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What is Statistical Significance?

Statistical Significance is important terminology in statistical inference namely Hypothesis testing. Statistical Significance indicates that obtained outcome is occurred solely due to some cause and has not occurred because of any randomness or concurrence. In hypothesis testing using available sample data, stated hypothesis is tested for Statistical Significance. If the result is statistically significance, then researcher can make generalized statement about general population based on this inference. Statistical Significance does not talk about the importance of result but it speaks about truthfulness of the result. Statistically significant result can be highly significant or weakly significant, but once it is significant, it can be concluded that the result is expectedly.

Statistical Significance tests are parametric as well as non-parametric in nature. Parametric tests rely on certain assumptions and test statistic follows certain statistical distribution for assessing Statistical Significance whereas non parametric tests are distribution free tests.

History of Statistical Significance

Sir R. A. Fisher in year 1925, in his paper ‘Statistical Methods for Research Workers’, worked on hypothesis tests and suggested that it is appropriate to reject the null hypothesis once in twenty (5% of the times) but he did not give any name at that time. Later in 1933, Egon Pearson and Jerzy Neyman termed the cut-off suggested by Fisher as Significance level and denote it by α. They also propose to predefine the alpha level before starting the research. R. A. Fisher later suggested that these alpha levels can be set by researcher based on given situation and need not be fixed at 5%.

How to determine Statistical Significance

Statistical Significance is determined by two ways either using classical method i.e. by using critical value or by p-value method. Critical value method is table based method whereas p value is calculation based method. Table here refers to statistical table based for underlying distribution namely t distribution, normal distribution or F distribution or Chi-square distribution.

General Procedure for determining Statistical Significance of hypothesis test

1. State the null and alternative hypothesis.
2. Determine the level of significance (α).
3. Obtain appropriate test statistic.
4. Make a decision.
1. Compare obtained test statistic with critical value using rejection rule.
2. Obtain p value and compare it with level of significance.
3. Write conclusion based on the decision.

Making decision using Critical value Approach

To determine Statistical Significance using critical value approach, first we need to determine critical value for given hypothesis test. General rule for rejection of null hypothesis is as follows.

Decision Rule: Reject the null hypothesis if test statistic falls in Rejection Region.

This rejection region depends on whether test is one tailed or two tailed test. For one tailed test depending on the direction of research hypothesis, rejection region can be either on right side or

left side. If research hypothesis or alternative hypothesis is right tailed, then rejection region lies to the right of the curve. If research hypothesis or alternative hypothesis is left tailed, then rejection region lies to the left of the curve. For two tailed test, the rejection region lies on both right and left tail of the test and it is equally divided in both tails.

For right tailed test, standard rule for rejection is:

Reject the null hypothesis if test statistic is greater than critical value.

Rejection regions for right tailed tests for various distributions are listed below.

For z tests: Reject H₀ if test statistic (Z)> Critical value (Z_α)

For t tests: Reject H₀ if test statistic (T) > Critical value (t_{α, df})

For χ² tests: Reject H₀ if test statistic (χ²) > Critical value (χ²α,df)

For F tests: Reject H₀ if test statistic (F) > Critical value (F_{(a,n1-1,n2-1)})

For left tailed test, standard rule for rejection is:

Reject the null hypothesis if test statistic is less than critical value.

Rejection regions for right tailed tests for various distributions are listed below.

For z tests: Reject H₀ if test statistic (Z) < Critical value (-Z_α)

For t tests: Reject H₀ if test statistic (T) < Critical value (- t_{α, df})

For X² tests: Reject H₀ if test statistic (X²) < Critical value (X²₁-α,df)

For F tests: Reject H₀ if test statistic (F) < Critical value (F_{(1-a,n1-1,n2-1)})

For two tailed test, standard rule for rejection is:

Reject the null hypothesis if test statistic is greater than right tailed critical value or less than left tailed critical value.

Rejection regions for two tailed tests for various distributions are listed below.

For Z tests: Reject H₀ if test statistic (Z) > Critical value (Z_α/2)

OR if test statistic (Z) < Critical value (-Z_α/2)

For t tests: Reject H₀ if test statistic (T) > Critical value (t_{α/2, df})

OR if test statistic (T) < Critical value (-t_{α/2, df})

For X² tests: Reject H₀ if test statistic (X²) > Critical value (X²_a/2,df)

OR if test statistic (X²) < Critical value (X²_1-a/2,df)

For F tests: Reject H₀ if test statistic (F) > Critical value (F_{(α/2,n1-1, n2-1)})

OR if test statistic (F) < Critical value (F_{(1-α/2,n1-1, n2-1)})

Making decision using P value approach

To determine Statistical Significance using P value approach, we need to determine P value for given test statistic. This p value is nothing but a probability having range between 0 and 1. It tells us how strong evidence our sample data provides against the null hypothesis when null hypothesis is actually true. For example, in case of single population mean, p value gives us probability that given sample would lead to larger difference between sample and population means when in reality population mean is equal to given value.

General rule for rejection of null hypothesis is as follows.

Decision Rule: Reject the null hypothesis if P value is less than level of significance (α).

This rejection rule is independent of whether test is one tailed or two tailed test. However, calculation of P value differs for two tailed, right tailed and left tailed tests.

For example, in case of z tests,

If alternative hypothesis is right tailed p value is calculated as:

P value = P (Z > Z observed)

If alternative hypothesis is left tailed p value is calculated as:

P value = P (Z < Z observed)

If alternative hypothesis is two tailed p value is calculated as:

P value = 2 * P (Z > Z observed)

Pictorial representation of P value for all these z tests is shown below:

What if null hypothesis is rejected?

When using critical value approach or using P value approach, the null hypothesis is rejected, then we always have strong evidence against the null hypothesis. When we have such strong evidence then only we can conclude that obtained result is statistically significant. When we fail to reject the null hypothesis, then obtained result is statistically not significant.

If we found that obtained result is statistically significant, then we can conclude that there is an effect and if we found that obtained result is statistically insignificant result then we can conclude that there is no effect.

Limitations of Statistical Significance

There are certain limitations for Statistical Significance. Statistically significant result may not be practically or clinically significant. Thus, experimental significance may divide in two parts, that is, Statistical Significance and practical significance.

It should be noted that result which is both statistically and practically significant is only important and reliable.

Larger sample size can be one of the cause for finding statistically significant result. The reason behind this is that with very large n, even minor difference gets spotted and as a result hypothesis test reveals significant result. Hence every statistically significant result must be published along with effect size. Effect size is the measure of strength of the relationship or difference between two means and it measures practical significance.

Statistically significant result sometimes might not be able to reproduce on other populations. Such results are referred as false positives.

Statistical Significance Calculator

There are various online calculators available which gives exact results as available form statistical software’s. These calculators require user to input sample information such as sample mean or means, sample standard deviation or sample proportion, sample size etc. Then for given level of significance we can compare the obtained significance values and make the conclusion accordingly. One of the Statistical Significance calculators is given here.

Statistical Significance is widely used in Psychology, Social science, clinical trials, biology and many other fields. In Psychology also, Statistical Significance is explained in the same way. Using significance tests, we can determine and compare the truth about various psychological treatments. The relationship between two or more factors can be studied using Statistical Significance tests. In Psychology, mostly 5% level of significance is used. If the p value is larger than 0.05, the result is statistically not significant and if p value is less than 0.05, the result is statistically significant.

Thus, we can see that Statistical Significance testing is most important technique in Statistical data analysis.

Example of Statistical Significance

Let us suppose that we want to see whether certain weight loss method is effective in reducing 15kg weight on an average under given health conditions during 3 months’ period. To determine effectiveness of this weight loss treatments, Statistical Significance test can be used. To do so, we can plan and conduct an experiment, collect sample data. Using Statistical Significance testing procedure, we can conclude about whether treatment given by that method really reduces weight or not. Thus, we can test the hypothesis and see if treatment is significantly producing stated results or not.

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Statistical Significance