## Q. How do I set up a hypothesis test?

There are three items you need before performing a hypothesis test:

1. Null Hypothesis ($$H_0$$): This is the “default” hypothesis for the parameter. You are trying to disprove this. It should always include “=”.

2. Alternative Hypothesis ($$H_A$$ or $$H_1$$): This is what you want to show. It should include “<”, “>”, or “$$\neq$$”.

3. Significance Level: This is the probability that you reject the null hypothesis when the null is actually true (also called false positive rate or Type I error). It is often notated with the Greek letter $$\alpha$$. You can adjust the significance level based on how confident you want to be in the results. Smaller significance levels result in greater confidence.

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• Last Updated Apr 20, 2021
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