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A team comprises of two or more than two people grouped to achieve a common objective or a goal. On the other hand, High-Performance Teams are objectively more focused in approach and better than the usual work teams. The members of a High-Performance Teamwork towards the achievement of synergies in business outcomes and attainment of […]
China’s Real Estate Market
The real estate market in China has undergone a complete shift. At one point in time, the Chinese workers were assured of secure housing by their communist government. However, the recent trend in Chinese real estate has made real estate unaffordable even for the highly paid middle class employees making it a completely different ball […]
The Finance behind the Plastic Problem
The plastic problem has become a major talking point across the entire world. Almost every country in the world is alarmed with how much plastic is being used and the effect it has on the environment. Plastic is an extremely convenient product to use. However, the problem with plastic is that when it is disposed […]
Pros and Cons of Financial Fair Play Rules
In the previous article, we have already seen how certain football clubs in Europe have been using their money power in order to muscle their way to the top of the league. Hence, in order to prevent this, certain organizations such as EUFA have created certain financial fair play rules. The aim of these rules […]
How To Predict Real Estate Market and Identify Asset Bubbles ?
Housing prices can go up under two main scenarios: One is when the fundamental economy of a given location has undergone a change. This means that there is somehow a better standard of living or more employment available in that area making it imperative for more people to stay there. Or else, there could be […]
The P-Value is a statistical representation of the likelihood that the null hypothesis is true. Therefore the P-Value is the probability that the output (Y) will not change as a result of the variation that we are deliberately introducing in the input (X).
Example: If we have a null hypothesis that says that there is no statistically significant relationship between the efficiency of workers in the New York factory as compared to the one in Sacramento California, then the P value attaches a probability to this statement.
If we say that for testing the following hypothesis we assign a P-Value of 0.05. This means that we are saying that 95 out of a 100 times, the efficiencies will not be different. Therefore we are admitting that 5% of the times they could be different. In this case the null hypothesis will only be rejected if we prove that differences in efficiencies arise let’s say 7% of the times.
The P-Value is an important part of the hypothesis problem. Changing the P-Values slightly can change which hypothesis is selected and which is rejected. Therefore the selection of the P-Value must be carefully done. There are different types of errors associated with choosing the wrong P Value. These errors have been described later. The management must decide which error they can afford to make before selecting the P-Value.
The P-Value and confidence interval are intertwined. In fact, if you have the value of one you can automatically derive the value of the other. The formula used in P value = 1 - Confidence Interval. Therefore for a P Value of 0.05, the confidence interval is 0.95 or 95%.
Statistical conclusions cannot be taken literally. One needs to carefully understand how to interpret them before any decisions are made which are based on them. For instance, we stated above that the null hypothesis stands true 95% of the time. Does this mean that if we were to conduct a 100 experiments right away, the null hypothesis would stand true 95 times or more? Well, not really.
Although this is what is ideally expected to happen, the entire subject of Statistics is based on the law of large numbers. This means that these conclusions can be tested for validity only after 1000’s of trials have taken place. When the numbers are sufficiently large, 95% will hold true!
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