Copyright © Texas Education Agency, All rights reserved. The Null-Hypothesis Statistics & Risk Management Copyright © Texas Education Agency, All rights reserved. 1

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Copyright © Texas Education Agency, All rights reserved. The Null-Hypothesis To prove a research hypothesis as true you must disprove it’s corresponding null- hypothesis. To prove a research hypothesis as true you must disprove it’s corresponding null- hypothesis. Why….It is easier to (for sure) disprove something verses proving it is true all the time. Why….It is easier to (for sure) disprove something verses proving it is true all the time. However….You are not really proving a hypothesis as true….Just not false…so far. However….You are not really proving a hypothesis as true….Just not false…so far. 3

Copyright © Texas Education Agency, All rights reserved. The Null-Hypothesis As gas prices rise consumption of gas will not significantly drop. As gas prices rise consumption of gas will not significantly drop. Women do not significantly prefer driving a SUV over a Pickup truck. Women do not significantly prefer driving a SUV over a Pickup truck. Bonds do not significantly provide a better “Return on Investment” (ROI) over stocks. Bonds do not significantly provide a better “Return on Investment” (ROI) over stocks. 4

Copyright © Texas Education Agency, All rights reserved. Common Formulas? 5

Copyright © Texas Education Agency, All rights reserved. How Would We Test This? Ask randomly 100 adult woman if they prefer driving an SUV or a Pickup. Ask randomly 100 adult woman if they prefer driving an SUV or a Pickup. Analyze the results to see if any difference is significant for a sample size of 100 respondents. Analyze the results to see if any difference is significant for a sample size of 100 respondents. 6

Copyright © Texas Education Agency, All rights reserved. Can We Make Errors? 7

Copyright © Texas Education Agency, All rights reserved. Create a Null-Hypothesis 8 The reason students drop out of high school is because they are failing anyway.

Copyright © Texas Education Agency, All rights reserved. Create a Null-Hypothesis 9 Government employees are lazy.

Copyright © Texas Education Agency, All rights reserved. Create a Null-Hypothesis 10 Because of the recession, university enrollment has plummeted in the last 10 years.

Copyright © Texas Education Agency, All rights reserved. Create a Null-Hypothesis 11 Student obesity has been on the increase for the last 10 years.