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    Statistical vs. practical signficance

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    Statistical vs. practical signficance

    Consider the following statement and discuss its implications. 'It is possible for a statistically significant result to be of no particular practical significance, depending on the context of the analysis.'

    a. Use a concrete example to illustrate your point(s).

    b. Explain the difference between significance in a statistical sense and significance in a practical sense.

    c. How does this apply or could apply to your workplace or home?

    d. How does this apply or could apply to your daily use, business use, or personal use?

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    (a) It is important to clearly distinguish between statistical significance and practical significance. One does not necessarily imply the other. As an example, suppose that the diameters of bolts produced by a machine are measured and recorded. Assume that the specification is 0.8 inches. So, we set up the null hypothesis as Ho: μ = 0.80, and the alternate hypothesis becomes Ha: μ ≠ 0.80. Now, whether the mean diameter is 0.8 inches or not is not the issue. The matter is, if the mean diameter is not 0.8 inches, then how ...

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    This solution goes through an example comparing statistical versus and practical significance.

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