How To Calculate P-value In Excel?

5.7 min read|Last Updated: December 29th, 2023|Categories: excel|
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P-value, which is short for “probability value,” indicates the probability of error in accepting the observed result’s validity. It is used in hypothesis testing in statistical calculations. In this blog, we are going to discuss what p-value is and how to calculate it.

The Concept of P-value

To understand what p-value is, we should first know what the hypothesis test is. In simple words, a hypothesis test is a statistical test used to determine if an assumption is true or not for a population. It is a way to test the results of a survey or experiment to see if the results are meaningful. A Hypothesis test includes two hypotheses:

Null hypothesis (H0): It is usually the hypothesis that the event will not occur or the results are by chance.

Alternative hypothesis (Ha): It is a hypothesis that the event will occur, or the results are not by chance.

Alpha: It is the threshold value in the hypothesis test by which the null hypothesis can be rejected or accepted. A common value for Alpha is 0.05.

We calculate a parameter called “p-value” that states the results are valid during a hypothesis test, or they have happened by chance: the smaller p-value, the stronger evidence in favor of the alternative hypothesis.

In Excel, we can calculate the p-value using two main methods: t-test and z-test.

T-Test or Z-Test?

we should check the sample size: for the small samples, a t-test will give a better result. If the sample size is 30 or more, we must choose the z-test. If the variance of the population is known, the z-test will be a better choice.

 

 

T-test

There are two ways to perform a t-test in Excel:

1. T-Test Tool From Data Analysis ToolPak

The first thing we should do is to add the analysis ToolPak to Excel. To do so, click on files > options; In the window that opens, click on Add-ins. Check if the “Excel Add-ins