Significance Level, Concept of

The concept of significance level originates from the discipline of statistical inference, which might be summarized as the application of the scientific method to either observed or collected data. In this setting, it is assumed that the data might be described by some stochastic model, which means that random variation is associated with the variables being measured.

First, an appropriate model for the data must be determined. Then, two hypotheses, known as the null hypothesis (typically denoted H0) and the alternative hypothesis (typically denoted Ha), are formulated. These hypotheses are precisely stated in terms of a parameter for the chosen model, such as a mean, proportion, or standard deviation. The null hypothesis specifies a particular value for the parameter of interest, and the alternative hypothesis considers ...