Final answer:
The statement in question is true; the process of a paired analysis involves taking the difference between each paired observation and conducting inference on these differences.
Step-by-step explanation:
The statement "In a paired analysis we first take the difference of each pair of observation, and then we do inference on these differences" is True. In statistics, when performing a hypothesis test on matched or paired samples, differences between each pair of observations are indeed calculated. These differences are then analyzed to make inferences about the population parameters.
When working with paired or matched samples, we often deal with scenarios where two measurements are taken from the same pair of individuals or objects. Hypothesis testing is then conducted based on the assumption that the differences come from a normally distributed population or that the number of differences is large enough to apply the central limit theorem, ensuring the distribution of the sample mean of differences is approximately normal.