null and alternative hypotheses

how do you figure null and alternative hypotheses. I have read the test but I still don't understand it. I don't know how the book just comes up with a number or how to use that number in the formula. Can anyone help!


TS Contributor
Can you post an example? It might be more clear if we use a concrete example.

In general, however, the null hypothesis is usually a statement of "equality" between 2 things or among 3 or more things. It also can be a statement of the "absence" of a significant effect, or the fact that a statistic is not significantly different from 0.

The alternative hypothesis is the "opposite" of the null hypothesis, and is what you are trying to show support for (i.e., if there is enough evidence to reject the null hypothesis).

Typically, the alternative hypothesis is a statement of "inequality" between 2 or among 3 or more things, or that an effect is significant, or that a statistic is significantly different from 0.
This is the senario that was presented to the class, on a pervious assignment we were supossed to find the probability of Option A and Option B. The probabilty was based on the 2003 US census data and the qtr 4 US Department of Commerce news.

PiggyBank has narrowed its options down to two incentive plans: A. cash back when the consumer makes an online purchase; and B. cash back when the consumer makes a purchase at a clothing store. The bank doesn't know whether consumers would shop online more than at clothing stores.

Information Experts has placed you in a group to develop null and alternative hypotheses to help the bank determine which option would provide the best incentive to consumers. Work with your group members to develop the null and alternative hypotheses. As a group, write a brief memo to the PiggyBank product development team describing your hypotheses and explaining how you arrived at them.

Option A is 1.9%
Option B is between 5-10%

This was supposed to be a group project but my teamate has not participated to this point and I am at a loss


TS Contributor
Near the top of the page you'll see a menu item for Search - type in "PiggyBank" (without quotes) and you'll see a list of 4 other threads on this site that describe this same project. Those other threads will probably help.

Is this an online stats class? I'm amazed at how often this "PiggyBank" problem has come up....