11 Pages Posted: 3 Sep 2016 Last revised: 1 Oct 2016
Date Written: September 2, 2016
This course module is for statistics instructors who want to teach students about the different approaches to setting up hypotheses, H0 and H1. Hypothesis tests might be conducted in order to substantiate a claim a company wants to make or might be used to refute a claim that a competitor is making about its product. When it comes to substantiating a claim, a company wants to set up the hypotheses, H0 and H1, in such a way that there is strong evidence that its claim is accurate. The cost of being mistaken is very high so the company wants to demonstrate that its claim is true. It does not want the sample evidence to be inconclusive (i.e., having no evidence to reject the claim). This is why the company’s claim belongs in the alternative hypothesis.
Keywords: statistics, hypothesis testing, null hypothesis, substantiating a claim, refuting a claim
JEL Classification: C00, C10, C40, I20
Suggested Citation: Suggested Citation
Friedman, Hershey H. and Friedman, Linda Weiser, Substantiating vs. Refuting Claims in Hypothesis Testing: A Course Module (September 2, 2016). Available at SSRN: https://ssrn.com/abstract=2834080