ANALYSIS

OF
VARIANCE
(ANOVA)
Quantitative Techniquesin Decision Making

Saturday 8:30 – 12:00

Prepared by: Group 3

Fauni, Katrizia
Ferrer, Fatima
Lacap, Normand
Lusabia, John
Valeroso, Jasmin
 ANALYSIS OF VARIANCE (ANOVA or F-TEST)
ANOVA was developed by R.A Fisher in 1923. The F-Test used in ANOVA is named after him. It is a
technique in statistics designed to test whether or not more than two samples are significantly different
from each other.
We learned in the previous topics that z-test and t-test are used to test non-significance of difference
between single pair of samples. The t-test is used to test non-significance of difference between samples
taking them one pair at a time so that the t-test is applied as many times as there are pairs among the
samples. While ANOVA takes all the samples all at the same time and the test is applied only once. It
minimizes time and effort expended when computing and testing more than two samples.
Suppose: samples A B C D have to be tested for non-significance of difference. If t-test is to be used, we
have to compute separately for the following pairs such as A-B, A-C, A-D, B-C, B-D, and C-D. There is a
possibility that none of the pairs are significantly different, so much time and effort would have been
spent uselessly.
Now, using ANOVA, all the four samples are taken without pairing. If, however, the conclusion arrived at is
that of significant difference, then t-test must be used to find which of the pairs are significantly different.
ANOVA data must be arranged into rows and columns where the row represent the items in a sample and
the columns represent the sample classification.
There are two main types of ANOVA:
1. One-Way ANOVA
2. Two-Way ANOVA

ONE-WAY ANOVA
One-way ANOVA is used when there is only onefactor being studied as the independent variable. Thus,
also called One-Factor ANOVA.
Factors are the independent variables in a study. Let’s say, the researcher wants to know the effect of
three different methods of teaching on the grades of the students. The independent variable here is the
“method of teaching”, and the dependent variables are the grades of students and since there are 3
methods of teaching being compared, the factor has 3 levels or groups.
The null hypothesis (H0) is the equality in all population means, while alternative hypothesis (H 1) will be
the difference in at least one mean.
One-way ANOVA is based on the following assumptions:
 Normal distribution of the population from which the samples are drawn.
 Measurement of the dependent variable is at interval or ratio level.
 Two or more than two categorical independent groups in an independent variable.
 Independence of samples
 Homogeneity of the variance of the population.

Page 1 of 20
 ONE-WAY ANOVA TABLE
Source of Sum of Squares Degrees of Mean Sum of F Value
Variation (SS) Freedom (df) Squares (MSS)

Between-column N–1 SS bet MSS bet

(bet) ∑ x ij2 - ¿ ¿
df bet MSS wit

2
Within-column ∑ x Ai k–1 SS wit
(wit) - ¿¿
n df wit

Total SStot - SSbet df tot −df bet

(tot)

Where:
x ij = value of individual observation in the i th column and j th row
N = total number of entries
k = no. of levels or groups
n = no. of data values within each group

TWO-WAY ANOVA
Two-Way ANOVAis used when there are two factors being studied as the independent variable. Thus, also
called Two-Factor ANOVA.
Two-way ANOVA examines the effect of the two factors on the continuous dependent variable. It also
studies the inter-relationship between independent variables influencing the values of the dependent
variable, if any.
For example, the researcher wants to know whether there is an interaction between age and nationality
on life satisfaction. Here, there are two factors being studied,age and nationality.
Assumptions of two-way ANOVA:
 Normal distribution of the population from which the samples are drawn.
 Measurement of dependent variable at continuous level.
 Two or more than two categorical independent groups in two factors.
 Categorical independent groups should have the same size.
 Independence of observations
 Homogeneity of the variance of the population

Page 2 of 20
 TWO-WAY ANOVA TABLE
Source of Sum of Squares (SS) Degrees of Mean F Value
Variation Freedom Sum of
(df) Squares
(MSS)

2
Factor A
∑ x Ai SS A MSS A
(A) - ¿¿ a–1
bn df A MSS wit

2
Factor B
∑ x Bj - SS B MSS B
(B) ¿¿ b–1
an df B MSS wit

AB 2
∑ ( x AiBj ¿ )2 ¿- ∑ x Ai - ∑ x Bj
2 (a – 1) (b – 1) SS AB MSS AB
(Interaction) −¿ ¿
n bn an df AB MSS wit
(AB)

Within-column 2 ∑ ( x AiBj ¿ )2 ¿ ab (n – 1) SS wit

(wit) ∑x - n df wit

Total SS A + SS B+ SS AB + SSwit N-1

(tot)

Where:
a = no. of levels or groups in factor A
b = no. of levels or groups in factor B

COMPARISON BETWEEN ONE-WAY and TWO-WAY

Basis of One-Way Two-Way
Comparison
Independent One Two
Variable
Compares Three or more Effect of
levels of one multiple level
factor. of two factors.
Number of Need not to be Need to be
Observations same in each equal in each
group. group.

Page 3 of 20
 STEPS IN THE ANALYSIS OF VARIANCE
Step 1. State the null hypothesis

Step 2. Compute the sum of squares

Step 3. Compute the degrees of freedom

Step 4. Compute the mean sum of squares

Step 5. Locate the tabular value of F by getting the intersection of d 1 (df of greater MSS) and d 2 (df of
smaller MSS)

Step 6. Calculate the F value

Step 7. Compare the computed F value with the tabular F value then state the conclusion arrived at.
If the F Value < Tabular F value, the H o is accepted.
If the F Value > Tabular F value, the H o is rejected.

APPLICATION
ONE-WAY ANOVA
Suppose a researcher wants to test whether the grades of the students differ between the teaching
methods being used in a certain school:
1. lecture method
2. interactive method
3. content-focused method
The researcher took a sample of six (6) students for each of method. The grades of the students are taken
at the end of the semester and enumerated according to groups.

Lecture Interactive Content-

Method Method Focused
Method
Student 1 84 70 90
Student 2 90 75 95
Student 3 92 90 100
Student 4 96 80 98
Student 5 84 75 88
Page 4 of 20
 Student 6 88 75 90

Step 1. H o : There is no significant difference among the teaching methods.

Step 2. Sum of squares

Lecture Interactive Content- ¿ ¿ ¿

Method Method Focused
Method
Student 1 84 70 90 7,056 4,900 8,100
Student 2 90 75 95 8,100 5,625 9,025
Student 3 92 90 100 8,464 8,100 10,000
Student 4 96 80 98 9,216 6,400 9,604
Student 5 84 75 88 7,056 5,625 7,744
Student 6 88 75 90 7,744 5,625 8,100
534 465 561 47,636 36,275 52,573

1,560 136,484

Total Sum of Squares ( SStot ) orTotal Variation – is the aggregate dispersion of the individual data values
across the factor levels

SStot = ∑ x ij2 - ¿ ¿

x ij = value of individual observation in the i th column and j th row

N = total number of entries

∑ x ij= 1,560

∑ x ij2 = 136,484

= 136,484 - ¿ ¿

2,433,600
= 136,484 -
18

= 136,484 - 135,200

SStot = 1,284

Page 5 of 20
Between-Column Sum of Squares ( SSbet ) or Between-Sample Variation – is
thedispersion among the factor sample means
2
SSbet = ∑ x Ai - ¿¿
n

(534 2+ 4652 +5612)

= -135 , 200
6

(285,156+216,255+314,721)
= - 135 , 200
6
= 136,022−135,200

SSbet = 822

Within-Column Sum of Squares ( SSbet ) or Within-Sample Variation – is thedispersion that existsamong the
data values factor sample means within a particular factor level

SSwit = SStot - SSbet

= 1,284 – 822

SSwit = 462

Step 3.Degrees of freedom

df tot = N – 1

= 18 – 1
df tot = 17

df bet = k – 1
k = no. of levels or groups
=3–1

df bet = 2

df wit= df tot - df bet

= 17 – 2

Page 6 of 20
df wit = 15

Step 4. Mean Sum of Squares

SS bet
MSS b =
df bet
822
=
2
MSS bet = 411

SS wit
MSS wit =
df wit
462
= 15

MSS wit = 30.8

ONE-WAY ANOVA TABLE
Source of Sum of Degrees Mean F Value
Variation Squares of Sum of
(SS) Freedom Squares
(df) (MSS)

Between-column 822 2 411

13.34
Within-column 462 15 30.8

Total 1,284 17

Step 5. Locate the tabular value of F by getting the intersection of d 1 (df of greater MSS) and d 2 (df of
smaller MSS)

d1 = 2

d 2 = 15

Tabular Value
@ 5% significance level = 3.68

Page 7 of 20
@ 1% significance level = 6.36
Step 6. Calculate the F value
MSS bet
F=
MSS wit
411
= 30.8

F = 13.34
Step 7. State the conclusion
Note:

If the F Value < Tabular F value, the H o is accepted.

If the F Value > Tabular F value, the H o is rejected.

Tabular values:
@ 5% significance level: 3.68
@ 1% significance level: 6.36

F (13.34) > Tabular F values (3.68 and 6.36)

Therefore, the H o is rejected.

Answer: There is a significant difference among the teaching methods.

TWO-WAY ANOVA
A study examining the differences in life satisfaction between young adult, middle adult, and older adult
American, British, Mexican and German. Each individual who participated in the study completed a life
satisfaction questionnaire. A high score on the test indicates a higher level of life satisfaction. Test scores
are recorded below.
Young Middle Older Adult
Adult Adult
7 10 10
13 15 7
American 8 9 7
15 9 17
11 5 13
12 15 10
11 5 4
British 11 13 8
16 8 12
4 12 11
Mexican 12 12 6
13 9 7
16 6 9
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 13 14 8
9 12 8
4 9 11
7 12 8
German 14 3 10
8 11 16
9 7 9

Step 1. H o : There is no significant difference among the ages.

There is no significant difference among the nationalities.

Age and Nationality do not interact to affect life satisfaction.
Step 2. Sum of squares
Young Middle Older Adult Total
Adult Adult
7 10 10
13 15 7
American 8 9 7
15 9 17
11 5 13
Sub-total 54 48 54 156
12 15 10
11 5 4
British 11 13 8
16 8 12
4 12 11
Sub-total 54 53 45 152
12 12 6
13 9 7
Mexican 16 6 9
13 14 8
9 12 8
Sub-total 63 53 38 154
4 9 11
7 12 8
German 14 3 10
8 11 16
9 7 9
Sub-total 42 42 54 138
TOTAL 213 196 191 600

SS A =
∑ x Ai - ¿ ¿
bn

Page 9 of 20
 ( 213 )2+ ( 196 )2+ ( 191 )2 (600)2
= -
( 4 ) (5) (3)(4 )(5)

= 6,013.30 – 6,000

SS A = 13.30

SS =
∑ x Bi - - ¿ ¿
B
an

( 156 )2+ ( 152 )2+ ( 154 )2+ ( 138 )2

= - 6,000
(3)(5)

= 6,013.33 – 6,000

SSB = 13.33

2 2
( x ¿ )2
= ∑ AiBj ¿- ∑ Ai - ∑ Bj
x x
SSAB +¿ ¿
n bn an

( 54 )2 + ( 54 )2 + ( 63 )2 + ( 42 )2+ ( 48 )2 + ( 53 )2 + ( 53 )2+ ( 42 )2 + ( 54 )2 + ( 45 )2+ (38 )2+ (54 )2

= – 6,013.30 - 6,013.33 + 6,000
5
= 6,110.40 – 6,013.30 – 6,013.33 + 6,000

SSAB = 83.77

SSwit = ∑ x 2- ∑ ( x AiBj ¿ )2 ¿
n
= ( 7 )2 + ( 13 )2 + ( 8 )2 + ( 15 )2 + ( 11 )2 + ( 12 )2 +. .. ( 16 )2 + ( 9 )2 – 6,110.40

= 6.672 - 6,110.40

SSwit = 561.60

SStot =SS A +SS B + SS AB + SSwit

= 13.30 + 13.33 + 83.77 + 561.60

SStot = 672

Step 3. Degrees of freedom

df A = a – 1
Page 10 of 20
a = no. of levels or groups
=3–1

df A = 2

df B = b – 1
b = no. of levels or groups
= 4– 1
df B = 3

df AB = (a – 1) (b – 1)
= (2 - 1) (3 - 1)
= (1) (2)

df AB = 2

df wit = ab ¿ )

= 3*4(5-1)

df wit = 48

df tot = N – 1

= 60 – 1
df tot = 59

Step 4. Mean Sum of Squares

SS A
MSS A =
df A
13.30
= 2
MSS A = 6.65

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 SS B
MSS B =
df B
13.33
= 3
MSS B = 4.44

SS AB
MSS AB =
df AB

83.77
=
2

MSS AB = 41.89

SS wit
MSS wit =
df wit
561.60
= 48
MSS wit = 11.70

TWO-WAY ANOVA TABLE

Source of Sum of Degrees Mean Sum
Variation Squares of of Squares
(SS) Freedom (MSS)
(df)

Factor A 13.30 2 6.65

Factor B 13.33 3 4.44

AB 83.77 2 41.89

Within 561.60 48 11.70

Total 672 55

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Step 5. Locate the tabular value of F by getting the intersection of n1 (df of greater MSS) and n2 (df of
smaller MSS)

For Factor A: d 1 = 48, d 2 = 2

@ 5% significance level = 19.47

@ 1% significance level = 99.47

For Factor B: d 1 = 48, d 2 = 3

@ 5% significance level = 8.59

@ 1% significance level = 26.41

Step 6. Calculate the F value

MSS A
FA =
MSS wit
6.65
= 11.70

F A = 0.57

MSS B
FB =
MSS wit
4.44
= 11.70

F B=¿ 0.38

MSS AB
F AB=
MSS wit
41.89
=
11.70
F AB = 3.58

Step 7. State the conclusion

Note:

If the F Value < Tabular F value, the H o is accepted.

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If the F Value > Tabular F value, the H o is rejected.

Since F values for Factors A and B are less than the tabular values such that:

F A ¿ F 0.05 < F 0.01

F B ¿ F 0.05 < F 0.01
F AB ¿ F 0.05< F 0.01

Therefore, the H o is accepted.

Answer:

 There is no significant difference among the ages.

 There is no significant difference among the nationalities.
 Age and Nationality do not interact to affect life satisfaction.

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