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# Hypothesis Testing watch

1. Hi guys.

Recently I’ve been working my way through S2 then straight on to S3, so I’ve been doing a lot of hypothesis testing.

Now that I am coming to the end of S3 I’ve realised that I actually don’t know what the significance level of a hypothesis test actually means.

I know how to use the significance level to perform the hypothesis test but I’m not entirely sure what it is.

Could someone please explain it to me.

2. (Original post by Shaanv)
Hi guys.

Recently I’ve been working my way through S2 then straight on to S3, so I’ve been doing a lot of hypothesis testing.

Now that I am coming to the end of S3 I’ve realised that I actually don’t know what the significance level of a hypothesis test actually means.

I know how to use the significance level to perform the hypothesis test but I’m not entirely sure what it is.

Could someone please explain it to me.

A simple example:

Say you have a coin that you are testing to see if it is biased towards heads. Your null hypothesis is that it's not biased so you assume that the probability of heads is 1/2.

You toss ten coins and get eight heads. Is that enough evidence to say that it's biased? It does feels like something unlikely has just happened.

This unlikely event has just a 5% probability of occurring so assuming the null hypothesis is correct, you've just done a trial that has a 5% chance of happening. Is this enough evidence to say the coin is not fair? Is 5% really that unlikely?

It all depends on what you set as the significance level. If you've set it as 10% then this will be enough evidence to reject the null hypothesis. But if your significance level is 1% then that's not enough evidence.

The lower you set the significance level, the more unlikely the event has to be (if you assume H_0) for you to reject H_0.

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Updated: March 3, 2018
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