Why the Level of Significance is 5%?

Ø The significance level, also known as alpha (α) is a measure of strength of evidence which will leads to reject null hypothesis and concludes that results are statistically significant.

Ø The significance level of 5% is a benchmark set in hypothesis testing for rejecting null hypothesis, globally.

Ø In practical terms, 5% level of significance means that there is a 1 in 20 or 5 in 100 chance that the result of study is false. Furthermore, 5% is selected arbitrarily as it was deemed that 1 in 20 chance of error is acceptable while 2 in 20 or 6 in 100 chance of error in your study is not acceptable.