Better Business Decisions from Data

CHAPTER 8

Levels of Significance

What Odds Are You Giving?

When we obtain two or more samples, we may expect them to be from the same population. Thus we may sample goods produced on two production lines in the same factory, or we could be comparing the same product from two different suppliers. If we find samples to be from the same population, we can pool them to create a larger sample and summarize the data more succinctly. If we find the samples to be from different populations, we are in a position to draw important conclusions. We might change our supplier, for example.

In making comparisons, statisticians propose at the outset that there is a difference or there is not a difference. These proposals are referred to as hypotheses. Hypothesis ...