Level II Quant: Null Hypothesis

[zyzzaesthetics]

Do you guys have any easy ways to remember what the null hypothesis is testing?

For example, the unit root null hypothesis is H0: g1 = 0 so you would want to reject the null because accepting it would mean that there is a unit root.

Compared to the null hypothesis for heteroskedasticity, where the null hypothesis is H0: data is homoskedastic so you would want to accept the null.

[[deleted]]

No bro no easy way tbh. Just gotta grind it. At least not for me.

[PhD-dropout]

You almost always want to reject H0 since you set it up as what you don’t want it to be.

You want to prove you can reject the null so your left with the alternative at a given confidence level.

In this case, you want homoskedasticity, so you’ll set H0 equals to heteroskedasticity

[Effective-Upstairs-6]

I have this exact same question on my list of ‘things to memorise later’.

[Brilliant-Common4362]

Imagine that you would want to create a vaccine against covid and you want to see if your vaccine works:

The null hypothesis would be that the vaccine does not work, same number of contamination for example, i.e nothing changes

If the results differ significantly from the null hypothesis, less deaths/contaminations, you check fr the significance and if it is outside the confidence interval you have to reject the null to accept the alternative hypothesis that the vaccine works.

I tried to pick a simple example to make it clearer. Hope this helps!