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# ANOVA

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Interpret the results of the ANOVA and the significance of the results to the business. Please explain how each day of the week has a different impact. Also, explain what this means to the banking industry. Explain the what the p values are telling you and the other statistics.

https://brainmass.com/statistics/analysis-of-variance/statistics-anova-example-134477

#### Solution Summary

This posting provides solution to problem using ANOVA technique, its interpretation and its relevance to different contexts like banking industry.

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## ANOVA Problem

When we want to test two samples to determine if it is likely that the population means (estimated by the sample means) are different, we typically use a t-test. If the samples are large, we can also use a z-test. (Note that the formulas for computing s, t and/or z in the case of a two-sample test are different than the formulas for computing the same values in a one-sample test. Use Excel data analysis to conduct tests comparing two sample means.)

Using ANOVA (short for Analysis of Variance), however, we can test 3 or more sample means to determine if at least one of the sample means comes from a population with a mean that is significantly different from all of the others in the test. We actually do this by estimating a combined population variance two different ways and comparing the two estimates (the ratio of these two variance estimates follows the so-called "F distribution").

Question:

Why do we need a new test method to compare the means of 3 or more populations? Why can't we just use a series of z-tests or t-tests to compare all of the possible pairs of population means to see if one (or more) is different?

Most of the testing is to determine one or two things:

1. Is there a statistically significant difference between two or more population means? (based on comparison of 2 or more sample means)

2. Is there a statistically significant relationship between two or more variables? We can use regression analysis or chi-square tests to answer this second question.)

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