Null Hypothesis

calender iconUpdated on February 12, 2024
corporate finance and accounting
financial ratios

The null hypothesis is a statement that there is no difference or no relationship between two variables or groups. It is a statement of no effect or no difference, which is assumed to be true unless proven otherwise.

Symbolic Notation:

H0: p = 0

where:

  • H0 is the null hypothesis
  • p is the population parameter being tested
  • 0 represents the hypothesized value of p (usually zero)

Types of Null Hypotheses:

  • Directional: Specifies the direction of the expected effect (e.g., H0: μ > 50).
  • Non-directional: Does not specify the direction of the expected effect (e.g., H0: μ = 50).
  • Two-tailed: Tests for difference in either direction from the hypothesized value (e.g., H0: μ = 50).
  • One-tailed: Tests for difference in only one direction from the hypothesized value (e.g., H0: μ > 50).

Examples:

  • The average height of women is equal to 160 cm. (H0: μ = 160)
  • There is no relationship between exercise and blood pressure. (H0: ρ = 0)
  • The probability of winning a lottery is 0.05. (H0: p = 0.05)

Importance:

  • Null hypotheses are essential for statistical testing.
  • They provide a clear statement of the hypothesis to be tested.
  • Null hypotheses are used to guide the selection of appropriate statistical tests.
  • They help interpret the results of statistical tests and draw conclusions.

Note:

  • Null hypotheses are not necessarily true. They are assumptions that need to be tested against evidence.
  • If the null hypothesis is rejected, it does not necessarily mean that the alternative hypothesis is true.

FAQ's

What is a null hypothesis?

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A null hypothesis (H0) is a statement that assumes no effect or no relationship between variables in a study. It is the default assumption to be tested.

What should a null hypothesis include?

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What is the difference between H0 and H1 in a hypothesis?

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What is the null hypothesis with an example?

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