Selecting alpha

Researchers usually define in advance what they mean by “sufficiently improbable” by specifying a cut-off point in the theoretical distribution below which the observed test statistic must fall to reject the null hypothesis. This cutoff point below which our observed chi-square statistic must fall is called alpha and denoted by the Greek letter a. It is customarily set at .05, .01, or .001.

For our example problem about the relationship between mean income and the percent black in MA census tracts, we will set our alpha level at .05.