In the early 20^th century, Guinness breweries in Dublin had a policy of hiring the best graduates from Oxford and Cambridge to improve their industrial processes. At the time, it was considered a trade secret that they were using statistical methods to improve their process and product.

One problem they were having was that the z-test (a commonly used test at the time) required large sample sizes, and sufficient data was often unavailable. By studying the properties of small sample sizes, William Sealy Gosset developed a statistical test that required fewer samples to produce a reasonable result. As the story goes though, chemists at Guinness were forbidden from publishing their findings.

So he did what many of us would do: realizing the finding was important to disseminate, he adopted a pseudonym (‘Student’) and published it. Even though we now know who developed the test, it’s still called “Student’s t-test” and it remains widely used across scientific disciplines.

It’s a cute little story of math, anonymity, and beer… but what can we do with it? As it turns out, it’s something we could probably all be using more often, given the number of Internet-connected sensors we’ve been playing with. Today our goal is to cover hypothesis testing and the basic z-test, as these are fundamental to understanding how the t-test works. We’ll return to the t-test soon — with real data. Continue reading “Statistics And Hacking: An Introduction To Hypothesis Testing” →