Finding a p-value from the t distribution

The p-value for any test is the probability of getting such an 'extreme' test statistic when H0 is true. When testing the value of a population mean, µ, when σ is unknown, the appropriate test statistic is

Since this has a t distribution (with - 1 degrees of freedom) when H0 is true, the p-value is found from a tail area of this distribution. The relevant tail depends on the alternative hypothesis. For example, if the alternative hypothesis is for low values of µ, the p-value is the low tail area of the t distribution since low values of (and hence t) would support HA over H0.

H0 :   μ  =  μ0
HA :   μ  <  μ0

The steps in performing the test are shown in the diagram below.

Computer software should be used to obtain the p-value from the t distribution.

Returns from Mutual Funds

The example on the previous page asked whether the average annualised return on high-risk mutual funds was higher than that from Federal Bonds (5.64%) over the period April 1997 to March 2000. The population standard deviation was unknown and the hypotheses of interest were,

H0:mu=20, HA:mu!=20

The diagram below shows the calculations for obtaining the p-value for this test from the t distribution with (n - 1) = 24 degrees of freedom.

Since the probability of obtaining such a high mean return from 25 funds is 0.000 (to 3 decimal places) if the underlying population mean is 5.64, we conclude that there is extremely strong evidence that the mean return on high-risk funds was over 5.64 percent.


Select Modified Data from the pop-up menu and use the slider to investigate the relationship between the sample mean and the p-value for the test.

Two-tailed test

In some hypothesis tests, the alternative hypothesis allows both low and high values of µ.

H0 :   μ  =  μ0
HA :   μ  ≠  μ0

In this type of two-tailed test, the p-value is the sum of the two tail areas, as illustrated below.