Monday, May 26, 2008

Understanding Null and Alternative Hypotheses

Is Grandma's Freezer Cold? (Understanding Null and Alternative Hypotheses)

When approaching business research, managers are sometimes confused by the concepts of the null and alternative hypotheses. The concepts are incredibly useful though, when the decision can be framed as a binary choice.

The null hypothesis embodies the condition that nothing has changed. For example, if we wished to learn if deep freezers were cold inside, we could think of the research in terms of null and alternative hypotheses.

The null hypothesis would be that the freezer in our sample is cold inside, which would be the normal condition. The alternative hypothesis would be that the freezer in our sample is not cold.

Therefore, to draw our sample, we walk up to Grandma's deep freezer, open the door, and stick our hand inside. Yes, Grandma's plugged in freezer is cold inside.

Internal validity, which means that what we saw what we thought we saw, is supported because we sensed that the freezer was cold with our own hands.

External validity is good in this case, which means that we can project our sample on the population of freezers that are plugged in (i.e., we did not check air conditioners, tap water, or ovens, but a freezer).

Construct validity, which is the theoretical background of measuring the temperature of freezers by sticking your hand in them, is supported because we have stuck our hand in all sorts of places to ascertain temperature before.

Conclusion validity, or support derived from statistically drawing a conclusion about all freezers from our sample of one, is not very good because our sample is very small.