Hypothesis testing and the power of the test

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SUMMARY

This discussion focuses on the concept of the power of a statistical test, specifically in the context of hypothesis testing. The example provided involves testing whether the average weekly demand exceeds 2000 lbs at a 5% significance level, with a population variance of 1,000,000 and a true mean of 2300 lbs. The calculated power of the test is 0.4404, which represents the probability of correctly rejecting the null hypothesis when it is false. The relationship between power and Type II error (Beta) is clarified, emphasizing that power is defined as 1 minus Beta.

PREREQUISITES
  • Understanding of hypothesis testing concepts, including null and alternative hypotheses.
  • Familiarity with statistical significance and significance levels.
  • Knowledge of Type I and Type II errors in statistical testing.
  • Ability to calculate z-scores and interpret standard deviations in the context of statistical data.
NEXT STEPS
  • Study the calculation of power in hypothesis testing using different significance levels.
  • Learn about the implications of Type I and Type II errors in statistical analysis.
  • Explore the relationship between sample size and power in statistical tests.
  • Investigate the use of statistical software for calculating power and conducting hypothesis tests.
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Statisticians, data analysts, researchers, and students seeking to deepen their understanding of hypothesis testing and the power of statistical tests.

adeel
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I am having trouble understanding the concept of the power of the test. Here is a sample question with solution:

A company wants to test if average weekly demand is more than 2000 lbs. Test is to be carried out at 5% level of significance, and an estimate of the population variance is 1,000,000. What is the power of the test if the true mean is 2300 lbs.

So here is the sol'n (u represents population mean, and x represents x bar, sample mean, z is z-score, based on 5% is 1.645):

Hypothesis statement: Null: u <= 2000 Alternative: u > 2000

xcritical = u + zo (o is standard deviation, calculation shows it to be 200)
xcritical = 2000 + 1.645(200)
xcritical = 2349

Power at 2300

P(xcritical > 2349) = P (z > 0.145)
P(z > 0.145) = 0.5 - 0.0596 = 0.4404

So the thing i don't understand, is that if the power of the test is the probability of correctly rejecting the null hypothesis when it is false, why do we calculate the area beyond the z-score and call that the power of the test. Isnt the area beyond supposed to be Beta, the probability of making a type II error?


Any help is greatly appreciated
 
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http://linkage.rockefeller.edu/wli/glossary/stat.html#p
POWER
This is the probability that a statistical test will detect a defined pattern in data and declare the extent of the pattern as showing STATISTICAL SIGNIFICANCE. POWER is related to TYPE-2 ERROR by the simple formula : POWER = (1-BETA) ; the motive for this re-definition is so that an increase in value for POWER shall represent improvement of performance of a STATISTICAL TEST. For more detail, see : BETA.
BETA
Also known as TYPE-2 ERROR, BETA is the complement to POWER : BETA = (1-POWER). This is the probability that a statistical test will generate a false-negative error : failing to assert a defined pattern of deviation from a null pattern in circumstances where the defined pattern exists.
 

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