ESTIMATING WITH

CONFIDENCE
2

 The sample mean is the natural

estimator of the unknown population
mean μ.
 It is the unbiased estimator of
 But how reliable is it
 Statistical estimation
3

Every member of the

population has the
same chance of
Population being
selected in the
sample

Parameters
Random sample
estimation
Statistics
 Statistical estimation
4

Estimate

Point estimate Interval estimate

sample mean confidence interval for mean
sample proportion confidence interval for proportion

Point estimate is always within the interval

estimate
 Interval estimation Confidence interval (CI)
5

provide us with a range of values that we

believe, with a given level of confidence,
containes a true value
%CI  x 1.96 SEM
CI for 95
the population means
99%CI  x 2.58 SEM
SD
SEM 
n
 Interval estimation (Confidence interval (CI))
6

34% 34%
14% 14%
2% 2%
z
-3.0 -2.0 -1.0 0.0 1.0 2.0
3.0 -1.96 1.96 2.58
-2.58
 Interval estimation
7
Confidence interval (CI), interpretation and example
50

Frequency 40

30

20

10

0
22.5 27.5 32.5 37.5 42.5 47.5 52.5 57.5
25.0 30.0 35.0 40.0 45.0 50.0 55.0 60.0
Age in years

x= 41.0, SD= 8.7, SEM=0.46, 95% CI (40.0, 42), 99%CI (39.7,
42.1)
 Point and Interval Estimates
 A point estimate is a single value
8

(statistic) used to estimate a

population value (parameter).
A confidence interval is a range of

values within which the population

parameter is expected to occur.
 Point Estimates and Interval
Estimates
9

 The factors that determine the width

of a confidence interval are:
1. The sample size, n.
2. The variability in the population,
usually estimated by s.
3. The desired level of confidence.
 Point and Interval Estimates
10

 If the population standard deviation

is known or the sample is greater
than 30 we use the z distribution.
s
X z
n
 Point and Interval Estimates
11

 If the population standard deviation

is unknown and the sample is less
than 30 we use the t distribution.
s
X t
n
 Interval Estimates
An Interval Estimate states the range within
12


which a population parameter probably lies.

The interval within which a population
parameter is expected to occur is called a
confidence interval.

The two confidence intervals that are used

extensively are the 95% and the 99%.
 Interval Estimates
13

 For a 95% confidence interval about 95% of the

similarly constructed intervals will contain the
parameter being estimated. Also 95% of the
sample means for a specified sample size will lie
within 1.96 standard deviations of the
hypothesized population mean.
For the 99% confidence interval, 99% of
the sample means for a specified sample
size will lie within 2.58 standard
deviations of the hypothesized
 Standard Error of the Sample
Means
14

 The standard error of the sample mean is the

standard deviation of the sampling distribution of the
sample means.
 It is computed by 
x 
n
x
  is the symbol for the standard error of the
sample mean.
 is the standard deviation of the population.
 n is the size of the sample.
 Standard Error of the Sample
Means
15

 If m is not known and n>30, the

standard deviation of the sample,
designated s, is used to approximate
the population standard deviation.
The formula for thes standard error is:
sx 
n
 95% and 99% Confidence Intervals for µ
16

 The 95% and 99% confidence intervals for are constructed

as follows when:
 95% CI for the population mean is given by
s
X 1.96
n
99% CI for the population mean is given by

s
X 2.58
n
 Constructing General Confidence
Intervals for µ
17

 In general, a confidence interval for

the mean is computed by:
s
X z
n
 EXAMPLE 3
18

The Dean of the Business School wants to

estimate the mean number of hours worked
per week by students. A sample of 49
students showed a mean of 24 hours with a
standard deviation of 4 hours. What is the
population mean?
The value of the population mean is not
known. Our best estimate of this value
is the sample mean of 24.0 hours. This
value is called a point estimate.
 Example 3 continued
19

Find the 95 percent confidence interval for the population mean.

s 4
X 1.96 24.00 1.96
n 49
24.00 1.12
The confidence limits range from 22.88 to
25.12.
About 95 percent of the similarly
constructed intervals include the
 Confidence Interval for a Population
Proportion
20

 The confidence interval for a

population proportion is estimated
by: p (1  p )
p z
n
where
X
p
n
 EXAMPLE 4
21

 A sample of 500 executives who own

their own home revealed 175 planned to
sell their homes and retire to Arizona.
Develop a 98% confidence interval for
the proportion of executives that plan to
sell and move(.to
35Arizona.
)(. 65)
.35 2.33 .35 .0497
500
 Distributions used in Sampling
theory
22

 Chi-Square distribution compares the relationship

between the population variance and the variance of
a sample set, based on the number of redundancies in
the sample.
 If a random sample of n observations is selected from
a population that has a normal distribution with mean
µ and variance σ then the chi-square sampling
2
distribution is vS
 2
 n= no of df 2
 Chi-square distribution
23

 The number of redundancies (degrees of freedom) in

sample set statistics are v=n-1. You can use tables to
find the c2 distribution at the various degrees of freedom
 The distribution is used in sampling statistics to
determine the range in which variance of the population
can be expected to occur based on
 Some specified percentage probability
 The variance of a sample set
 The number of degrees of freedom in the sample
 t (student) Distribution
24

 This is used to compare a population

mean with the mean of a sample set
based on the number or redundancies in
the sample set.
 This distribution is preferred over the
normal distribution when samples
contain fewer than 30 values.
 student distribution
25

 If z is a standard normal distribution

random variable, c2 is a chi-square
random variable with v degrees of
freedom, and z andc2 are both
independent variables, z then by
t
definition, 2
v
 F Distribution
26

 This distribution is used when comparing

the computed variance from sample
sets. If c21 and c22 are two chi-square
random variable with v1 and v2 degrees
of freedom then  2
1
v1
F
 22
v2
 Confidence interval for a population
variance
27

 Confidence intervals for variance of the

population is based on the c2 statistic.
Areas for the upper and lower tails of
this distribution will be given in tables
and will be given for a given number of
redundancies.
 Selecting a Sample Size
28

There are 3 factors that determine the

size of a sample, none of which has
any direct relationship to the size of
the population. They are:
 The degree of confidence selected.
 The maximum allowable error.
 The variation in the population.
 Variation in the Population
29

 To find the sample size for a variable:

2
 z s 
n  
 E 

 where : E is the allowable error, z is the z- value

corresponding to the selected level of confidence,
and s is the sample deviation of the pilot survey.
 EXAMPLE 6
A consumer group would like to
30

estimate the mean monthly electricity

charge for a single family house in July
within $5 using a 99 percent level of
confidence. Based on similar studies
the standard deviation is estimated to
be $20.00. How large2 a sample is
 ( 2.58)( 20) 
required? 
n 
5
 107
 
 Sample Size for Proportions
31

 The formula for determining the sample size in the case

of a proportion is: 2
 Z
n  p(1  p) 
 E

 where p is the estimated proportion, based on past

experience or a pilot survey; z is the z value associated
with the degree of confidence selected; E is the
maximum allowable error the researcher will tolerate.
 EXAMPLE 7
32

 The American Kennel Club wanted to

estimate the proportion of children that
have a dog as a pet. If the club
wanted the estimate to be within 3% of
the population proportion, how many
children would they need to contact?
Assume a 95% level of confidence and
that the club estimated
 1.96 
n (. 30)(. 70)
2
that 30% of the
 897
children have a dog  .03 as
 a pet.