Past exam of the probability, statistics and options I course of the University of Oxford / 2010 / O / 1 / a / Solution

Each before-and-after observation belongs to the same individual, so pairing removes individual baseline variation and allows dependence within a person's two readings. Under the stated independent normal model for the differences,The independence of the normal sample mean and sample variance theorem gives independence of $\overline{D}$ and $S_D^2$, andAlso $(\overline{D}-\mu )/(\sigma /\sqrt{n})$ is standard normal. Dividing it by the square root of the independent ${\chi }_{n-1}^2/(n-1)$ variable givesIts law contains neither unknown parameter, providing the pivotal quantity for a paired t-test.