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Estimation

• Estimation Defined
• Confidence Levels
• Confidence Intervals
• Confidence Interval Precision
• Standard Error of the Mean
• Sample Size
• Standard Deviation
• Confidence Intervals for Proportions
Estimation Defined:

• Estimation – A process whereby we select a


random sample from a population and use
a sample statistic to estimate a population
parameter.
Point and Interval Estimation
• Point Estimate – A sample statistic used to
estimate the exact value of a population
parameter
• Confidence interval (interval estimate) – A
range of values defined by the confidence level
within which the population parameter is
estimated to fall.
• Confidence Level – The likelihood, expressed
as a percentage or a probability, that a
specified interval will contain the population
parameter.
The Process of Estimation
Margin of Error and the Interval Estimate

A point estimator cannot be expected to provide the


exact value of the population parameter.

An interval estimate can be computed by adding and


subtracting a margin of error to the point estimate.

Point Estimate +/- Margin of Error

The purpose of an interval estimate is to provide


information about how close the point estimate is to
the value of the parameter.
Margin of Error and the Interval Estimate

The general form of an interval estimate of a


population mean is

x  Margin of Error
Interval Estimate of a Population Mean:
s Known
 In order to develop an interval estimate of a
population mean, the margin of error must be
computed using either:
• the population standard deviation s , or
• the sample standard deviation s
 s is rarely known exactly, but often a good estimate
can be obtained based on historical data or other
information.
 We refer to such cases as the s known case.
The Central Limit Theorem
Revisited
• What does this Theorem tell us:
– Even if a population distribution is skewed, we know that the
sampling distribution of the mean is normally distributed
– As the sample size gets larger, the mean of the sampling
distribution becomes equal to the population mean
– As the sample size gets larger, the standard error of the mean
decreases in size (which means that the variability in the sample
estimates from sample to sample decreases as N increases).
• It is important to remember that researchers do not
typically conduct repeated samples of the same
population. Instead, they use the knowledge of theoretical
sampling distributions to construct confidence intervals
around estimates.
Confidence Levels:
• Confidence Level – The likelihood, expressed as a
percentage or a probability, that a specified interval
will contain the population parameter.
• 95% confidence level – there is a .95 probability that a
specified interval DOES contain the population mean.
In other words, there are 5 chances out of 100 (or 1
chance out of 20) that the interval DOES NOT contain
the population mean.
• 99% confidence level – there is 1 chance out of 100
that the interval DOES NOT contain the population
mean.
The confidence level =
where α = probability that the confidence
interval does not contain the true
population parameter.

α corresponds to the level of significance

Critical value is the value that indicates the


point beyond which lies the rejection region.

In hypothesis testing, if the absolute value of


your test statistic is greater than the critical
value, reject the null hypothesis.
Interval Estimate of a Population Mean:
s Known
There is a 1 -  probability that the value of a
sample mean will provide a margin of error of z / 2s x
or less.

Sampling
distribution
of x

/2 1 -  of all /2


x values

x

z /2 s x z /2 s x
Interval Estimate of a
Population
• Interval Estimate of Mean:

s Known x  z s  /2
n

where: x is the sample mean


1 - is the confidence coefficient
z/2 is the z value providing an area of
/2 in the upper tail of the standard
normal probability distribution
s is the population standard deviation
n is the sample size
Interval Estimate of a Population Mean:
s Known
 Values of z/2 for the Most Commonly Used
Confidence Levels

Confidence Table
Level  /2 Look-up Area z/2
90% .10 .05 .9500 1.645
95% .05 .025 .9750 1.960
99% .01 .005 .9950 2.576
Meaning of Confidence

Because 90% of all the intervals constructed using


x  1.645s x will contain the population mean,
we say we are 90% confident that the interval
x  1.645s x includes the population mean .

We say that this interval has been established at the


90% confidence level.

The value .90 is referred to as the confidence


coefficient.
Exercises 4.1, page 21

Find α in the following confidence levels:


3. 92% 5. 96%

Find the critical value that corresponds to


the given confidence level:
9. 92% 11. 96%

Find the margin of error:


25. 9,849.30 < µ < 10,150.70
27. 12,328.96 < µ < 12,671.04
Exercises 4.1, page 21

Find the margin of error E:


31. Confidence Level: 90%
σ = 12
n = 40

33. Confidence Level: 99%


σ = 18 kg
n = 60
Exercises 4.1, page 21

Find the confidence interval:


35. Sample mean
margin of error = 3.50
Exercises 4.1, page 21

Find the minimum sample size required to


estimate an unknown population mean µ
using the given data.
37. Confidence level: 95%
margin of error = 130
σ = 400

39. Confidence level: 90%


margin of error = 12
σ = 50
Exercises 4.1, page 21

Find the lower confidence limit


43. Margin of error = 810.90
upper confidence limit = 2,310.50

Find the upper confidence limit


51. Margin of error = 301
lower confidence limit = 1,199
Exercises 4.1, page 21

Find the 90% confidence interval of a


population mean µ for the following values.
53.

Find the 99% confidence interval of a


population mean µ for the following values.
57.
Example Unit 4, page 8

The mean score of a random sample of 49


Grade 11 students who took the first
periodic test is calculated to be 78. The
population variance is known to be 0.16.
a. Find the 95% confidence interval for the
mean of the entire Grade 11 students.
b. Find the lower and upper confidence
limits.
Interval Estimate of a Population Mean:
s Known
 Example: Discount Sounds
Discount Sounds has 260 retail outlets throughout
the United States. The firm is evaluating a potential
location for a new outlet, based in part, on the mean
annual income of the individuals in the marketing
area of the new location.
A sample of size n = 36 was taken; the sample
mean income is $41,100. The population is not
believed to be highly skewed. The population
standard deviation is estimated to be $4,500, and the
confidence coefficient to be used in the interval
estimate is .95.
Interval Estimate of a Population Mean:
s Known
 Example: Discount Sounds
95% of the sample means that can be observed
are within + 1.96 s x of the population mean .

The margin of error is:


s  4,500 
z /2  1.96    1, 470
n  36 

Thus, at 95% confidence,


the margin of error is $1,470.
When s Is Unknown
 Cannot use z distribution
 2 uncertain values:  and s

 need wider interval to be confident

 Student’s t distribution
 also normal distribution

 width depends on how well s

approximates s ~
Student’s t Distribution

 The t distribution was discovered by


William. S. Gosset in 1908.
 Gosset was an Oxford graduate in
mathematics and worked for the
Guinness Brewery in Dublin.
 He used the pseudonym Student to
avoid getting fired for doing statistics
on the job!!!
t Distribution

A t distribution with more degrees of freedom has


less dispersion.

As the degrees of freedom increases, the difference


between the t distribution and the standard
normal probability distribution becomes smaller
and smaller.
t Distribution
t distribution
Standard (20 degrees
normal of freedom)
distribution

t distribution
(10 degrees
of freedom)

z, t
0
Characteristics of the t Distribution
The t distribution is similar to the
standard normal distribution in
these ways:
1. It is bell-shaped.
2. It is symmetric about the mean.
3. The mean, median, and mode are
equal to 0 and are located at the
center of the distribution.
4. The curve never touches the x
axis.
Characteristics of the t Distribution

The t distribution differs from the


standard normal distribution in the
following ways:
1. The variance is greater than 1.
2. The t distribution is actually a
family of curves based on the
concept of degrees of freedom,
which is related to sample size.
3. As the sample size increases, the
t distribution approaches the
standard normal distribution.
The Concept of Degrees of Freedom
Many statistical distributions use the
concept of degrees of freedom, and
the formulas for finding the degrees
of freedom vary for different
statistical tests. The degrees of
freedom are the number of values
that are free to vary after a sample
statistic has been computed, and
they tell the researcher which
specific curve to use when a
distribution consists of a family of
curves.
The t-distribution formula

Where:
df = n – 1
= sample mean
µ = population mean
s = standard deviation of the sample
n = sample size
Example Unit 4.2, page 27

A student researcher wants to determine


whether the mean score in mathematics of
the 25 students in Grade 8 Section Newton is
significantly different from the school mean
of 89. The mean and the standard deviation
of the scores of the students in Section
Newton are 95 and 15, respectively. Assume
95% confidence level.
Formula for a Specific Confidence Interval for the
Mean When σ Is Unknown

Assumptions for Finding a Confidence Interval for


a Mean When σ Is Unknown
1. The sample is a random sample.
2. Either or the population is normally
distributed if n < 30.
Example:
The data represent a sample of the
number of home fires started by
candles for the past several years.
(Data are from the National Fire
Protection Association.) Find the
99% confidence interval for the
mean number of home fires started
by candles each year.

5460 5900 6090 6310 7160


8440 9930
Visits to Networking Sites A sample of
10 networking sites for a specific month
has a mean of 26.1 and a standard
deviation of 4.2. Find the 99% confidence
interval of the true mean. Assume that
the variable is approximately normally
distributed
Confidence Intervals and Sample Size
for Proportions

The Third Quarter 2018 Social Weather Survey,


conducted from September 15-23, 2018, found
74% of adult Filipinos have much trust, in
President Rodrigo Duterte.

• The parameter 74% is called a proportion.


• A proportion represents a part of a whole.
• Proportions can also represent probabilities.
A point estimator of the population
proportion p is given by the statistic

Where:
= sample proportion
x = number of elements in the
sample having the same
characteristics
n = sample size
Example 1
In a random sample of 120 teachers,
48 of them have master’s degree.
Find the value of

proportion of the sample that DOES NOT possess


the characteristic of interest
The Central Limit Theorem for sample
proportion led to the following formula. This
can be used to calculate probabilities for the
sample proportion The formula can be used only if .

Where:
= sample proportion
p = population proportion
n = sample size
q=1–p
Example
If 15% of the batteries produced
daily by a company is defective,
what is the probability of randomly
selecting 70 batteries and finding 14
or more of them defective?
Formula for a Specific Confidence
Interval for a Proportion

Rounding Rule for a Confidence Interval for


a Proportion Round off to three decimal places.
Example
A sample of 150 students were
chosen at random from all Grade 11
students in a private school in
Pampanga. The sample indicated
that 75% of them were in favour of
having an educational trip. Find a)
95% and b) 99% confidence intervals
for the proportion of all students
who are in favor of having an
educational trip.
Formula for Minimum Sample Size Needed
for Interval Estimate of a Population
Proportion

• If necessary, round up to obtain a whole


number.
• if some approximation of is known (e.g., from a previous
study), that value can be used in the formula.
• if no approximation of is known, you should use This
value will give a sample size sufficiently large to
guarantee an accurate prediction, given the confidence
interval and the error of estimate.
Example
A researcher wishes to estimate,
with 95% confidence, the proportion
of people who
own a home computer. A previous
study shows that 40% of those
interviewed had a
computer at home. The researcher
wishes to be accurate within 2% of
the true
proportion. Find the minimum
sample size necessary.

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