Difference Between Hypothesis and Prediction (With Table)

Hypothesis and prediction appear to be the same which is involved in the process of bringing solutions for the future. A Hypothesis is an initial step towards decision making. A hypothesis is an assumption statement that is framed in order to arrive at a decision about the population based on the random sample taken from the population.

Hypothesis vs Prediction

The difference between hypothesis and prediction is that hypothesis is a statement that is assumed about the relationship between the sample and the population. Whereas, prediction is the second stage after descriptive analysis and before prescriptive analysis.

The hypothesis can be classified into various types according to their relationship and assumption criteria. They are the Null Hypothesis and Alternative Hypothesis, which are based on the nature of the assumption. The other two types which are based on the relationship between the sample and the population are the Simple hypothesis and Composite Hypothesis.

Prediction is the second step in the process of analysis, which is focused on forecasting. It is used in Time Series and Forecasting to predict future changes and development. There are various methods and models involved in the process of prediction such ARIMA model, SARIMA model, and so on.

Comparison Table Between Hypothesis and Prediction

Parameters of ComparisonHypothesisPrediction
DefinitionThe hypothesis is an assumption statement towards prediction analysis.Prediction is an analysis that is done in order to predict future changes.
TypesThe null hypothesis, alternative hypothesis, simple null, and simple alternative hypothesis, composite null, and composite alternative hypothesis. Inductive prediction, Deductive predictive, and Abductive prediction.
MechanismA hypothesis starts the analysis. Prediction is the final step in the analysis.
UseA hypothesis is used in Testing of Hypothesis, which is a branch in Statistical InferencePrediction is used in prediction analysis in Time Series and Forecasting.
ExampleNull Hypothesis – There is no significant difference between the sample statistic and the population parameter.

Alternative Hypothesis- There is a significant difference between the sample statistic and the population parameter.
Prediction analysis for a startup :

There is an increase in the sales and profit in the due course of 3 years, which on further prediction analysis would lead to development in the revenue.

What is Hypothesis?

A hypothesis is an initial process in the testing of whether there is any relationship between the population and the sample taken from the population. This analysis of the relationship would help in determining and framing decisions towards the population. Framing an assumption, testing it using statistic, and deriving a conclusion is called Hypothesis Testing.

Null Hypothesis and Alternative Hypothesis are framed as an initial step, which forms the basis of testing. Simple and composite hypotheses are the building blocks of hypothesis testing. There are various theorems that are determined based on the hypothesis that we are choosing.

There are various steps involved in the hypothesis testing process. The first step would be framing the hypothesis, which is the null hypothesis and alternative hypothesis. Then proceeding further with the level of significance, Statistic formulation, and comparing it with the level of significance to either accept or reject the null or alternative hypothesis.

The hypothesis statement framing is a very important process in the theory of statistics. Statistics has two main branches, one is the Estimation theory and the other is the Testing of Hypothesis. These two branches are regarded to be the backbone of Statistics.

What is Prediction?

Prediction is the process of using data and statistical techniques to bring out useful insights about the future. There are various tools and techniques employed in the process of predictive analysis. Predictive analysis forms the basis of Forecasting. Forecasting helps in developing the business process.

Prediction helps in answering the questions related to future development. What will the development scale of the company be in the period of 5 years hence? Such questions will be answered using the prediction process. It is regarded as the most important technique in the production and improvement process.

Prediction involves analyzing the past data, using various tools and techniques in statistics such as the method of least squares, likelihood function, distribution function, and so on, and then building various optimizing and stimulation models for forecasting. It is a kind of analysis that is the process of predicting the future.

Predictions help in detecting flaws in any system, optimizing and minimizing risks, improving operations, and reducing future risks. It is helpful in developing and improving the techniques for future analyses.

Main Differences Between Hypothesis and Prediction

  1. A hypothesis is an explanation about a population based on the sample taken from the population, whereas prediction is the technique of predicting what will happen in the future.
  2. Hypothesis employs variables and parameters, in its process of analysis, whereas prediction employs past data in its process of prediction analysis.
  3. The hypothesis is involved in the testing of hypothesis theory, while Prediction is involved in forecasting theory and time series analysis.
  4. The hypothesis involves dependent and independent variables in the statistical theory, prediction analysis involves various theorems and techniques which predict series of data for the required period.
  5. An example statement describing the hypothesis is ” There is an increase in the number of defects in the products manufactured.’ The example statement describing Prediction is “As there is an increase in the number of defects in the manufactured products we need to analyze the manufacturing methodology”.

Conclusion

Both Hypothesis and Prediction are related terms that keep confusing at certain points in time. The main difference between Hypothesis and Prediction is the stages at which they are employed. A hypothesis is an explanation towards decision making, whereas Prediction is a decision made in order to increase the proficiency of the process.

Prediction is inter-linked to the hypothesis in various ways. Prediction depends on the hypothesis chosen at the end of the decision made. It is an important aspect of deriving effective decisions in the process of analysis. Various techniques are involved for testing the framed hypothesis for both parametric and parametric variables, which eventually determines the prediction analysis.

References

  1. https://www.journals.uchicago.edu/doi/pdf/10.1093/bjps/VIII.32.281
  2. https://science.sciencemag.org/content/307/5707/219.abstract
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