Question

Compare and contrast the “critical values approach” and the “p-value approach” for determining the statistical significance of an hypothesis test.

Answer 1

The critical and p-value approach yield same results when testing any hypothesis. The p-value approach has an advantage over the critical value as it just needs the computation of one value i.e P value which is the probability of obtaining a test statistic as extreme as the one for the current sample under the assumption that the null hypothesis is true.

On the other hand, critical value approach needs computation of test statistic and critical value corresponding to the given confidence or significance level. This is the reason why most statistical softwares and calculators make use of p-value approach to deliver the results of hypothesis testing.

The critical value is the standard score such that the area in the tail on the opposite side of the critical value(or values) from zero equals the significance level.