Chapter 7

Sampling and Sampling

Distributions

McGraw-Hill/Irwin

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

St. Andrews
St. Andrews University receives 900
applications annually from prospective
students. The application forms contain a
variety of information including the individuals
scholastic aptitude test (SAT) score and
whether or not the individual desires oncampus housing.

St. Andrews
l

To get numerical/statistical information from

the population (for example, the mean scores
of all the applicants)
l
l

Census of all 900 applicants

Survey of a portion of the applicants (ex. 30)

St. Andrews
l

Taking a Census of the 900 Applicants

l

SAT Scores
l

Population Mean

900

= 990

Population Standard Deviation

=
l

2
(
x

)
i

900

Applicants Wanting On-Campus Housing

l

Population Proportion

648
p=
= .72
900

= 80

St. Andrews
l

Taking a survey of 30 people

Random
No. Number
1
744
2
436
3
865
4
790
5
835
.
.
30
685

Applicant
SAT Score
Connie Reyman
1025
William Fox
950
Fabian Avante
1090
Eric Paxton
1120
Winona Wheeler
1015
.
.
Kevin Cossack
965

On-Campus
Yes
Yes
No
Yes
No
.
No

St. Andrews
l

Population
x

900

(x

Sample

900

29,910
=
= 997
30
30

= 990
2

x=

= 80

648
p=
= .72
900

s=

2
(
x

x
)
i

29

163,996
=
= 75.2
29

p = 20 30 = .68

Sampling Error
The absolute value of the difference
between an unbiased point estimate and
the population parameter it estimates is
called the sampling error.
l For the case of a sample mean estimating
a population mean:
l

Sampling Error = | x |

St. Andrews
l

Population
x

900

(x

Sample

900

29,910
=
= 997
30
30

= 990
2

x=

= 80

648
p=
= .72
900

s=

2
(
x

x
)
i

29

163,996
=
= 75.2
29

p = 20 30 = .68

Sampling Distribution of the

Sample Mean
The sampling distribution of the sample
mean x is the probability distribution of the
population of the sample means obtainable
from all possible samples of size n from a
population of size N

Example: Sampling Annual

% Return of 6 Stocks
STOCKS
% RETURN

A
B
C
D
E
F
10% 20% 30% 40% 50% 60%

Assume that we have a population of 6 stocks

(shown in the table)
Computing for the population parameters, we get:
N = 6
= 35%
= 17.078%

Example: Sampling Annual

% Return of 6 Stocks
Lets try taking a random sample of size n =
1.
l We can take 6 samples (6C1) from the
population, each with the same probability of
being chosen.
l Thus, each would have a 1/6 chance of being
chosen.
l

Example: Sampling Annual

% Return of 6 Stocks
Stock
Stock A
Stock B
Stock C
Stock D
Stock E
Stock F
Total

% Return
10
20
30
40
50
60

Frequency
1
1
1
1
1
1
6

Relative
Frequency
1/6
1/6
1/6
1/6
1/6
1/6
1

Example: Sampling Annual

% Return of 6 Stocks

Example: Sampling Annual

% Return of 6 Stocks
Now, lets try taking samples of size n = 2.
l We can take a total of 15 samples (6C2) from
the population of 6 stocks.
l Calculating the sample mean of each and
every sample, we get
l

Example: Sampling Annual

% Return of 6 Stocks
Sample

% Returns

Sample
Mean

Sample % Returns

Sample
Mean

10%, 20%

15%

20%, 60%

40%

10%, 30%

20%

10

30%, 40%

35%

10%, 40%

25%

11

30%, 50%

40%

10%, 50%

30%

12

30%, 60%

45%

10%, 60%

35%

13

40%, 50%

45%

20%, 30%

25%

14

40%, 60%

50%

20%, 40%

30%

15

50%, 60%

55%

20%, 50%

35%

Example: Sampling Annual

% Return of 6 Stocks
Sample
Mean
15
20
25
30
35
40
45
50
55

Relative
Frequency Frequency
1
1/15
1
1/15
2
2/15
2
2/15
3
3/15
2
2/15
2
2/15
1
1/15
1
1/15

Example: Sampling Annual

% Return of 6 Stocks

Observations
l
l

Although the population of N = 6 stock

returns has a uniform distribution,
the histogram of n = 15 sample mean
returns:
1. Seem to be centered over the sample
mean return of 35%, and
2. Appears to be bell-shaped and less
spread out than the histogram of
individual returns

Example: NYSE Stocks

l Population

of returns of all 1,815 stocks

listed on NYSE for 1987
l

The mean rate of return was 3.5% with

a standard deviation of 26%

Example: NYSE Stocks

Example: NYSE Stocks

l

Draw all possible random samples of size

n = 5 and calculate the sample mean
return of each

Example: Sampling All

Stocks

Results from Sampling All Stocks

l

Observations
l
l

Both histograms appear to be bell-shaped and

centered over the same mean of 3.5%
The histogram of the sample mean returns looks
less spread out than that of the individual
returns

Statistics
l
l

Mean of all sample means: x = = -3.5%

Standard deviation of all possible means:

26
x =
=
= 11.63%
n
5

And the Empirical Rule

l

The empirical rule holds for the sampling

distribution of the sample mean
l
l
l

68.26% = 1 Standard Deviation from the Mean

95.44% = 2 Standard Deviations from the Mean
99.73% = 3 Standard Deviations from the Mean

Properties of the Sampling

Distribution of the Sample Mean
If the population being sampled is normal,
then so is the sampling distribution of the
sample mean, x
l The mean x of the sampling distribution of x
is x =
l

That is, the mean of all possible sample means

is the same as the population mean

7-25

Properties of the Sampling

Distribution of the Sample Mean #2
l

The variance 2x of the sampling distribution

of x is
2
2
x

=
l

That is, the variance of the sampling

distribution of x is
l

Directly proportional to the variance of the

population
Inversely proportional to the sample size
7-26

Properties of the Sampling

Distribution of the Sample Mean #3
l

The standard deviation x of the sampling

distribution of x is

x =
n

That is, the standard deviation of the

sampling distribution of x is
l
l

Directly proportional to the standard deviation of

the population
Inversely proportional to the square root of the
sample size
7-27

Notes
l

The formulas for 2x and x hold if the sampled population

is infinite
The formulas hold approximately if the sampled population
is finite but if N is much larger (at least 20 times larger)
than the n (N/n 20)
l x is the point estimate of , and the larger the sample size
n, the more accurate the estimate
l Because as n increases, x decreases (/n)
l Additionally, as n increases, the more representative
is the sample of the population

So, to reduce x, take bigger samples!

7-28

Finite Populations
l

If a finite population of size N is sampled randomly

and without replacement, must use the finite
population correction to calculate the correct
standard deviation of the sampling distribution of the
sample mean
l

If N is less than 20 times the sample size, that is,

if N/n < 20
Otherwise

but instead x <

n
7-29

Finite Populations
l

Continued

The finite population correction is

N n
N 1

The standard error is

x =

N n
N 1

7-30

Effect of Sample Size

7-31

Central Limit Theorem

l

If the population is normally distributed

l

The sampling distribution is normal regardless of

the sample size n

But if population is non-normal, what is the

shape of the sampling distribution of the
sample mean?
l

The sampling distribution is approximately normal

if the sample is large enough, even if the
population is non-normal (Central Limit Theorem)

7-32

The Central Limit Theorem

Continued

No matter the probability distribution that

describes the population, if the sample size n
is large enough, the population of all possible
sample means is approximately normal with
mean x= and standard deviation x=/n
l Further, the larger the sample size n, the
closer the sampling distribution of the sample
mean is to being normal
l

In other words, the larger n, the better the

approximation
7-33

Central Limit Theorem

Random Sample (x1, x2, , xn)

as n large
Sampling
Distribution of
Sample Mean

Population Distribution

(, )
(right-skewed)

= , x =
(nearly normal)

How Large?
l
l

How large is large enough?

If the sample size is at least 30, then for most
sampled populations, the sampling distribution of
sample means is approximately normal
l

Here, if n is at least 30, it will be assumed that the

sampling distribution of x is approximately normal
l If the population is normal, then the sampling
distribution of x is normal regardless of the
sample size

7-36

Car Mileage Statistical Inference

Recall from Chapter 3 example, x = 31.56
mpg for a sample of size n = 50 and = 0.8
l The minimum standard for a tax credit is a
population mean mileage of at least 31 mpg
l We want to know if the automaker is qualified
for the tax credit
l If the population mean is exactly 31, what is
the probability of observing a sample mean
that is greater than or equal to 31.56?
l

7-37

Car Mileage Statistical

Inference #2
l

Calculate the probability of observing a

sample mean that is greater than or equal to
31.56 mpg if = 31 mpg
l

Want P(x > 31.56 if = 31)

Compute for the standard error

0.8
x =
=
= 0.1131
n
50
7-38

Car Mileage Statistical

Inference #3
l

Then

# 31.56 x &
P ( x 31.56 if = 31) = P % z
(
x
$
'
# 31.56 31 &
= P%z
(
$
0.1131 '
= P ( z 4.95)

But z = 4.95 is off the standard normal table

l The largest z value in the table is 3.99, which
has a right hand tail area of 0.00003
l

7-39

Car Mileage Statistical

Inference #4
l

z = 4.95 > 3.99, so P(z 4.95) < 0.00003

l

l
l

If = 31 mpg, fewer than 3 in 100,000 of all samples have

a mean as large as observed

Difficult to believe such a small chance would occur,

so conclude that there is strong evidence that
does not equal 31 mpg
And, is, in fact, actually larger than 31 mpg
There is enough evidence to give a tax credit to the
automaker

7-40

Example
l

Suppose that we will randomly select a sample

of 64 measurements from a population having a
mean equal to 20 and a standard deviation
equal to 4.
l
l
l
l

Describe the shape of the sampling distribution of the

sample mean.
Find the mean and the standard deviation of the
sampling distribution of the sample mean.
Calculate the probability that the sample mean is
greater than 21.
Calculate the probability that the sample mean is less
than 19.385.

Exercise: Pizza Delivery

l

When a pizza restaurants delivery process is

operating effectively, pizzas are delivered in an
average of 45 minutes with a standard deviation
of 6 minutes. To monitor its delivery process, the
restaurant randomly selects five pizzas each
night and records their delivery times. The
population of all delivery times on a given
evening is known to be normally distributed.
Suppose that a sample gave a mean of 55
minutes. Would you say that the restaurants
delivery process is operating effectively?

Exercise: Bank Customer

Waiting Time Case
l

A bank manager wants to show that the new

system reduces typical customer waiting times to
less than six minutes. One way to do this is to
demonstrate that the mean of the population of
all customer waiting times is less than 6. We
wish to investigate whether the sample of 100
waiting times provides evidence to support the
claim that is less than 6. The mean of the
sample of 100 waiting times is 5.46 minutes, and
assume that of the population of all customer
waiting times is known to be 2.47.

Exercise: Bank Customer

Waiting Time Case
a)

b)

c)

d)

Consider the population of all sample means obtained

from a sample of 100 waiting times. What is the shape of
this population of sample means?
Find the mean and standard deviation of the population of
all possible sample means when we assume that is
equal to 6.
The sample mean that we have actually observed is 5.46.
Assuming that = 6, find the probability of observing a
sample mean that is less than or equal to 5.46.
Is it more reasonable to believe that = 6 or is less than
6? What do you conclude about whether the new system
has reduced the typical customer waiting time to less than
6 minutes?

7.2 Sampling Distribution of the

Sample Proportion
l

The probability distribution of all possible sample

proportions is the sampling distribution of the sample
proportion
If a random sample of size n is taken from a
population, then the sampling distribution of the
sample proportion is
l

Approximately normal, if n is large enough

l

l
l

n can be considered large if both np and n(1 p) are at least 5

Has a mean that equals =

(1 )
Has standard deviation =
p
n

Where is the population proportion and p is the

sampled proportion
7-45

Sampling Distribution of the

Sample Proportion
l

If the population is finite and N/n < 20,

l

The finite population correction is

N n
N 1
l

The standard error of the proportion is

p =

(1 ) N n
n

N 1
7-46

Example: Sample Proportion

l

Suppose that we will randomly select a

sample of n = 100 units from a population
and that we will compute the sample
proportion
p of these units that fall into a
category of interest. If the true population
proportion p equals 90%:
l
l

Describe the shape of the sampling distribution of

Find the mean and the standard deviation of the
sampling distribution of
p

Example: Sample Proportion

l

Calculate the following probabilities about the

sample proportion p . In each case sketch
the sampling distribution and the probability.
l
l
l

P(
p 0.96)
p 0.945)
P(0.855
p 0.915)
P(

Exercise: Bank of America

l

Historically, the percentage of Bank of America

customers expressing customer delight has
been 48%. Suppose we want to justify the claim
that more than 48% of all current Bank of
America customers express customer delight. To
do so, we did a survey of 350 Bank of America
customers, out of which, 189 said they were
delighted. Can we say that the percentage of
customers expressing delight is, indeed, greater
than 48%?