Statistics for Managers

Using Microsoft Excel

5th Edition
Chapter 10
Two-Sample Tests

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-1

Learning Objectives
In this chapter, you learn how to use hypothesis testing for
comparing the difference between:
The means of two independent populations with
equal variances
The means of two independent populations with
unequal variances
The means of two related populations
The proportions of two independent populations
The variances of two independent populations

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-2

Two-Sample Tests Overview

Two Sample Tests

Independent
Population
Means

Means,
Related
Populations

Independent
Population
Proportions

Same group
before vs. after
treatment

Proportion 1vs.
Proportion 2

Independent
Population
Variances

Examples
Group 1 vs.
Group 2

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Variance 1 vs.
Variance 2

Chap 10-3

Two-Sample Tests
Independent Populations
Different data sources

Independent
Population Means

1 and 2 known

1 and 2 unknown

Independent: Sample

selected from one

population has no effect
on the sample selected
from the other population
Use pooled variance t test,
or separate-variance t test

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-4

The Process
There are two tests to determine if the means of two

populations are different. One test assumes the

variances of the populations are equal the other is
needed if the variances are not equal. Rather than

make assumptions about the variances, I prefer to

perform an F test for the equality of population
variances and use the results to determine which
model should be used. Therefore the F test comes
first.
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-5

Testing Population Variances

Purpose: To determine if two independent

populations have the same variability.

H0: 12 = 22
H1: 12 22

H0: 12 22
H1: 12 < 22

H0: 12 22
H1: 12 > 22

Two-tail test

Lower-tail test

Upper-tail test

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-6

Testing Population Variances

The F test statistic is:
2
1
2
2

S
F
S

S12 = Variance of Sample 1

n1 - 1 = numerator degrees of freedom

S 22 = Variance of Sample 2
n2 - 1 = denominator degrees of freedom
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-7

F Test: An Example
You are a financial analyst for a brokerage firm. You want to
compare dividend yields between stocks listed on the NYSE &
NASDAQ. You collect the following data:
NYSE
NASDAQ
Number
21
25
Mean
3.27
2.53
Std dev
1.30
1.16
Is there a difference in the
variances between the NYSE
& NASDAQ at the = 0.05 level?
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-8

F Test: Example Solution

(continued)

H0: 12 = 22
H1: 12 22
The test statistic is:

S12 1.302
F 2
1.256
2
S2 1.16
p-value= .588846

= .05

The p-value is not < alpha, so we do not reject H0

Conclusion: There is not sufficient evidence of a difference in the

variances of dividend yield for the two exchanges

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-9

F test in PhStat
PHStat | Two-Sample Tests | F Test for

Differences in Two Variances

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-10

Hypothesis Tests for

Two Population Means
Two Population Means, Independent Samples
Lower tail test:

Upper tail test:

Two-tailed test:

H0: 1 2
H1: 1 < 2

H0: 1 2
H1: 1 > 2

H0: 1 = 2
H1: 1 2

i.e.,

i.e.,

i.e.,

H0: 1 2 0
H1: 1 2 < 0

H0: 1 2 0
H1: 1 2 > 0

H0: 1 2 = 0
H1: 1 2 0

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-11

Two-Sample Tests for Means

Independent Populations
Independent
Population Means

Assumptions:
Samples are randomly and
independently drawn

1 and 2 known

Populations are normally

distributed

1 and 2 unknown

or large sample sizes are used

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-12

Difference Between Two Means

Population means,
independent
samples
1 and 2 unknown
but equal

1 and 2 unknown
but unequal

Use s to estimate unknown

Use pooled variance t test

where 1=2 or
individual variance t test
where 12 (proven by F
test)

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-13

1 and 2 Unknown but Equal

(continued)

Population means,
independent
samples

1 and 2 unknown
but equal

If an F test does not prove the

variances to be unequal, we
can assume that they are
equal and pool them. The
pooled standard deviation is

Sp

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

n1 1S12 n2 1S2 2
(n1 1) (n2 1)

Chap 10-14

1 and 2 Unknown but Equal

(continued)

The test statistic for

1 = 2 is:

Population means,
independent
samples

1 and 2 unknown
but equal

X2

1
1
S
n1 n 2
2
p

Where t has (n1 + n2 2) d.f.,

and

2
2

1
S

1
S
1
2
2
S2 1
p

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

(n1 1) (n2 1)

Chap 10-15

Pooled Variance t Test:

Example
You are a financial analyst for a brokerage firm. Is there a
difference in dividend yield between stocks listed on the NYSE
& NASDAQ? You collect the following data:
NYSE NASDAQ
Number
21
25
Sample mean
3.27
2.53
Sample std dev 1.30
1.16

Is there a difference in the mean

dividend yield between the
NYSE & NASDAQ ( = 0.05)?
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-16

Solution
F = 1.256
p = .5888

H0: 1 = 2
Do Not Reject
H1: 1 2
2 = 2

1
2
= 0.05
df = 21 + 25 - 2 = 44
Pooled Test Statistic:

3.27 2.53
1 1
1.5021
21 25
p-value:

2.0397

.047407

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Reject H0

Reject H0

.025

.025

Decision:
Reject H0 at = 0.05
Conclusion:
There is sufficient evidence of
a difference in mean dividend
yield for the two exchanges.
Chap 10-17

Pooled Variance t Test in

PhStat and Excel
If the raw data is available
Tools | Data Analysis | t-Test: Two Sample

Assuming Equal Variances

If only summary statistics are available
PHStat | Two-Sample Tests | t Test for

Differences in Two Means

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-18

Independent Populations
Unequal Variance
If you cannot assume population variances

are equal, the pooled-variance t test is

inappropriate
Instead, use a separate-variance t test, which
includes the two separate sample variances in
the computation of the test statistic
The computations are not in the Text but are
as follows:

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-19

The Unequal-Variance t Test

Population means,
independent
samples
1 and 2 unknown
and unequal

(X 1 X 2)
t
2
2
s1 s2

n1 n2
( s / n1 s / n2 )
d.f.
( s12 / n1 ) 2 ( s22 / n2 ) 2

n2 1
n1 1
2
1

2
2

p TDIST(t , df , tails)
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-20

Unequal Variance t Test: Example

You are a financial analyst for a brokerage firm. Is there a
difference in dividend yield between stocks listed on the NYSE
& NASDAQ? You collect the following data:
NYSE NASDAQ
Number
21
25
Sample mean
3.27
2.53
Sample std dev 2.30
1.16

Is there a difference in the mean

dividend yield between the
NYSE & NASDAQ ( = 0.05)?
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-21

Unequal Variance Solution

Test Statistics:

H0: m1 = m2
H1: m1 m2
= 0.05
df = 92

F = 3.9313
p = .001794

Reject HO: 1

t = 1.34
p-value =.1901

Reject H0

Reject H0

.025

.025

.1901

Decision:
Fail to Reject at = 0.05
Conclusion:

There is not sufficient evidence of a

difference in mean dividend yields
for the two exchanges

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-22

Unequal Variance t Test in

PhStat and Excel
If the raw data is available
Tools | Data Analysis | t-Test: Two Sample

Assuming Unequal Variances

If only summary statistics are available
Use the Excel spreadsheet downloaded from the

Homework web page

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-23

Confidence Intervals
Independent Populations
Independent
Population Means

The confidence interval for

1 2 is:

X 2 t n1 n 2 - 2

1 and 2 known

1
1
S
n1 n 2
2
p

Where

1 and 2 unknown

2
2

1
S

1
S
1
2
2
S2 1
p

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

(n1 1) (n2 1)

Chap 10-24

Two-Sample Tests
Related Populations
Tests Means of 2 Related Populations

Paired or matched samples

Repeated measures (before/after)
Use difference between paired values:

D = X1 - X2
Eliminates Variation Among Subjects
Assumptions:
Both Populations Are Normally Distributed

or have large samples

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-25

Mean Difference, D Unknown

(continued)

Paired
samples

If D is unknown, we can estimate the unknown

population standard deviation with a sample
standard deviation. The test statistic for D is now
a t statistic, with n-1 d.f.:

D
t
SD
n
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

SD

2
(D

D
)
i
i1

n 1

Chap 10-26

Paired Samples Example

Assume you send your salespeople to a customer

service training workshop to reduce complaints. Is the

training effective? You collect the following data:
Number of Complaints:
(2) - (1)
Salesperson Before (1) After (2)
Difference, Di
C.B.
T.F.
M.H.
R.K.
M.O.

6
20
3
0
4

4
6
2
0
0

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

- 2
-14
- 1
0
- 4
-21

D =

Di
n

= -4.2
SD

2
(D

D
)
i

n 1

5.67
Chap 10-27

Paired Samples: Solution

Has the training made a difference in the number of complaints

(at the 0.05 level)?

H0: D = 0
H1: D 0

= .01

D = - 4.2

Reject

/2

/2
-1.66

d.f. = n - 1 = 4

Decision: Do not reject H0

Test Statistic:

D
4.2
t

1.66
SD / n 5.67/ 5
p-value=

Reject

.1730

(p-value is not <.05)

Conclusion: There is not

sufficient evidence of a change
in the number of complaints.

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-28

Related Sample t Test in

PhStat and Excel
If the raw data is available
Tools | Data Analysis | t-Test: Paired Two Sample for Means

If only summary statistics are available

No test available

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-29

Two Population Proportions

Goal: Test a hypothesis or form a confidence
interval for two independent population
proportions, 1 = 2
Assumptions:
n11 5 , n1(1-1) 5
n22 5 , n2(1-2) 5

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-30

Two Population Proportions

Hypothesis for Population Proportions
Lower-tail test:

Upper-tail test:

Two-tail test:

H0: 1 2
H1: 1 < 2

H0: 1 2
H1: 1 > 2

H0: 1 = 2
H1: 1 2

i.e.,

i.e.,

i.e.,

H0: 1 2 0
H1: 1 2 < 0

H0: 1 2 0
H1: 1 2 > 0

H0: 1 2 = 0
H1: 1 2 0

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-31

Two Population Proportions

Since you begin by assuming the null
hypothesis is true, you assume 1 = 2 and pool
the two sample (p) estimates.
The pooled estimate for
the overall proportion is:

X1 X 2
p
n1 n 2

where X1 and X2 are the number of

successes in samples 1 and 2

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-32

Two Population Proportions

The test statistic for 1 = 2 is a Z statistic:

where

p1 p2
1 1
p (1 p )
n1 n2
p

X1 X 2
X
X
, P1 1 , P2 2
n1 n 2
n1
n2

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-33

Example:
Two population Proportions
Is there a significant difference between the
proportion of men and the proportion of women
who will vote Yes on Proposition A?

In a random sample, 36 of 72 men and 31 of 50

women indicated they would vote Yes

Test for a significant difference at the .05 level of

significance
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-34

Check the Assumptions

The sample proportions are:
Men:

ps1 = 36/72 = .50

Women: ps2 = 31/50 = .62

Assumptions
Men np=72(.5)=36 n(1-p)=72(.5)=36
Women np=50(.62)=31 n(1-p)50(.38)=19
All values > 5

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-35

Two Independent Population

Proportions: Example
H0: 1 = 2 (the two proportions are equal)
H1: 1 2
The sample proportions are:
Men:

p1 = 36/72 = .50

Women: p2 = 31/50 = .62

The pooled estimate for the overall proportion is:

X1 X 2 36 31 67
p

.549
n1 n 2 72 50 122
Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-36

Two Independent Population

Proportions: Example
The test statistic for 1 = 2 is:
z

p1 p2
1 1
p (1 p)
n1 n 2
.50 .62
1
1
.549 (1 .549)
72 50

Reject H0

.025

.025

-1.96
-1.31

1.31

P-value for -1.31 is .1902

At = .05

Reject H0

1.96

Decision: Do not reject H0

There is not sufficient evidence of a
difference in the proportions of men
and women who will vote yes on
Proposition A.

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-37

Confidence Interval - Two

Independent Population Proportions
The confidence interval for 1 2 is:

p1 p2 Z

p1 (1 p1 ) p2 (1 p2 )

n1
n2

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-38

Two Sample Tests in PHStat

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-39

Sample PHStat Output

Input

Output

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-40

Sample PHStat Output

(continued)

Input

Output

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-41

Chapter Summary
In this chapter, we have
Compared two independent samples
Performed pooled variance t test for the differences
in two means
Examined unequal variance t test for the differences
in two means
Formed confidence intervals for the differences
between two means
Compared two related samples (paired samples)
Performed paired sample t test for the mean
difference
Formed confidence intervals for the paired difference

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-42

Chapter Summary
In this chapter, we have
Compared two population proportions
Performed Z-test for equality of two population

proportions
Formed confidence intervals for the difference
between two population proportions
Performed F tests for the difference between two

population variances

Statistics for Managers Using Microsoft Excel, 5e 2008 Prentice-Hall, Inc.

Chap 10-43