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Hypothesis Testing Questions: T-Test and ANOVA

1. What does it mean practically when we say that we found a significant difference between two groups using a t-test?

2. Describe a business situation where you would want to use a t-test. Why would you choose that test? What would you expect to show by doing this?

3. Describe a business situation where you would want to use an ANOVA. Why would you choose that test? What would you expect to show by doing this?

4. Say you are looking at the difference between two groups. When you look at the means, it looks obvious that there is a difference between the groups. When you run the analysis however, your p-value comes out to be .098. Assuming that you wanted to show a difference and were able to collect more data, what would you change to ensure that you got a significant difference the second time?

Solution Preview

1) If you are looking to see if there is any difference in the way that 2 groups behave on one particular issue, you would conduct a t-test. You have 2 groups; one of them is a control, and one you give a particular treatment to. You then test both groups to see if they have differently. You calculate statistics, since it is impossible to eyeball data to see if they are different. If the two groups behave differently, the t-test can showcase this, and we can say that there is a significant difference between the two groups.

2) Let us say that you want to see if a new training program will reduce the number of errors employees in the plant make, You take a group of 100 people, and you randomly assign half to the control group (they get no training), and then the other half need to attend a special training program. You then record the number of errors that each group makes over a period of 3 months.

You ...

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