Wednesday, March 1, 2017

42. BAYESIAN APPROACH TO HYPOTHESIS TESTING

OBJECTIVE

Identify the probability of a hypothesis using the probability of related events.


DESCRIPTION

This probabilistic approach is often used in logic tests, which may require a statement such as the following to be solved:

0.5% of the population suffers a certain disease and those with this disease that take a clinical test are diagnosed correctly in 90% of cases. You also know that you have on average 10% of false positive tests on people who do not have the disease. A person has been diagnosed as positive; what is the probability that he actually has the disease?

This problem is solved by finding the percentage of true positives (the test is positive and the person has the disease) in the total number of positive tests, and it can be approached by drawing the following matrix and calculating the missing percentages:


Probability Matrix Bayesian hypothesis testing
Matrix of the Bayesian Inference Method


The answer is given by dividing 0.45% by 10.45%, giving a 4.31% possibility of that person being sick. More formally, the problem is resolved by the following equation:

Probability Equation
where P is the probability, A is having the disease, and B is when the test is positive; therefore, P(A|B) is the probability of having the disease when the test is positive and P(B|A) is the probability of obtaining a positive test when the patient has the disease. The template shows how the values have been calculated starting from the proposed problem.



TEMPLATE


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