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: INTRODUCTORY STATISTICS
: INTERVAL ESTIMATION

Outline
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Interval estimation: motivation

What is interval estimation? Formulas for confidence interval Calculation of sample size

Interval estimation: motivation I

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Population parameters (such as the population mean and the population proportion p) are impractical to calculate because it is usually expensive to conduct a census. But recall that type of statistics called inferential statistics. That part of statistics involves using sample data to estimate (or to infer) population parameters. Sample statistics such as the sample mean X and the sample proportion , calculated from sample data, are used as point estimates of the population parameters and p, respectively. A point estimate (aka sample statistics) is one value used to approximate a population parameter.

Interval estimation: motivation II

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However, point estimates (or sample statistics) are also problematic because they vary from one sample to the next. Since we are stuck with selecting one sample, it is likely that the point estimate calculated from that one sample may be quite different from the population parameter it is trying to estimate. Therefore, it is not prudent to use a point estimate, by itself. We must now find a more prudent and reliable method of estimating population parameters. A more prudent and reliable method of estimation is interval estimation.

What is interval estimation?

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Interval estimation is a technique used to estimate a confidence interval, typically, for the unknown population mean () and proportion ( p ). A confidence interval gives an estimated (from sample data) range of values which is likely to include the unknown population parameter with some level of confidence. The confidence level is a measure of how confident one is that the confidence interval contains the population parameter. A confidence interval has a lower limit and an upper limit called confidence limits.

Formulas for confidence interval I

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The confidence interval for the population mean is

The confidence interval for the population proportion is

Margin of error,

Z is a value that is based on the level of confidence. is called the standard error for the sample mean. Interpretation: we are ## % confident that the interval contains the true population mean.

Margin of error,

Z is a value that is based on the level of confidence. is called the standard error for the sample mean. Interpretation: we are ## % confident that the interval contains the

true population mean.

Formulas for confidence interval II

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Z, which is used in the formula for confidence interval, is called the critical value. The value of Z depends on the confidence level. The following are typical values of Z based on typical confidence levels.
Confidence level
90%

Z-value
1.6449

95%
98% 99%

1.96
2.3263 2.5758

Example I
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Calculation of sample size

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When carrying out a sample survey, a sample must be selected from a population. But, how large a sample should be used? The sample size typically depends on the level of confidence, the standard deviation and the margin of error. If is known, the sample size based on the mean is computed as:

The sample size based on the proportion is calculated as:

Example II
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