, a new person joined the team, and you think the scores have gotten better. Use hypothesis testing to see if the average score has improved based on the following 8 weeks’ worth of score data: 82, 74, 62, 68, 79, 94, 90, 81, 80.
• A study examines self-esteem and depression in teenagers.  A sample of 25 teens with a low self-esteem are given the Beck Depression Inventory.  The average score for the group is 20.9.  For the general population, the average score is 18.3 with σ = 12.  Use a two-tail test with α = 0.05 to examine whether teenagers with low self-esteem show significant differences in depression.
• You get hired as a server at a local restaurant, and the manager tells you that servers’ tips are $42 on average but vary about $12 (μ = 42, σ = 12). You decide to track your tips to see if you make a different amount, but because this is your first job as a server, you don’t know if you will make more or less in tips. After working 16 shifts, you find that your average nightly amount is $44.50 from tips. Test for a difference between this value and the population mean at the α = 0.05 level of significance.

Answers to Odd- Numbered Exercises – Ch. 10

1. List hypotheses. Determine critical region. Calculate z.  Compare z to critical region. Draw Conclusion.  We calculate an effect size when we find a statistically significant result to see if our result is practically meaningful or important

5. Step 1: H 0 : μ = 42 “My average tips does not differ from other servers”, H A : μ ≠ 42 “My average tips do differ from others”

Introduction to Statistics for Psychology Copyright © 2021 by Alisa Beyer is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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What Is a Z-Test?

Understanding z-tests, the bottom line.

• Corporate Finance
• Financial Analysis

Z-Test: Definition, Uses in Statistics, and Example

James Chen, CMT is an expert trader, investment adviser, and global market strategist.

Investopedia / Julie Bang

A z-test is a statistical test used to determine whether two population means are different when the variances are known and the sample size is large. It can also be used to compare one mean to a hypothesized value.

The data must approximately fit a normal distribution , otherwise the test doesn't work. Parameters such as variance and standard deviation should be calculated for a z-test to be performed.

Key Takeaways

• A z-test is a statistical test to determine whether two population means are different or to compare one mean to a hypothesized value when the variances are known and the sample size is large.
• A z-test is a hypothesis test for data that follows a normal distribution. 
• A z-statistic, or z-score, is a number representing the result from the z-test.
• Z-tests are closely related to t-tests, but t-tests are best performed when an experiment has a small sample size.
• Z-tests assume the standard deviation is known, while t-tests assume it is unknown.

The z-test is also a hypothesis test in which the z-statistic follows a normal distribution. The z-test is best used for greater-than-30 samples because, under the central limit theorem , as the number of samples gets larger, the samples are considered to be approximately normally distributed.

When conducting a z-test, the null and alternative hypotheses, and alpha level should be stated. The z-score , also called a test statistic, should be calculated, and the results and conclusion stated. A z-statistic, or z-score, is a number representing how many standard deviations above or below the mean population a score derived from a z-test is.

Examples of tests that can be conducted as z-tests include a one-sample location test, a two-sample location test, a paired difference test, and a maximum likelihood estimate. Z-tests are closely related to t-tests, but t-tests are best performed when an experiment has a small sample size. Also, t-tests assume the standard deviation is unknown, while z-tests assume it is known. If the standard deviation of the population is unknown, the assumption of the sample variance equaling the population variance is made.

Formula for Z-Score

The Z-score is calculated with the formula:

z = ( x - μ ) / σ

• z = Z-score
• x = the value being evaluated
• μ = the mean
• σ = the standard deviation

One-Sample Z-Test Example

Assume an investor wishes to test whether the average daily return of a stock is greater than 3%. A simple random sample of 50 returns is calculated and has an average of 2%. Assume the standard deviation of the returns is 2.5%. Therefore, the null hypothesis is when the average, or mean, is equal to 3%.

Conversely, the alternative hypothesis is whether the mean return is greater or less than 3%. Assume an alpha of 0.05% is selected with a two-tailed test . Consequently, there is 0.025% of the samples in each tail, and the alpha has a critical value of 1.96 or -1.96. If the value of z is greater than 1.96 or less than -1.96, the null hypothesis is rejected.

The value for z is calculated by subtracting the value of the average daily return selected for the test, or 3% in this case, from the observed average of the samples. Next, divide the resulting value by the standard deviation divided by the square root of the number of observed values.

Therefore, the test statistic is:

(0.02 - 0.03) ÷ (0.025 ÷ √ 50) = -2.83

The investor rejects the null hypothesis since z is less than -1.96 and concludes that the average daily return is less than 3%.

What's the Difference Between a T-Test and Z-Test?

Z-tests are closely related to t-tests, but t-tests are best performed when the data consists of a small sample size, i.e., less than 30. Also, t-tests assume the standard deviation is unknown, while z-tests assume it is known.

When Should You Use a Z-Test?

If the standard deviation of the population is known and the sample size is greater than or equal to 30, the z-test can be used. Regardless of the sample size, if the population standard deviation is unknown, a t-test should be used instead.

What Is a Z-Score?

A z-score, or z-statistic, is a number representing how many standard deviations above or below the mean population the score derived from a z-test is. Essentially, it is a numerical measurement that describes a value's relationship to the mean of a group of values. If a z-score is 0, it indicates that the data point's score is identical to the mean score. A z-score of 1.0 would indicate a value that is one standard deviation from the mean. Z-scores may be positive or negative, with a positive value indicating the score is above the mean and a negative score indicating it is below the mean.

What Is Central Limit Theorem (CLT)?

In the study of probability theory, the central limit theorem (CLT) states that the distribution of sample approximates a normal distribution (also known as a “bell curve”) as the sample size becomes larger, assuming that all samples are identical in size, and regardless of the population distribution shape. Sample sizes equal to or greater than 30 are considered sufficient for the CLT to predict the characteristics of a population accurately. The z-test's fidelity relies on the CLT holding.

What Are the Assumptions of the Z-Test?

For a z-test to be effective, the population must be normally distributed, and the samples must have the same variance. In addition, all data points should be independent of one another.

A z-test is used in hypothesis testing to evaluate whether a finding or association is statistically significant or not. In particular, it tests whether two means are the same (the null hypothesis). A z-test can only be used if the population standard deviation is known and the sample size is 30 data points or larger. Otherwise, a t-test should be employed.

Newcastle University. " Z-Test ."

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Z-Test: Formula, Examples, Uses, Z-Test vs T-Test

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Z-test Definition

z-test is a statistical tool used for the comparison or determination of the significance of several statistical measures, particularly the mean in a sample from a normally distributed population or between two independent samples.

• Like t-tests, z tests are also based on normal probability distribution.
• Z-test is the most commonly used statistical tool in research methodology, with it being used for studies where the sample size is large (n>30).
• In the case of the z-test, the variance is usually known.
• Z-test is more convenient than t-test as the critical value at each significance level in the confidence interval is the sample for all sample sizes.
• A z-score is a number indicating how many standard deviations above or below the mean of the population is.

Z-test formula

For the normal population with one sample:

where x̄    is the mean of the sample, and µ is the assumed mean, σ is the standard deviation, and n is the number of observations.

z-test for the difference in mean: 

where x̄ 1 and x̄ 2 are the means of two samples, σ is the standard deviation of the samples, and n1 and n2 are the numbers of observations of two samples.

One sample z-test (one-tailed z-test)

• One sample z-test is used to determine whether a particular population parameter, which is mostly mean, significantly different from an assumed value.
• It helps to estimate the relationship between the mean of the sample and the assumed mean.
• In this case, the standard normal distribution is used to calculate the critical value of the test.
• If the z-value of the sample being tested falls into the criteria for the one-sided tets, the alternative hypothesis will be accepted instead of the null hypothesis.
• A one-tailed test would be used when the study has to test whether the population parameter being tested is either lower than or higher than some hypothesized value.
• A one-sample z-test assumes that data are a random sample collected from a normally distributed population that all have the same mean and same variance.
• This hypothesis implies that the data is continuous, and the distribution is symmetric.
• Based on the alternative hypothesis set for a study, a one-sided z-test can be either a left-sided z-test or a right-sided z-test. 
• For instance, if our H 0 : µ 0 = µ and H a : µ < µ 0 , such a test would be a one-sided test or more precisely, a left-tailed test and there is one rejection area only on the left tail of the distribution.
• However, if H 0 : µ = µ 0 and H a : µ > µ 0 , this is also a one-tailed test (right tail), and the rejection region is present on the right tail of the curve.

Two sample z-test (two-tailed z-test)

• In the case of two sample z-test, two normally distributed independent samples are required.
• A two-tailed z-test is performed to determine the relationship between the population parameters of the two samples.
• In the case of the two-tailed z-test, the alternative hypothesis is accepted as long as the population parameter is not equal to the assumed value.
• The two-tailed test is appropriate when we have H 0 : µ = µ 0 and H a : µ ≠ µ 0 which may mean µ > µ 0 or µ < µ 0
• Thus, in a two-tailed test, there are two rejection regions, one on each tail of the curve.

Z-test examples

If a sample of 400 male workers has a mean height of 67.47 inches, is it reasonable to regard the sample as a sample from a large population with a mean height of 67.39 inches and a standard deviation of 1.30 inches at a 5% level of significance?

Taking the null hypothesis that the mean height of the population is equal to 67.39 inches, we can write:                           

H 0 : µ = 67 . 39 “

H a : µ ≠ 67 . 39 “

x̄ = 67 . 47 “, σ = 1 . 30 “, n = 400

Assuming the population to be normal, we can work out the test statistic z as under:

z-test applications

• Z-test is performed in studies where the sample size is larger, and the variance is known.
• It is also used to determine if there is a significant difference between the mean of two independent samples.
• The z-test can also be used to compare the population proportion to an assumed proportion or to determine the difference between the population proportion of two samples.

Z-test vs T-test (8 major differences)

References and Sources

• C.R. Kothari (1990) Research Methodology. Vishwa Prakasan. India.
• https://ncss-wpengine.netdna-ssl.com/wp-content/themes/ncss/pdf/Procedures/PASS/One-Sample_Z-Tests.pdf
• https://www.wallstreetmojo.com/z-test-vs-t-test/
• https://sites.google.com/site/fundamentalstatistics/chapter-13
• 3% – https://www.investopedia.com/terms/z/z-test.asp
• 2% – https://www.coursehero.com/file/61052903/Questions-statisticswpdf/
• 2% – https://towardsdatascience.com/everything-you-need-to-know-about-hypothesis-testing-part-i-4de9abebbc8a
• 2% – https://ncss-wpengine.netdna-ssl.com/wp-content/themes/ncss/pdf/Procedures/PASS/One-Sample_Z-Tests.pdf
• 1% – https://www.slideshare.net/MuhammadAnas96/ztest-with-examples
• 1% – https://www.mathandstatistics.com/learn-stats/hypothesis-testing/two-tailed-z-test-hypothesis-test-by-hand
• 1% – https://www.infrrr.com/proportions/difference-in-proportions-hypothesis-test-calculator
• 1% – https://keydifferences.com/difference-between-t-test-and-z-test.html
• 1% – https://en.wikipedia.org/wiki/Z-test
• 1% – http://www.sci.utah.edu/~arpaiva/classes/UT_ece3530/hypothesis_testing.pdf
• <1% – https://www.researchgate.net/post/Can-a-null-hypothesis-be-stated-as-a-difference
• <1% – https://www.isixsigma.com/tools-templates/hypothesis-testing/making-sense-two-sample-t-test/
• <1% – https://www.investopedia.com/terms/t/two-tailed-test.asp
• <1% – https://www.academia.edu/24313503/BIOSTATISTICS_AND_RESEARCH_METHODS_IN_PHARMACY_Pharmacy_C479_4_quarter_credits_A_Course_for_Distance_Learning_Prepared

About Author

Anupama Sapkota

2 thoughts on “Z-Test: Formula, Examples, Uses, Z-Test vs T-Test”

The formula for Z test provided for testing the single mean is wrong. The correct formula is wrong. Please check and correct it. It should be Z = (𝑥̅−𝜇)/𝜎/√n

Hi Ramnath, Sorry for the mistake. Thank you so much for the correction. We have updated the page with correct formula.

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One Sample Z-Test: Definition, Formula, and Example

A  one sample z-test is used to test whether the mean of a population is less than, greater than, or equal to some specific value.

This test assumes that the population standard deviation is known.

This tutorial explains the following:

• The formula to perform a one sample z-test.
• The assumptions of a one sample z-test.
• An example of how to perform a one sample z-test.

Let’s jump in!

One Sample Z-Test: Formula

A one sample z-test will always use one of the following null and alternative hypotheses:

1. Two-Tailed Z-Test

• H 0 :  μ = μ 0 (population mean is equal to some hypothesized value μ 0 )
• H A : μ ≠ μ 0 (population mean is not equal to some hypothesized value μ 0 )

2. Left-Tailed Z-Test

• H 0 :  μ ≥ μ 0 (population mean is greater than or equal to some hypothesized value μ 0 )
• H A : μ 0 (population mean is less than some hypothesized value μ 0 )

3. Right-Tailed Z-Test

• H 0 :  μ ≤ μ 0 (population mean is less than or equal to some hypothesized value μ 0 )
• H A : μ > μ 0 (population mean is greaer than some hypothesized value μ 0 )

We use the following formula to calculate the z test statistic:

z = ( x – μ 0 ) / (σ/√ n )

• x : sample mean
• μ 0 : hypothesized population mean
• σ: population standard deviation
• n:  sample size

If the p-value that corresponds to the z test statistic is less than your chosen significance level (common choices are 0.10, 0.05, and 0.01) then you can reject the null hypothesis .

One Sample Z-Test: Assumptions

For the results of a one sample z-test to be valid, the following assumptions should be met:

• The data are continuous (not discrete).
• The data is a simple random sample from the population of interest.
• The data in the population is approximately normally distributed .
• The population standard deviation is known.

One Sample Z-Test : Example

Suppose the IQ in a population is normally distributed with a mean of μ = 100 and standard deviation of σ = 15.

A scientist wants to know if a new medication affects IQ levels, so she recruits 20 patients to use it for one month and records their IQ levels at the end of the month:

To test this, she will perform a one sample z-test at significance level α = 0.05 using the following steps:

Step 1: Gather the sample data.

Suppose she collects a simple random sample with the following information:

• n (sample size) = 20
•   x (sample mean IQ) = 103.05

Step 2: Define the hypotheses.

She will perform the one sample z-test with the following hypotheses:

• H 0 :  μ = 100
• H A :  μ ≠ 100

Step 3: Calculate the z test statistic.

The z test statistic is calculated as:

• z = (x – μ) / (σ√ n )
• z = (103.05 – 100) / (15/√ 20 )
• z = 0.90933

Step 4: Calculate the p-value of the z test statistic.

According to the Z Score to P Value Calculator , the two-tailed p-value associated with z = 0.90933 is 0.36318 .

Step 5: Draw a conclusion.

Since the p-value (0.36318) is not less than the significance level (.05), the scientist will fail to reject the null hypothesis.

There is not sufficient evidence to say that the new medication significantly affects IQ level.

Note:  You can also perform this entire one sample z-test by using the One Sample Z-Test Calculator .

Additional Resources

The following tutorials explain how to perform a one sample z-test using different statistical software:

How to Perform Z-Tests in Excel How to Perform Z-Tests in R How to Perform Z-Tests in Python

Pandas: How to Create Pivot Table with Sum of Values

How to use str_pad in r (with examples), related posts, three-way anova: definition & example, two sample z-test: definition, formula, and example, how to find a confidence interval for a..., an introduction to the exponential distribution, an introduction to the uniform distribution, the breusch-pagan test: definition & example, population vs. sample: what’s the difference, introduction to multiple linear regression, dunn’s test for multiple comparisons, how to use dunnett’s test for multiple comparisons.

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Z-tests for Hypothesis testing: Formula & Examples

Z-tests are statistical hypothesis testing techniques that are used to determine whether the null hypothesis relating to comparing sample means or proportions with that of population at a given significance level can be rejected or otherwise based on the z-statistics or z-score. As a data scientist , you must get a good understanding of the z-tests and its applications to test the hypothesis for your statistical models. In this blog post, we will discuss an overview of different types of z-tests and related concepts with the help of examples. You may want to check my post on hypothesis testing titled – Hypothesis testing explained with examples

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What are Z-tests & Z-statistics?

Z-tests can be defined as statistical hypothesis testing techniques that are used to quantify the hypothesis testing related to claim made about the population parameters such as mean and proportion. Z-test uses the sample data to test the hypothesis about the population parameters (mean or proportion). There are different types of Z-tests which are used to estimate the population mean or proportion, or, perform hypotheses testing related to samples’ means or proportions.

Different types of Z-tests 

There are following different types of Z-tests which are used to perform different types of hypothesis testing.  

• One-sample Z-test for means
• Two-sample Z-test for means
• One sample Z-test for proportion
• Two sample Z-test for proportions

Four variables are involved in the Z-test for performing hypothesis testing for different scenarios. They are as follows:

• An independent variable that is called the “sample” and assumed to be normally distributed;
• A dependent variable that is known as the test statistic (Z) and calculated based on sample data
• Different types of Z-test that can be used for performing hypothesis testing
• A significance level or “alpha” is usually set at 0.05 but can take the values such as 0.01, 0.05, 0.1

When to use Z-test – Explained with examples

The following are different scenarios when Z-test can be used:

• Compare the sample or a single group with that of the population with respect to the parameter, mean. This is called as one-sample Z-test for means. For example, whether the student of a particular school has been scoring marks in Mathematics which is statistically significant than the other schools. This can also be thought of as a hypothesis test to check whether the sample belongs to the population or otherwise.
• Compare two groups with respect to the population parameter, mean. This is called as two-samples Z-test for means. For example, you want to compare class X students from different schools and determine if students of one school are better than others based on their score of Mathematics.
• Compare hypothesized proportion of the population to that of population theoritical proportion. For example, whether the unemployment rate of a given state is different than the well-established rate for the ccountry
• Compare the proportion of one population with the proportion of othe rproportion. For example, whether the efficacy rate of vaccination in two different population are statistically significant or otherwise.

Z-test Interview Questions 

Here is a list of a few interview questions you may expect in your data scientists interview:

• What is Z-test?
• What is Z-statistics or Z-score?
• When to use Z-test vs other tests such as T-test or Chi-square test?
• What is Z-distribution?
• What is the difference between Z-distribution and T-distribution?
• What is sampling distribution?
• What are different types of Z-tests?
• Explain different types of Z-tests with the help of real-world examples?
• What’s the difference two samples Z-test for means and two-samples Z-test for proportions? Explain with one example each.
• As data scientists, give some scenarios when you would like to use Z-test when building machine learning models?

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Recent Comments

I found it very helpful. However the differences are not too understandable for me

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Z Table. Z Score Table. Normal Distribution Table. Standard Normal Table.

What is Z-Test?

Z-Test is a statistical test which let’s us approximate the distribution of the test statistic under the null hypothesis using normal distribution .

Z-Test is a test statistic commonly used in hypothesis test when the sample data is large.For carrying out the Z-Test, population parameters such as mean, variance, and standard deviation should be known.

This test is widely used to determine whether the mean of the two samples are different when the variance is known. We make use of the Z score and the Z table for running the Z-Test.

Z-Test as Hypothesis Test

A test statistic is a random variable that we calculate from the sample data to determine whether to reject the null hypothesis. This random variable is used to calculate the P-value, which indicates how strong the evidence is against the null hypothesis. Z-Test is such a test statistic where we make use of the mean value and z score to determine the P-value. Z-Test compares the mean of two large samples taken from a population when the variance is known.

Z-Test is usually used to conduct a hypothesis test when the sample size is greater than 30. This is because of the central limit theorem where when the sample gets larger, the distributed data graph starts resembling a bell curve and is considered to be distributed normally. Since the Z-Test follows normal distribution under the null hypothesis, it is the most suitable test statistic for large sample data.

Why do we use a large sample for conducting a hypothesis test?

In a hypothesis test, we are trying to reject a null hypothesis with the evidence that we should collect from sample data which represents only a portion of the population. When the population has a large size, and the sample data is small, we will not be able to draw an accurate conclusion from the test to prove our null hypothesis is false. As sample data provide us a door to the entire population, it should be large enough for us to arrive at a significant inference. Hence a sufficiently large data should be considered for a hypothesis test especially if the population is huge.

How to Run a Z-Test

Z-Test can be considered as a test statistic for a hypothesis test to calculate the P-value. However, there are certain conditions that should be satisfied by the sample to run the Z-Test.

The conditions are as follows:

• The sample size should be greater than 30.

This is already mentioned above. The size of the sample is an important factor in Z-Testing as the Z-Test follows a normal distribution and so should the data. If the same size is less than 30, it is recommended to use a t-test instead

• All the data point should be independent and doesn’t affect each other.

Each element in the sample, when considered single should be independent and shouldn’t have a relationship with another element.

• The data must be distributed normally.

This is ensured if the sample data is large.

• The sample should be selected randomly from a population.

Each data in the population should have an equal chance to be selected as one of the sample data.

• The sizes of the selected samples should be equal if at all possible.

When considering multiple sample data, ensuring that the size of each sample is the same for an accurate calculation of population parameters.

• The standard deviation of the population is known.

The population parameter, standard deviation must be given to run a Z-Test as we cannot perform the calculation without knowing it. If it is not directly given, then it assumed that the variance of the sample data is equal to the variance of the entire population.

If the conditions are satisfied, the Z-Test can be successfully implemented.

Following are steps to run the Z-Test:

• State the null hypothesis

The null hypothesis is a statement of no effect and it supports the data which is already given. It is generally represented as :

• State the alternate hypothesis

The statement that we are trying to prove is the alternate hypothesis. It is represented as:

This is the representation of a bidirectional alternate hypothesis.

• H 1 :µ > k

This is the representation of a one-directional alternate hypothesis that is represented in the right region of the graph.

• H 1 :µ < k

This is the representation of a one-directional alternate hypothesis that is represented in the left region of the graph.

• Choose an alpha level for the test.

Alpha level or significant level is the probability of rejecting the null hypothesis when it is true. It is represented by ( α ). An alpha level must be chosen wisely so as to avoid the Type I and Type II errors.

If we choose a large alpha value such as 10%, it is likely to reject a null hypothesis when it is true. There is a probability of 10% for us to reject the null hypothesis. This is an error known as the Type I error.

On the other hand, if we choose an alpha level as low as 1%, there is a chance to accept the null hypothesis even if it is false. That is we reject the alternate hypothesis to favor the null hypothesis. This is the Type II error.

Hence the alpha level should be chosen in such a way that the chance of making Type I or Type II error is minimal. For this reason, the alpha level is commonly selected as 5% which is proven best to avoid errors.

• Determining the critical value of Z from the Z table.

The critical value is the point in the normal distribution graph that splits the graph into two regions: the acceptance region and the rejection regions. It can be also described as the extreme value for which a null hypothesis can be accepted. This critical value of Z can be found from the Z table .

• Calculate the test statistic.

The sample data that we choose to test is converted into a single value. This is known as the test statistic. This value is compared to the null value. If the test statistic significantly differs from the null value, the null value is rejected.

• Comparing the test statistic with the critical value.

Now, we have to determine whether the test statistic we have calculated comes under the acceptance region or the rejection region. For this, the test statistic is compared with the critical value to know whether we should accept or reject a null hypothesis.

Types of Z-Test

Z-Test can be used to run a hypothesis test for a single sample or to compare the mean of two samples. There are two common types of Z-Test

One-Sample Z-Test

This is the most basic type of hypothesis test that is widely used. For running an one-sample Z-Test, all we need to know is the mean and standard deviation of the population. We consider only a single sample for a one-sample Z-Test. One-sample Z-Test is used to test whether the population parameter is different from the hypothesized value i.e whether the mean of the population is equal to, less than or greater than the hypothesized value.

The equation for finding the value of Z is:

The following are the assumptions that are generally taken for a one-sampled Z-Test:

• The sample size is equal to or greater than 30.
• One normally distributed sample is considered with the standard deviation known.
• The null hypothesis is that the population mean that is calculated from the sample is equal to the hypothetically determined population mean.

Two-Sample Z-Test

A two-sample Z-Test is used whenever there is a comparison between two independent samples. It is used to check whether the difference between the means is equal to zero or not. Suppose if we want to know whether men or women prefer to drive more in a city, we use a two-sample Z-Test as it is the comparison of two independent samples of men and women.

• x 1 and x 2 represent the mean of the two samples.
• µ 1 and µ 2 are the hypothesized mean values.
• σ 1 and σ 2 are the standard deviations.
• n 1 and n 2 are the sizes of the samples.

The following are the assumptions that are generally taken for a two-sample Z-Test:

• Two independent, normally distributed samples are considered for the Z-Test with the standard deviation known.
• Each sample is equal to or greater than 30.
• The null hypothesis is stated that the population mean of the two samples taken does not differ.

Critical value

A critical value is a line that splits a normally distributed graph into two different sections. Namely the ‘Rejection region’ and ‘Acceptance region’. If your test value falls in the ‘Rejection region’, then the null hypothesis is rejected and if your test value falls in the ‘Accepted region’, then the null hypothesis is accepted.

Critical Value Vs Significant Value

Significant level, alpha is the probability of rejecting a null hypothesis when it is actually true. While the critical value is the extreme value up to which a null hypothesis is true. There migh come a confusion regarding both of these parameters.

Critical value is a value that lies in critical region. It is in fact the boundary value of the rejection region. Also, it is the value up to which the null hypothesis is true. Hence the critical value is considered to be the point at which the null hypothesis is true or is rejected.

Critical value gives a point of extremity whose probability is indicated by the significant level. Significant level is pre-selected for a hypothesis test and critical value is calculated from this Alpha value. Critical value is a point represented as Z score and Significant level is a probability.

Z-Test Vs T-Test

Z-Test are used when the sample size exceeds 30. As Z-Test follows normal distribution, large sample size can be taken for the Z-Test. Z-Test indicates the distance of a data point from the mean of the data set in terms of standard deviation. Also. this test can only be used if the standard deviation of the data set is known.

T-Test is based on T distribution in which the mean value is known and the variance could be calculated from the sample. T-Test is most preferred to know the difference between the statistical parameters of two samples as the standard deviation of the samples are not usually given in a two-sample test for running the Z-Test. Also, if the sample size is less than 30, T-Test is preferred.

Approximate Hypothesis Tests: the z Test and the t Test

This chapter presents two common tests of the hypothesis that a population mean equals a particular value and of the hypothesis that two population means are equal: the z test and the t test. These tests are approximate : They are based on approximations to the probability distribution of the test statistic when the null hypothesis is true, so their significance levels are not exactly what they claim to be. If the sample size is reasonably large and the population from which the sample is drawn has a nearly normal distribution —a notion defined in this chapter—the nominal significance levels of the tests are close to their actual significance levels. If these conditions are not met, the significance levels of the approximate tests can differ substantially from their nominal values. The z test is based on the normal approximation ; the t test is based on Student's t curve, which approximates some probability histograms better than the normal curve does. The chapter also presents the deep connection between hypothesis tests and confidence intervals, and shows how to compute approximate confidence intervals for the population mean of nearly normal populations using Student's t -curve.

where \(\phi\) is the pooled sample percentage of the two samples. The estimate of \(SE(\phi^{t-c})\) under the null hypothesis is

\[ se = s^*\times(1/n_t + 1/n_c)^{1/2}, \]

where \(n_t\) and \(n_c\) are the sizes of the two samples. If the null hypothesis is true, the Z statistic,

\[ Z=\phi^{t-c}/se, \]

is the original test statistic \(\phi^{t-c}\) in approximately standard units , and Z has a probability histogram that is approximated well by the normal curve , which allowed us to select the rejection region for the approximate test.

This strategy—transforming a test statistic approximately to standard units under the assumption that the null hypothesisis true, and then using the normal approximation to determine the rejection region for the test—works to construct approximate hypothesis tests in many other situations, too. The resulting hypothesis test is called a z test. Suppose that we are testing a null hypothesis using a test statistic \(X\) , and the following conditions hold:

• We have a probability model for how the observations arise, assuming the null hypothesis is true. Typically, the model is that under the null hypothesis, the data are like random draws with or without replacement from a box of numbered tickets.
• Under the null hypothesis, the test statistic \(X\) , converted to standard units, has a probability histogram that can be approximated well by the normal curve.
• Under the null hypothesis, we can find the expected value of the test statistic, \(E(X)\) .
• Under the null hypothesis, either we can find the SE of the test statistic, \(SE(X)\) , or we can estimate \(SE(X)\) accurately enough to ignore the error of the estimate of the SE. Let se denote either the exact SE of \(X\) under the null hypothesis, or the estimated value of \(SE(X)\) under the null hypothesis.

Then, under the null hypothesis, the probability histogram of the Z statistic

\[ Z = (X-E(X))/se \]

is approximated well by the normal curve, and we can use the normal approximation to select the rejection region for the test using \(Z\) as the test statistic. If the null hypothesis is true,

\[ P(Z < z_a) \approx a \]

\[ P(Z > z_{1-a} ) \approx a, \]

\[ P(|Z| > z_{1-a/2} ) \approx a. \]

These three approximations yield three different z tests of the hypothesis that \(\mu = \mu_0\) at approximate significance level \(a\) :

• Reject the null hypothesis whenever \(Z (left-tail z test)
• Reject the null hypothesis whenever \(Z > z_{1-a}\) (right-tail z test)
• Reject the null hypothesis whenever \(|Z|> z_{1-a/2}\) (two-tail z test)

The word "tail" refers to the tails of the normal curve: In a left-tail test, the probability of a Type I error is approximately the area of the left tail of the normal curve, from minus infinity to \(z_a\) . In a right-tail test, the probability of a Type I error is approximately the area of the right tail of the normal curve, from \(z_{1-a}\) to infinity. In a two-tail test, the probability of a Type I error is approximately the sum of the areas of both tails of the normal curve, the left tail from minus infinity to \(z_{a/2}\) and the right tail from \(z_{1-a/2}\) to infinity. All three of these tests are called z tests. The observed value of Z is called the z score .

Which of these three tests, if any, should one use? The answer depends on the probability distribution of Z when the alternative hypothesis is true. As a rule of thumb, if, under the alternative hypothesis, \(E(Z) , use the left-tail test. If, under the alternative hypothesis, \(E(Z) > 0\) , use the right-tail test. If, under the alternative hypothesis, it is possible that \(E(Z) and it is possible that \(E(Z) > 0\) , use the two-tail test. If, under the alternative hypothesis, \(E(Z) = 0\) , consult a statistician. Generally (but not always), this rule of thumb selects the test with the most power for a given significance level.

P values for z tests

Each of the three z tests gives us a family of procedures for testing the null hypothesis at any (approximate) significance level \(a\) between 0 and 100%—we just use the appropriate quantile of the normal curve. This makes it particularly easy to find the P value for a z test. Recall that the P value is the smallest significance level for which we would reject the null hypothesis, among a family of tests of the null hypothesis at different significance levels.

Suppose the z score (the observed value of \(Z\) ) is \(x\) . In a left-tail test, the P value is the area under the normal curve to the left of \(x\) : Had we chosen the significance level \(a\) so that \(z_a=x\) , we would have rejected the null hypothesis, but we would not have rejected it for any smaller value of \(a\) , because for all smaller values of \(a\) , \(z_a . Similarly, for a right-tail z test, the P value is the area under the normal curve to the right of \(x\) : If \(x=z_{1-a}\) we would reject the null hypothesis at approximate significance level \(a\) , but not at smaller significance levels. For a two-tail z test, the P value is the sum of the area under the normal curve to the left of \(-|x|\) and the area under the normal curve to the right of \(|x|\) .

Finding P values and specifying the rejection region for the z test involves the probability distribution of \(Z\) under the assumption that the null hypothesis is true. Rarely is the alternative hypothesis sufficiently detailed to specify the probability distribution of \(Z\) completely, but often the alternative does help us choose intelligently among left-tail, right-tail, and two-tail z tests. This is perhaps the most important issue in deciding which hypothesis to take as the null hypothesis and which as the alternative: We calculate the significance level under the null hypothesis, and that calculation must be tractable.

However, to construct a z test, we need to know the expected value and SE of the test statistic under the null hypothesis. Usually it is easy to determine the expected value, but often the SE must be estimated from the data. Later in this chapter we shall see what to do if the SE cannot be estimated accurately, but the shape of the distribution of the numbers in the population is known. The next section develops z tests for the population percentage and mean, and for the difference between two population means.

Examples of z tests

The central limit theorem assures us that the probability histogram of the sample mean of random draws with replacement from a box of tickets—transformed to standard units—can be approximated increasingly well by a normal curve as the number of draws increases. In the previous section, we learned that the probability histogram of a sum or difference of independent sample means of draws with replacement also can be approximated increasingly well by a normal curve as the two sample sizes increase. We shall use these facts to derive z tests for population means and percentages and differences of population means and percentages.

z Test for a Population Percentage

Suppose we have a population of \(N\) units of which \(G\) are labeled "1" and the rest are labeled "0." Let \(p = G/N\) be the population percentage. Consider testing the null hypothesis that \(p = p_0\) against the alternative hypothesis that \(p \ne p_0\) , using a random sample of \(n\) units drawn with replacement. (We could assume instead that \(N >> n\) and allow the draws to be without replacement.)

Under the null hypothesis, the sample percentage

\[ \phi = \frac{\mbox{# tickets labeled "1" in the sample}}{n} \]

has expected value \(E(\phi) = p_0\) and standard error

\[ SE(\phi) = \sqrt{\frac{p_0 \times (1 - p_0)}{n}}. \]

Let \(Z\) be \(\phi\) transformed to standard units :

\[ Z = (\phi - p_0)/SE(\phi). \]

Provided \(n\) is large and \(p_0\) is not too close to zero or 100% (say \(n \times p > 30\) and \(n \times (1-p) > 30)\) , the probability histogram of \(Z\) will be approximated reasonably well by the normal curve, and we can use it as the Z statistic in a z test. For example, if we reject the null hypothesis when \(|Z| > 1.96\) , the significance level of the test will be about 95%.

z Test for a Population Mean

The approach in the previous subsection applies, mutatis mutandis , to testing the hypothesis that the population mean equals a given value, even when the population contains numbers other than just 0 and 1. However, in contrast to the hypothesis that the population percentage equals a given value, the null hypothesis that a more general population mean equals a given value does not specify the SD of the population, which poses difficulties that are surmountable (by approximation and estimation) if the sample size is large enough. (There are also nonparametric methods that can be used.)

Consider testing the null hypothesis that the population mean \(\mu\) is equal to a specific null value \(\mu_0\) , against the alternative hypothesis that \(\mu , on the basis of a random sample with replacement of size \(n\) . Recall that the sample mean \(M\) of \(n\) random draws with or without replacement from a box of numbered tickets is an unbiased estimator of the population mean \(\mu\) : If

\[ M = \frac{\mbox{sum of sample values}}{n}, \]

\[ E(M) = \mu = \frac{\mbox{sum of population values}}{N}, \]

where \(N\) is the size of the population. The population mean determines the expected value of the sample mean. The SE of the sample mean of a random sample with replacement is

\[ \frac{SD(\mbox{box})}{\sqrt{n}}, \]

where SD(box) is the SD of the list of all the numbers in the box, and \(n\) is the sample size. As a special case, the sample percentage \phi of \(n\) independent random draws from a 0-1 box is an unbiased estimator of the population percentage p , with SE equal to

\[ \sqrt{\frac{p\times(1-p)}{n}}. \]

In testing the null hypothesis that a population percentage \(p\) equals \(p_0\) , the null hypothesis specifies not only the expected value of the sample percentage \phi, it automatically specifies the SE of the sample percentage as well, because the SD of the values in a 0-1 box is determined by the population percentage \(p\) :

\[ SD(box) = \sqrt{p\times(1-p)}. \]

The null hypothesis thus gives us all the information we need to standardize the sample percentage under the null hypothesis. In contrast, the SD of the values in a box of tickets labeled with arbitrary numbers bears no particular relation to the mean of the values, so the null hypothesis that the population mean \(\mu\) of a box of tickets labeled with arbitrary numbers equals a specific value \(\mu_0\) determines the expected value of the sample mean, but not the standard error of the sample mean. To standardize the sample mean to construct a z test for the value of a population mean, we need to estimate the SE of the sample mean under the null hypothesis. When the sample size is large, the sample standard deviation s> is likely to be close to the SD of the population, and

\[ se=\frac{s}{\sqrt{n}} \]

is likely to be an accurate estimate of \(SE(M)\) . The central limit theorem tells us that when the sample size \(n\) is large, the probability histogram of the sample mean, converted to standard units, is approximated well by the normal curve. Under the null hypothesis,

\[ E(M) = \mu_0, \]

and thus when \(n\) is large

\[ Z = \frac{M-\mu_0}{s/\sqrt{n}} \]

has expected value zero, and its probability histogram is approximated well by the normal curve, so we can use \(Z\) as the Z statistic in a z test. If the alternative hypothesis is true, the expected value of \(Z\) could be either greater than zero or less than zero, so it is appropriate to use a two-tail z test. If the alternative hypothesis is \(\mu > \mu_0\) , then under the alternative hypothesis, the expected value of \(Z\) is greater than zero, and it is appropriate to use a right-tail z test. If the alternative hypothesis is \(\mu , then under the alternative hypothesis, the expected value of \(Z\) is less than zero, and it is appropriate to use a left-tail z test.

z Test for a Difference of Population Means

Consider the problem of testing the hypothesis that two population means are equal, using random samples from the two populations. Different sampling designs lead to different hypothesis testing procedures. In this section, we consider two kinds of random samples from the two populations: paired samples and independent samples , and construct z tests appropriate for each.

Paired Samples

Consider a population of \(N\) individuals, each of whom is labeled with two numbers. For example, the \(N\) individuals might be a group of doctors, and the two numbers that label each doctor might be the annual payments to the doctor by an HMO under the terms of the current contract and under the terms of a proposed revision of the contract. Let the two numbers associated with individual \(i\) be \(c_i\) and \(t_i\) . (Think of \(c\) as control and \(t\) as treatment . In this example, control is the current contract, and treatment is the proposed contract.) Let \(\mu_c\) be the population mean of the \(N\) values

\[ \{c_1, c_2, \ldots, c_N \}, \]

and let \(\mu_t\) be the population mean of the \(N\) values

\[ \{t_1, t_2, \ldots, t_N\}. \]

Suppose we want to test the null hypothesis that

\[ \mu = \mu_t - \mu_c = \mu_0 \]

against the alternative hypothesis that \(\mu . With \(\mu_0=\$0\) , this null hypothesis is that the average annual payment to doctors under the proposed revision would be the same as the average payment under the current contract, and the alternative is that on average doctors would be paid less under the new contract than under the current contract. With \(\mu_0=-\$5,000\) , this null hypothesis is that the proposed contract would save the HMO an average of $5,000 per doctor, compared with the current contract; the alternative is that under the proposed contract, the HMO would save even more than that. With \(\mu_0=\$1,000\) , this null hypothesis is that doctors would be paid an average of $1,000 more per year under the new contract than under the old one; the alternative hypothesis is that on average doctors would be paid less than an additional $1,000 per year under the new contract—perhaps even less than they are paid under the current contract. For the remainder of this example, we shall take \(\mu_0=\$1,000\) .

The data on which we shall base the test are observations of both \(c_i\) and \(t_i\) for a sample of \(n\) individuals chosen at random with replacement from the population of \(N\) individuals (or a simple random sample of size \(n ): We select \(n\) doctors at random from the \(N\) doctors under contract to the HMO, record the current annual payments to them, and calculate what the payments to them would be under the terms of the new contract. This is called a paired sample , because the samples from the population of control values and from the population of treatment values come in pairs: one value for control and one for treatment for each individual in the sample. Testing the hypothesis that the difference between two population means is equal to \(\mu_0\) using a paired sample is just the problem of testing the hypothesis that the population mean \(\mu\) of the set of differences

\[ d_i = t_i - c_i, \;\; i= 1, 2, \ldots, N, \]

is equal to \(\mu_0\) . Denote the \(n\) (random) observed values of \(c_i\) and \(t_i\) by \(\{C_1, C_2, \ldots, C_n\}\) and \(\{T_1, T_2, \ldots, T_n \}\) , respectively. The sample mean \(M\) of the differences between the observed values of \(t_i\) and \(c_i\) is the difference of the two sample means:

\[ M = \frac{(T_1-C_1)+(T_2-C_2) + \cdots + (T_n-C_n)}{n} = \frac{T_1+T_2+ \cdots + T_n}{n} - \frac{C_1+C_2+ \cdots + C_n}{n} \]

\[ = (\mbox{sample mean of observed values of } t_i) - (\mbox{sample mean of observed values of } c_i). \]

\(M\) is an unbiased estimator of \(\mu\) , and if n is large, the normal approximation to its probability histogram will be accurate. The SE of \(M\) is the population standard deviation of the \(N\) values \(\{d_1, d_2, \ldots, d_N\}\) , which we shall denote \(SD_d\) , divided by the square root of the sample size, \(n^{1/2}\) . Let \(sd\) denote the sample standard deviation of the \(n\) observed differences \((T_i - C_i), \;\; i=1, 2, \ldots, n\) :

\[ sd = \sqrt{\frac{(T_1-C_1-M)^2 + (T_2-C_2-M)^2 + \cdots + (T_n-C_n-M)^2}{n-1}} \]

(recall that \(M\) is the sample mean of the observed differences). If the sample size \(n\) is large, sd is very likely to be close to SD( d ), and so, under the null hypothesis,

\[ Z = \frac{M-\mu_0}{sd/n^{1/2}} \]

has expected value zero, and when \(n\) is large the probability histogram of \(Z\) can be approximated well by the normal curve. Thus we can use \(Z\) as the Z statistic in a z test of the null hypothesis that \(\mu=\mu_0\) . Under the alternative hypothesis that \(\mu (doctors on the average are paid less than an additional $1,000 per year under the new contract), the expected value of \(Z\) is less than zero, so we should use a left-tail z test. Under the alternative hypothesis \(\mu\ne\mu_0\) (on average, the difference in average annual payments to doctors is not an increase of $1,000, but some other number instead), the expected value of \(Z\) could be positive or negative, so we would use a two-tail z test. Under the alternative hypothesis that \(\mu>\mu_0\) (on average, under the new contract, doctors are paid more than an additional $1,000 per year), the expected value of \(Z\) would be greater than zero, so we should use a right-tail z test.

Independent Samples

Consider two separate populations of numbers, with population means \(\mu_t\) and \(\mu_c\) , respectively. Let \(\mu=\mu_t-\mu_c\) be the difference between the two population means. We would like to test the null hypothesis that \(\mu=\mu_0\) against the alternative hypothesis that \(\mu>0\) . For example, let \(\mu_t\) be the average annual payment by an HMO to doctors in the Los Angeles area, and let \(\mu_c\) be the average annual payment by the same HMO to doctors in the San Francisco area. Then the null hypothesis with \(\mu_0=0\) is that the HMO pays doctors in the two regions the same amount annually, on average; the alternative hypothesis is that the average annual payment by the HMO to doctors differs between the two areas. Suppose we draw a random sample of size \(n_t\) with replacement from the first population, and independently draw a random sample of size \(n_c\) with replacement from the second population. Let \(M_t\) and \(M_c\) be the sample means of the two samples, respectively, and let

\[ M = M_t - M_c \]

be the difference between the two sample means. Because the expected value of \(M_t\) is \(\mu_t\) and the expected value of \(M_c\) is \(\mu_c\) , the expected value of \(M\) is

\[ E(M) = E(M_t - M_c) = E(M_t) - E(M_c) = \mu_t - \mu_c = \mu. \]

Because the two random samples are independent , \(M_t\) and \(-M_c\) are independent random variables, and the SE of their sum is

\[ SE(M) = (SE^2(M_t) + SE^2(M_c))^{1/2}. \]

Let \(s_t\) and \(s_c\) be the sample standard deviations of the two samples, respectively. If \(n_t\) and \(n_c\) are both very large, the two sample standard deviations are likely to be close to the standard deviations of the corresponding populations, and so \(s_t/n_t^{1/2}\) is likely to be close to \(SE(M_t)\) , and \(s_c/n_c^{1/2}\) is likely to be close to \(SE(M_c)\) . Therefore, the pooled estimate of the standard error

\[ se_\mbox{diff} = ( (s_t/n_t^{1/2})^2 + (s_c/n_c^{1/2})^2)^{1/2} = \sqrt{ s_t^2/n_t + s_c^2/n_c} \]

is likely to be close to \(SE(M)\) . Under the null hypothesis, the statistic

\[ Z = \frac{M - \mu_0}{se_\mbox{diff}} = \frac{M_1 - M_2 - \mu_0}{\sqrt{ s_t^2/n_t + s_c^2/n_c}} \]

has expected value zero and its probability histogram is approximated well by the normal curve, so we can use it as the Z statistic in a z test.

Under the alternative hypothesis

\[ \mu = \mu_t - \mu_c > \mu_0, \]

the expected value of \(Z\) is greater than zero, so it is appropriate to use a right-tail z test.

If the alternative hypothesis were \(\mu \ne \mu_0\) , under the alternative the expected value of \(Z\) could be greater than zero or less than zero, so it would be appropriate to use a two-tail z test. If the alternative hypothesis were \(\mu , under the alternative the expected value of \(Z\) would be less than zero, so it would be appropriate to use a left-tail z test.

The following exercises check that you can compute the z test for a population mean or a difference of population means. The exercises are dynamic: the data will tend to change when you reload the page.

For the nominal significance level of the z test for a population mean to be approximately correct, the sample size typically must be large. When the sample size is small, two factors limit the accuracy of the z test: the normal approximation to the probability distribution of the sample mean can be poor, and the sample standard deviation can be an inaccurate estimate of the population standard deviation, so se is not an accurate estimate of the SE of the test statistic Z . For nearly normal populations , defined in the next subsection, the probability distribution of the sample mean is nearly normal even when the sample size is small, and the uncertainty of the sample standard deviation as an estimate of the population standard deviation can be accounted for by using a curve that is broader than the normal curve to approximate the probability distribution of the (approximately) standardized test statistic. The broader curve is Student's t curve . Student's t curve depends on the sample size: The smaller the sample size, the more spread out the curve.

Nearly Normally Distributed Populations

A list of numbers is nearly normally distributed if the fraction of values in any range is close to the area under the normal curve for the corresponding range of standard units—that is, if the list has mean \(\mu\) and standard deviation SD, and for every pair of values \(a < b\) ,

\[ \mbox{ the fraction of numbers in the list between } a \mbox{ and } b \approx \mbox{the area under the normal curve between } (a - \mu)/SD \mbox{ and } (b - \mu)/SD. \]

A list is nearly normally distributed if the normal curve is a good approximation to the histogram of the list transformed to standard units. The histogram of a list that is approximately normally distributed is (nearly) symmetric about some point, and is (nearly) bell-shaped.

No finite population can be exactly normally distributed, because the area under the normal curve between every two distinct values is strictly positive—no matter how large or small the values nor how close together they are. No population that contains only a finite number of distinct values can be exactly normally distributed, for the same reason. In particular, populations that contain only zeros and ones are not approximately normally distributed, so results for the sample mean of samples drawn from nearly normally distributed populations need not apply to the sample percentage of samples drawn from 0-1 boxes. Such results will be more accurate for the sample percentage when the population percentage is close to 50% than when the population percentage is close to 0% or 100%, because then the histogram of population values is more nearly symmetric.

Suppose a population is nearly normally distributed. Then a histogram of the population is approximately symmetric about the mean of the population. The fraction of numbers in the population within ±1 SD of the mean of the population is about 68%, the fraction of numbers within ±2 SD of the mean of the population is about 95%, and the fraction of numbers in the population within ±3 SD of the mean of the population is about 99.7%.

The following exercises check that you understand what it means for a list to be nearly normally distributed. The exercises are dynamic: the data tend to change when you reload the page.

Student's t -curve

Student's t curve is similar to the normal curve, but broader. It is positive, has a single maximum, and is symmetric about zero. The total area under Student's t curve is 100%. Student's t curve approximates some probability histograms more accurately than the normal curve does. There are actually infinitely many Student t curves, one for each positive integer value of the degrees of freedom. As the degrees of freedom increases, the difference between Student's t curve and the normal curve decreases.

Consider a population of \(N\) units labeled with numbers. Let \(\mu\) denote the population mean of the \(N\) numbers, and let SD denote the population standard deviation of the \(N\) numbers. Let \(M\) denote the sample mean of a random sample of size \(n\) drawn with replacement from a population, and let s> denote the sample standard deviation of the sample. The expected value of \(M\) is \(\mu\) , and the SE of \(M\) is \(SD/n^{1/2}\) . Let

\[ Z = (M - \mu)/(SD/n^{1/2}). \]

Then the expected value of \(Z\) is zero, the SE of \(Z\) is 1, and if \(n\) is large enough, the normal curve is a good approximation to the probability histogram of \(Z\) . The closer to normal the distribution of values in the population is, the smaller \(n\) needs to be for the normal curve to be a good approximation to the distribution of \(Z\) . Consider the statistic

\[ T = \frac{M - \mu}{s/n^{1/2}}, \]

which replaces SD by its estimated value (the sample standard deviation \(s\) ). If \(n\) is large enough, \(s\) is very likely to be close to SD, so \(T\) will be close to \(Z\) ; the normal curve will be a good approximation to the probability histogram of \(T\) ; and we can use \(T\) as the Z statistic in a z test of hypotheses about \(\mu\) .

For many populations, when the sample size is small—say less than 25, but the accuracy depends on the population—the normal curve is not a good approximation to the probability histogram of \(T\) . For nearly normally distributed populations, when the sample size is intermediate—say 25–100, but again this depends on the population—the normal curve is a good approximation to the probability histogram of \(Z\) , but not to the probability histogram of \(T\) , because of the variability of the sample standard deviation s> from sample to sample, which tends to broaden the probability distribution of \(T\) (i.e., to make \(SE(T)>1\) ).

When you first load this page, the degrees of freedom will be set to 25, and the region from -1.96 to 1.96 will be hilighted. The area under the normal curve between ±1.96 is 95%, but for Student's t curve with 25 degrees of freedom, the area is about 93.9%: Student's t curve with d.f.=25 is broader than the normal curve. Increase the degrees of freedom to 200; you will see that the Student t curve gets slightly narrower, and the area under the curve between ±1.96 is about 94.9%.

We define quantiles of Student t curves in the same way we defined quantiles of the normal curve: For any number a between 0 and 100%, the a quantile of Student's t curve with \(d.f.=d\) , \(t_{d,a}\) , is the unique value such that the area under the Student t curve with d degrees of freedom from minus infinity to \(t_{d,a}\) is equal to \(a\) . For example, \(t_{d,0.5} = 0\) for all values of \(d\) . Generally, the value of \(t_{d,a}\) depends on the degrees of freedom \(d\) . The probability calculator allows you to find quantiles of Student's t curve.

t test for the Mean of a Nearly Normally Distributed Population

We can use Student's t curve to construct approximate tests of hypotheses about the population mean \(\mu\) when the population standard deviation is unknown, for intermediate values of the sample size \(n\) . The approach is directly analogous to the z test, but instead of using a quantile of the normal curve, we use the corresponding quantile of Student's t curve (with the appropriate number of degrees of freedom). However, for the test to be accurate when \(n\) is small or intermediate, the distribution of values in the population must be nearly normal for the test to have approximately its nominal level. This is a somewhat bizarre restriction: It may require a very large sample to detect that the population is not nearly normal—but if the sample is very large, we can use the z test instead of the t test, so we don't need to rely as much on the assumption. It is my opinion that the t test is over-taught and overused—because its assumptions are not verifiable in the situations where it is potentially useful.

Consider testing the null hypothesis that \(\mu=\mu_0\) using the sample mean \(M\) and sample standard deviation s> of a random sample of size \(n\) drawn with replacement from a population that is known to have a nearly normal distribution. Define

\[ T = \frac{M - \mu_0}{s/n^{1/2}}. \]

Under the null hypothesis, if \(n\) is not too small, Student's t curve with \(n-1\) degrees of freedom will be an accurate approximation to the probability histogram of \(T\) , so

\[ P(T < t_{n-1,a}), \]

\[ P(T > t_{n-1,1-a}), \]

\[ P(|T| > t_{n-1,1-a/2}) \]

all are approximately equal to \(a\) . As we saw earlier in this chapter for the Z statistic, these three approximations give three tests of the null hypothesis \(\mu=\mu_0\) at approximate significance level \(a\) —a left-tail t test, a right-tail t test, and a two-tail t test:

• Reject the null hypothesis if \(T (left-tail)
• Reject the null hypothesis if \(T > t_{n-1,1-a}\) (right-tail)
• Reject the null hypothesis if \(|T| > t_{n-1,1-a/2}\) (two-tail)

To decide which t test to use, we can apply the same rule of thumb we used for the z test:

• Use a left-tail t test if, under the alternative hypothesis, the expected value of \(T\) is less than zero.
• Use a right-tail t test if, under the alternative hypothesis, the expected value of \(T\) is greater than zero.
• Use a two-tail t test if, under the alternative hypothesis, the expected value of \(T\) is not zero, but could be less than or greater than zero.
• Consult a statistician for a more appropriate test if, under the alternative hypothesis, the expected value of \(T\) is zero.

P-values for t tests are computed in much the same way as P-values for z tests. Let t be the observed value of \(T\) (the t score). In a left-tail t test, the P-value is the area under Student's t curve with \(n-1\) degrees of freedom, from minus infinity to \(t\) . In a right-tail t test, the P-value is the area under Student's t curve with \(n-1\) degrees of freedom, from \(t\) to infinity. In a two-tail t test, the P-value is the total area under Student's t curve with \(n-1\) degrees of freedom between minus infinity and \(-|t|\) and between \(|t|\) and infinity.

There are versions of the t test for comparing two means, as well. Just like for the z test, the method depends on how the samples from the two populations are drawn. For example, if the two samples are paired (if we are sampling individuals labeled with two numbers and for each individual in the sample, we observe both numbers), we may base the t test on the sample mean of the paired differences and the sample standard deviation of the paired differences. Let \(\mu_1\) and \(\mu_2\) be the means of the two populations, and let

\[ \mu = \mu_1 - \mu_2. \]

The \(T\) statistic to test the null hypothesis that \(\mu=\mu_0\) is

\[ T = \frac{(\mbox{sample mean of differences}) - \mu_0 }{(\mbox{sample standard deviation of differences})/n^{1/2}}, \]

and the appropriate curve to use to find the rejection region for the test is Student's t curve with \(n-1\) degrees of freedom, where \(n\) is the number of individuals (differences) in the sample.

Two-sample t tests for a difference of means using independent samples depend on additional assumptions, such as equality of the two population standard deviations; we shall not present such tests here. The following exercises check your ability to compute t tests. The exercises are dynamic: the data tend to change when you reload the page.

Hypothesis Tests and Confidence Intervals

There is a deep connection between hypothesis tests about parameters, and confidence intervals for parameters. If we have a procedure for constructing a level \(100\% \times (1-a)\) confidence interval for a parameter \(\mu\) , then the following rule is a two-sided significance level \(a\) test of the null hypothesis that \(\mu = \mu_0\) :

reject the null hypothesis if the confidence interval does not contain \(\mu_0\).

Similarly, suppose we have an hypothesis-testing procedure that lets us test the null hypothesis that \(\mu=\mu_0\) for any value of \(\mu_0\) , at significance level \(a\) . Define

\(A\) = (all values of \(\mu_0\) for which we would not reject the null hypothesis that \(\mu = \mu_0\)).

Then \(A\) is a \(100\% \times (1-a)\) confidence set for \(\mu\) :

\[ P( A \mbox{ contains the true value of } \mu ) = 100\% \times (1-a). \]

(A confidence set is a generalization of the idea of a confidence interval: a \(1-a\) confidence set for the parameter \(\mu\) is a random set that has probability \(1-a\) of containing \(\mu\) . As is the case with confidence intervals, the probability makes sense only before collecting the data.) The set \(A\) might or might not be an interval, depending on the nature of the test. If one starts with a two-tail z test or two-tail t test, one ends up with a confidence interval rather than a more general confidence set.

Confidence Intervals Using Student's t curve

The t test lets us test the hypothesis that the population mean \(\mu\) is equal to \(\mu_0\) at approximate significance level a using a random sample with replacement of size n from a population with a nearly normal distribution. If the sample size n is small, the actual significance level is likely to differ considerably from the nominal significance level. Consider a two-sided t test of the hypothesis \(\mu=\mu_0\) at significance level \(a\) . If the sample mean is \(M\) and the sample standard deviation is \(s\) , we would not reject the null hypothesis at significance level \(a\) if

\[ \frac{|M-\mu_0|}{s/n^{1/2}} \le t_{n-1,1-a/2}. \]

We rearrange this inequality:

\[ -t_{n-1,1-a/2} \le \frac{M-\mu_0}{s/n^{1/2}} \le t_{n-1,1-a/2} \]

\[ -t_{n-1,1-a/2} \times s/n^{1/2} \le M - \mu_0 \le t_{n-1,1-a/2} \times s/n^{1/2} \]

\[ -M - t_{n-1,1-a/2} \times s/n^{1/2} \le - \mu_0 \le -M + t_{n-1,1-a/2} \times s/n^{1/2} \]

\[ M + t_{n-1,1-a/2} \times s/n^{1/2} \le \mu_0 \le M - t_{n-1,1-a/2} \times s/n^{1/2} \]

That is, we would not reject the hypothesis \(\mu = \mu_0\) provided \(\mu_0\) is in the interval

\[ [M - t_{n-1,1-a/2} \times s/n^{1/2}, M + t_{n-1,1-a/2} \times s/n^{1/2}]. \]

Therefore, that interval is a \(100\%-a\) confidence interval for \(\mu\) :

\[ P([M - t_{n-1,1-a/2} \times s/n^{1/2}, M + t_{n-1,1-a/2} \times s/n^{1/2}] \mbox{ contains } \mu) \approx 1-a. \]

The following exercise checks that you can use Student's t curve to construct a confidence interval for a population mean. The exercise is dynamic: the data tend to change when you reload the page.

In hypothesis testing, a Z statistic is a random variable whose probability histogram is approximated well by the normal curve if the null hypothesis is correct: If the null hypothesis is true, the expected value of a Z statistic is zero, the SE of a Z statistic is approximately 1, and the probability that a Z statistic is between \(a\) and \(b\) is approximately the area under the normal curve between \(a\) and \(b\) . Suppose that the random variable \(Z\) is a Z statistic. If, under the alternative hypothesis, \(E(Z) , the appropriate z test to test the null hypothesis at approximate significance level \(a\) is the left-tailed z test: Reject the null hypothesis if \(Z , where \(z_a\) is the \(a\) quantile of the normal curve. If, under the alternative hypothesis, \(E(Z)>0\) , the appropriate z test to test the null hypothesis at approximate significance level \(a\) is the right-tailed z test: Reject the null hypothesis if \(Z>z_{1-a}\) . If, under the alternative hypothesis, \(E(Z)\ne 0 \) but could be greater than 0 or less than 0, the appropriate z test to test the null hypothesis at approximate significance level \(a\) is the two-tailed z test: reject the null hypothesis if \(|Z|>z_{1-a/2}\) . If, under the alternative hypothesis, \(E(Z)=0\) , a z test probably is not appropriate—consult a statistician. The exact significance levels of these tests differ from \(a\) by an amount that depends on how closely the normal curve approximates the probability histogram of \(Z\) .

Z statistics often are constructed from other statistics by transforming approximately to standard units, which requires knowing the expected value and SE of the original statistic on the assumption that the null hypothesis is true. Let \(X\) be a test statistic; let \(E(X)\) be the expected value of \(X\) if the null hypothesis is true, and let \(se\) be approximately equal to the SE of \(X\) if the null hypothesis is true. If \(X\) is a sample sum of a large random sample with replacement, a sample mean of a large random sample with replacement, or a sum or difference of independent sample means of large samples with replacement,

\[ Z = \frac{X-E(X)}{se} \]

is a Z statistic.

Consider testing the null hypothesis that a population percentage \(p\) is equal to the value \(p_0\) on the basis of the sample percentage \phi of a random sample of size \(n\) with replacement. Under the null hypothesis, \(E(\phi)=p_0\) and

\[ SE(\phi) = \sqrt{\frac{p_0\times(1-p_0)}{n}}, \]

and if \(n\) is sufficiently large (say \(n \times p > 30\) and \(n \times (1-p)>30\) , but this depends on the desired accuracy), the normal approximation to

\[ Z = \frac{\phi-p_0}{\sqrt{(p_0 \times (1-p_0))/n}} \]

will be reasonably accurate, so \(Z\) can be used as the Z statistic in a z test of the null hypothesis \(p=p_0\) .

Consider testing the null hypothesis that a population mean \(\mu\) is equal to the value \(\mu_0\) , on the basis of the sample mean \(M\) of a random sample of size \(n\) with replacement. Let \(s\) denote the sample standard deviation. Under the null hypothesis, \(E(M)=\mu_0\) , and if \(n\) is large,

\[ SE(M)=SD/n^{1/2} \approx s/n^{1/2}, \]

and the normal approximation to

\[ Z = \frac{M-\mu_0}{s/n^{1/2}} \]

will be reasonably accurate, so \(Z\) can be used as the Z statistic in a z test of the null hypothesis \(\mu=\mu_0\) .

Consider a population of \(N\) individuals, each labeled with two numbers. The \(i\) th individual is labeled with the numbers \(c_i\) and \(t_i\) , \(i=1, 2, \ldots, N\) . Let \(\mu_c\) be the population mean of the \(N\) values \(\{c_1, \ldots, c_N\}\) and let \(\mu_t\) be the population mean of the \(N\) values \(\{t_1, \ldots, t_N \}\) . Let \(\mu=\mu_t-\mu_c\) be the difference between the two population means. Consider testing the null hypothesis that \(\mu=\mu_0\) on the basis of a paired random sample of size \(n\) with replacement from the population: that is, a random sample of size \(n\) is drawn with replacement from the population, and for each individual \(i\) in the sample, \(c_i\) and \(t_i\) are observed. This is equivalent to testing the hypothesis that the population mean of the \(N\) values \(\{(t_1-c_1), \ldots, (t_N-c_N)\}\) is equal to \(\mu_0\) , on the basis of the random sample of size \(n\) drawn with replacement from those \(N\) values. Let \(M_t\) be the sample mean of the \(n\) observed values of \(t_i\) and let \(M_c\) be the sample mean of the \(n\) observed values of \(c_i\) . Let \(sd\) denote the sample standard deviation of the \(n\) observed differences \(\{(t_i-c_i)\}\) . Under the null hypothesis, the expected value of \(M_t-M_c\) is \(\mu_0\) , and if \(n\) is large,

\[ SE(M_t-M_c) \approx sd/n^{1/2}, \]

and the normal approximation to the probability histogram of

\[ Z = \frac{M_t-M_c-\mu_0}{sd/n^{1/2}} \]

will be reasonably accurate, so \(Z\) can be used as the Z statistic in a z test of the null hypothesis that \(\mu_t-\mu_c=\mu_0\) .

Consider testing the hypothesis that the difference ( \(\mu_t-\mu_c\) ) between two population means, \(\mu_c\) and \(\mu_t\) , is equal to \(\mu_0\) , on the basis of the difference ( \(M_t-M_c\) ) between the sample mean \(M_c\) of a random sample of size \(n_c\) with replacement from the first population and the sample mean \(M_t\) of an independent random sample of size \(n_t\) with replacement from the second population. Let \(s_c\) denote the sample standard deviation of the sample of size \(n_c\) from the first population and let \(s_t\) denote the sample standard deviation of the sample of size \(n_t\) from the second population. If the null hypothesis is true,

\[ E(M_t-M_c)=\mu_0, \]

and if \(n_c\) and \(n_t\) are both large,

\[ SE(M_t-M_c) \approx \sqrt{s_t^2/n_t + s_c^2/n_c} \]

\[ Z = \frac{M_t-M_c-\mu_0}{\sqrt{s_t^2/n_t + s_c^2/n_c}} \]

A list of numbers is nearly normally distributed if the fraction of numbers between any pair of values, \(a , is approximately equal to the area under the normal curve between \((a-\mu)/SD\) and \((b-\mu)/SD\) , where \(\mu\) is the mean of the list and SD is the standard deviation of the list.

Student's t curve with \(d\) degrees of freedom is symmetric about 0, has a single bump centered at 0, and is broader and flatter than the normal curve. The total area under Student's t curve is 1, no matter what \(d\) is; as \(d\) increases, Student's t curve gets narrower, its peak gets higher, and it becomes closer and closer to the normal curve.

Let \(M\) be the sample mean of a random sample of size \(n\) with replacement from a population with mean \(\mu\) and a nearly normal distribution, and let \(s\) be the sample standard deviation of the random sample. For moderate values of \(n\) ( \(n or so), Student's t curve approximates the probability histogram of \((M-\mu)/(s/n^{1/2})\) better than the normal curve does, which can lead to an approximate hypothesis test about \(\mu\) that is more accurate than the z test.

Consider testing the null hypothesis that the mean \(\mu\) of a population with a nearly normal distribution is equal to \(\mu_0\) from a random sample of size \(n\) with replacement. Let

\[ T=\frac{M-\mu_0}{s/n^{1/2}}, \]

where \(M\) is the sample mean and \(s\) is the sample standard deviation. The tests that reject the null hypothesis if \(T (left-tail t test), if \(T>t_{n-1,1-a}\) (right-tail t test), or if \(|T|>t_{n-1,1-a/2}\) (two-tail t test) all have approximate significance level \(a\) . How close the nominal significance level \(a\) is to the true significance level depends on the distribution of the numbers in the population, the sample size \(n\) , and \(a\) . The same rule of thumb for selecting whether to use a left, right, or two-tailed z test (or not to use a z test at all) works to select whether to use a left, right, or two-tailed t test: If, under the alternative hypothesis, \(E(T) , use a left-tail test. If, under the alternative hypothesis, \(E(T) > 0 \) , use a right-tail test. If, under the alternative hypothesis, \(E(T)\) could be less than zero or greater than zero, use a two-tail test. If, under the alternative hypothesis, \(E(T) = 0 \) , consult an expert. Because the t test differs from the z test only when the sample size is small, and from a small sample it is not possible to tell whether the population has a nearly normal distribution, the t test should be used with caution.

A \(1-a\) confidence set for a parameter \(\mu\) is like a \(1-a\) confidence interval for a parameter \(\mu\) : It is a random set of values that has probability \(1-a\) of containing the true value of \(\mu\) . The difference is that the set need not be an interval.

There is a deep duality between hypothesis tests about a parameter \(\mu\) and confidence sets for \(\mu\) . Given a procedure for constructing a \(1-a\) confidence set for \(\mu\) , the rule reject the null hypothesis that \(\mu=\mu_0\) if the confidence set does not contain \(\mu\) is a significance level \(a\) test of the null hypothesis that \(\mu=\mu_0\) . Conversely, given a family of significance level \(a\) hypothesis tests that allow one to test the hypothesis that \(\mu=\mu_0\) for any value of \(\mu_0\) , the set of all values \(\mu_0\) for which the test does not reject the null hypothesis that \(\mu=\mu_0\) is a \(1-a\) confidence set for \(\mu\) .

• alternative hypothesis
• central limit theorem
• confidence interval
• confidence set
• expected value
• independent
• independent random variable
• mutatis mutandis
• nearly normal distribution
• normal approximation
• normal curve
• null hypothesis
• pooled bootstrap estimate of the population SD
• pooled bootstrap estimate of the SE
• population mean
• population percentage
• population standard deviation
• probability
• probability distribution
• probability histogram
• random sample
• random variable
• rejection region
• sample mean
• sample percentage
• sample size
• sample standard deviation
• significance level
• simple random sample
• standard deviation (SD)
• standard error (SE)
• standard unit
• Student's t curve
• test statistic
• two-tailed test
• Type I error
• Z statistic

Six Sigma Study Guide

Study notes and guides for Six Sigma certification tests

One Sample Z Hypothesis Test

Posted by Ted Hessing

One sample Z hypothesis test is one of the basic tests of inferential statistics. One sample Z test is a parametric procedure for hypothesis testing. It tests whether the sample mean is significantly different (greater than, less than or not equal) than a population mean when the population’s standard deviation is known. Since we use standard normal distribution to compute the critical values, we often call it a one sample Z test.

When to use one sample Z test

One sample Z test is a robust hypothesis test for violations of standard normal distribution . Z test is similar to student t-test, z test is basically used for relatively large samples (say n>30) and the population standard deviation is known. Whereas, student t-test is for a small sample size, and also t-test assumes the population standard deviation is unknown.

Assumptions of one sample Z hypothesis test

• Population data is continuous
• Population follows a standard normal distribution
• The mean and standard deviation of the population is known
• Samples are independent of each other
• The sample should be randomly selected from the population

One sample Z-test Formula

• x̅ = sample mean
• µ= population mean
• σ= population standard deviation
• n= sample size

Steps to Calculate One Sample Z hypothesis test

• Select appropriate statistic- one-tailed or two-tailed?
• Determine the null hypothesis and alternative hypothesis
• Determine the level of significance
• Find the critical value
• Calculate the test statistics

• x̅ is observed sample mean
• μ is population mean
• σ is population standard deviation
• n is sample size
• Then make a decision, reject the null hypothesis; If the test statistic falls in the critical region.
• Finally, interpret the decision in the context of the original claim.

Hypothesis Testing

A  tailed hypothesis  is an assumption about a population parameter. The assumption may or may not be true. One-tailed hypothesis is a test of hypothesis where the area of rejection is only in one direction. Whereas two-tailed, the area of rejection is in two directions. The selection of one or two-tailed tests depends upon the problem.

One Sample z test mostly performed in Analyze phase of DMAIC to check the sample mean is significantly different than a population mean when the population’s standard deviation is known.

Example of right-tailed test

Example: A coaching institute claims that the students’ mean scores in their institute are greater than the 82 marks with a standard deviation of 20. A sample of 81 students is selected, and the mean score is 90 marks. At 95% confidence level, is there enough evidence to support the claim?

• Null hypothesis H 0 : µ ≤ 82
• Alternative hypothesis H 1 : µ>82
• Select appropriate statistic- Since the claim is student marks are greater than 82 marks; it is a right-tailed test.
• Level of significance: α= 0.05
• Find the critical value: 1-α= 1-0.05=0.95
• Look at the 0.95 in z table= 1.645

Interpret the results : Compare Z  calc  to Z  critical  . In hypothesis testing, a critical value is a point on the test distribution compares to the test statistic to determine whether to reject the null hypothesis. Since zcal value is greater than z critical value and it is in the rejection region. Hence we can reject the null hypothesis.

There is enough evidence to support the students’ scores in their institute is greater than the 82 marks.

One Sample Z Excel Right Tail template

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