The president of a large company is in the process of deciding whether to adopt

Question

The president of a large company is in the process of deciding whether to adopt a lunch- time exercise program. The purpose of such pro- grams is to improve the health of workers and, in so doing, reduce medical expenses. To get more information, he instituted an exercise program for the employees in one office. The president knows that during the winter months medical expenses are relatively high because of the incidence of colds and flu. Consequently, he decides to use a matched pairs design by recording medical expenses for the 12 months before the program and for 12 months after the program. The “before” and “after” expenses (in thousands of dollars) are compared on a month-to-month basis and shown here. Do the data indicate that exercise programs reduce medical expenses .

Hypothesis: H0: Ud = 0 H1: Ud > 0 Match pairs.

Can you explain why the alternative hypothesis is greather than 0. Shouldn't it be less than 0

Explanation / Answer

Because here, we are talking about the difference,

We want to test whether the program reduce medical expenses or not,

Now if it decreases, the difference will be greater than 0 i.e., positive and that is what we want to test.

In simple words, we want to test if the expenses decrease,

I.e, if we got positive difference in before and after expenses or not

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