Lecture 9: Confidence Interval

Prepared by Jauny Prajapati

Department of Mathematics, Bioinformatics & Computer Applications

MANIT, Bhopal

February 23, 2023

Confidence Intervals for the Mean (Large Samples)
Point Estimate for Population 𝜇

▶ A point estimate is a single value estimate for a population parameter. The most unbiased
point estimate of the population mean, 𝜇, is the sample mean 𝑥.¯
Ex: A random sample of 32 textbook prices (rounded to the nearest dollar) is taken from a local
college bookstore. Find a point estimate for the population mean, 𝜇

34 34 38 45 45 45 45
54 


56 65 65 66 67 67 68 74 





56 65 65 66 67 67 68 74 𝑥¯ = 74.22.

79 86 87 87 87 88 90 90 




94 95 96 98 98 101 110 121 


▶ The point estimate for the population mean of textbooks in the the bookstore is 74.22.
Interval Estimate

▶ An interval estimate is an interval or range of values used to estimate a population parameter.

▶ How confident do we want to be that the interval estimate contains the population mean, 𝜇?
25 Confidence Intervals with 95% Confidence
Level of Confidence

▶ The level of confidence 𝑐 is the probability that the interval estimate contains the population
parameter.

▶ The remaining area in the tails is 1 − 𝑐.

Critical Values Tables
Common Levels of Confidence

▶ If the level of confidence is 90%, this means that we are 90% confident that the interval
contains the population mean, 𝜇.
Common Levels of Confidence

▶ If the level of confidence is 95%, this means that we are 95% confident that the interval
contains the population mean, 𝜇.
Common Levels of Confidence

▶ If the level of confidence is 99%, this means that we are 99% confident that the interval
contains the population mean, 𝜇.
Margin of Error

▶ The difference between the point estimate and the actual population parameter value is called
the sampling error, i.e., 𝜇 − 𝑥.
¯
▶ Since 𝜇 is usually unknown, the maximum value for the error can be calculated using the level
of confidence.
▶ Given a level of confidence, the margin of error (sometimes called the maximum error of
estimate or error tolerance) 𝐸 is the greatest possible distance between the point estimate and
the value of the parameter it is estimating

𝜎
𝐸 = 𝑧 𝑐 𝜎𝑥¯ = 𝑧 𝑐 √ , when 𝑛 ≥ 30, the sample standard deviation 𝑠 can be used for 𝜎.
𝑛
Margin of Error

Ex: A random sample of 32 textbook prices is taken from a local college bookstore. The mean of
the sample is 𝑥¯ = 74.22, and the sample standard deviation is 𝑠 = 23.44. Use a 95% confidence
level and find the margin of error for the mean price of all textbooks in the bookstore.

𝜎 23.44
𝐸 = 𝑧 𝑐 √ = 1.96 √ ≈ 8.12, since 𝑛 ≥ 30, 𝑠 can be substituted for 𝜎 .
𝑛 32
▶ We are 95% confident that the margin of error for the population mean (all the textbooks in
the bookstore) is about $8.12.
Confidence Intervals for 𝜇
▶ A 𝑐−confidence interval for the population mean 𝜇 is
𝜎
𝑥¯ − 𝐸 < 𝜇 < 𝑥¯ + 𝐸, where 𝐸 = 𝑧 𝑐 √
𝑛
▶ The probability that the confidence interval contains 𝜇 is 𝑐.
Ex: A random sample of 32 textbook prices is taken from a local college bookstore. The mean of
the sample is 𝑥¯ = 74.22, the sample standard deviation is 𝑠 = 23.44, and the margin of error is
𝐸 = 8.12. Construct a 95% confidence interval for the mean price of all textbooks in the
bookstore.
Confidence Intervals for 𝜇 (𝑛 ≥ 30) or 𝜎 Known with a Normally
Distributed Population

Í
𝑥
Step 1: Find the sample statistics 𝑛 and 𝑥¯ 𝑥¯ =
√︃𝑛Í
( 𝑥− 𝑥¯ ) 2
Step 2: Specify 𝜎, if known. Otherwise, if 𝑛 ≥ 30, find the sample s= 𝑛−1
standard deviation 𝑠 and use it as an estimate for 𝜎
Step 3: Find the critical value 𝑧 𝑐 that corresponds to the given level of Use the Standard
confidence Normal Table
Step 4: Find the margin of error 𝐸 𝐸 = 𝑧 𝑐 √𝜎𝑛
Step 5: Find the left and right endpoints and form the confidence interval 𝑥¯ − 𝐸 < 𝜇 < 𝑥¯ + 𝐸
Confidence Intervals for 𝜇 (𝜎 Known)

Q A random sample of 25 students had a grade point average with a mean of 2.86. Past studies
have shown that the standard deviation is 0.15 and the population is normally distributed.
Construct a 90% confidence interval for the population mean grade point average.
Sol:

𝑛 = 25, 𝑥¯ = 2.86, 𝜎 = 0.15, 𝑧 𝑐 = 1.645

𝜎 0.15
𝐸 = 𝑧 𝑐 √ = 1.645 √ ≈ 0.05
𝑛 25
confidence interval: 𝑥¯ − 𝐸 < 𝜇 < 𝑥¯ + 𝐸 =⇒ 2.81 < 𝜇 < 2.91.

▶ With 90% confidence we can say that the mean grade point average for all students in the
population is between 2.81 and 2.91.
Minimum Sample Size

▶ Given a 𝑐−confidence level and a maximum error of estimate (𝐸) the minimum sample size 𝑛,
needed to estimate the population mean 𝜇 is
 𝑧 𝜎 2
𝑐
𝑛≥ .
𝐸
▶ If 𝜎 is unknown, you can estimate it using 𝑠 provided you have a preliminary sample with at
least 30 members.
Example

Q You want to estimate the mean price of all the textbooks in the college bookstore. How many
books must be included in your sample if you want to be 99% confident that the sample mean
is within $5 of the population mean?
Sol:

𝑥¯ = 74.22, 𝜎 ≈ 𝑠 = 23.44, 𝑧 𝑐 = 2.575

 𝑧 𝜎 2
𝑐
𝑛≥ ≈ 145.7.
𝐸
▶ You should include at least 146 books in your sample.
Problems

Q1 A random sample of 36 measurements was selected from a population with unknown mean 𝜇
and known standard deviation 𝜎 = 18. The sample mean is 𝑥¯ = 12. Calculate a 95%
confidence interval for 𝜇.
Q2 A random sample of n measurements was selected from a population with unknown mean 𝜇
and known standard deviation 𝜎. Calculate a 95% confidence interval for 𝜇 for each of the
following situations:
𝑛 = 49, 𝑥¯ = 28, 𝜎 = 28
𝑛 = 100, 𝑥¯ = 125, 𝜎 = 50
▶ Complete Problem 1, with a 99% confidence interval instead of a 95% confidence interval.
Degree of Freedom

▶ If you are asked to choose a pair of numbers (𝑥1 , 𝑥 2 ) at random, you have complete freedom of
choice with regard to each of the two numbers.
There are two degrees of freedom.
▶ If somehow you are asked to choose a pair of numbers whose sum is 7 (𝑥 1 + 𝑥 2 = 7), you are
free to choose only one number (for example, 𝑥 1 ). The other number has to be 𝑥 2 = 7 − 𝑥 1 .
There is only one degree of freedom.
▶ If you are further asked to make sure 𝑥 12 + 𝑥 22 = 5 then you have no freedom to choose the
number. 𝑥1 has to be 3 and 𝑥 2 has to be 4.
The degree of freedom is zero.
How to Determine Degree of Freedom?

▶ The number of degree of freedom = the number of original observations - the number of
parameters estimated from the observation
▶ For example, the number of degree of freedom for a variance is 𝑛 − 1, where 𝑛 is the number
of observations in a sample.
▶ The quantity: 𝑥 𝑖 − 𝑥¯ is called the 𝑖th deviation from the mean. Note that:
𝑛
∑︁
(𝑥 𝑖 − 𝑥)
¯ = 0 (sum of deviations is zero).
𝑖=1
𝑧− Distribution
▶ The 𝑧− distribution is a special case of the normal distribution with a mean of 0 and a standard
deviation of 1.

𝑥− 𝜇
▶ The formula for calculating a z-score is 𝑧 = 𝜎
Student’s 𝑡− Distribution

▶ When population standard deviation 𝜎 is not known and the sample is of small size (i.e.,
𝑛 < 30), we use 𝑡− distribution for the sampling distribution of the mean.
▶ Let 𝑥 1 , 𝑥 2 , . . . , 𝑥 𝑛 be a random sample of size 𝑛 from a normal distributed population with
mean 𝜇 and standard deviation 𝜎. Then student’s 𝑡 is defined by the statistic
𝑥¯ − 𝜇
𝑡= √ ,
𝑠/ 𝑛
where 𝑥¯ is the sample mean and 𝑠 is an unbiased estimate of the population standard deviation
with 𝜈 = (𝑛 − 1) degree of freedom.