MATH 105 – ENGINEERING DATA ANALYSIS FOR CE

Chapter 6

SAMPLING DISTRIBUTIONS AND POINT ESTIMATION OF PARAMETERS

If you want to figure out the distribution of the change people carry in their pockets, using the
central limit theorem and assuming your sample is large enough, you will find that the distribution
is normal and bell-shaped. (Credit: John Lodder)

Objectives:
By the end of this chapter, the student should be able to:

1. Explain the general concepts of Point Estimation

2. Explain important properties of Point Estimators.
3. Recognize central limit theorem problem.
4. Classify continuous word problems by their distributions.
5. Apply and interpret the central limit theorem for means and sums

6.1 POINT ESTIMATION OF PARAMETERS

Statistical inference is always focused on drawing conclusions about one or more

parameters of a population. An important part of this process is obtaining estimates of
the parameters.

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Suppose that we want to obtain a point estimate (a reasonable value) of a population

parameter. We know that before the data are collected, the observations are
considered to be random variables, say X1, X2, … Xn. Therefore, any function of the
observation, or any statistic, is also a random variable. For example, the sample mean 𝑋
and the sample variance S2 are statistics and they are also random variables.

Since a statistic is a random variable, it has a probability distribution. We call the

probability distribution of a statistic a sampling distribution. The notion of a sampling
distribution is very important and will be discussed and illustrated later in the chapter.

When discussing inference problems, it is convenient to have a general symbol to

represent the parameter of interest. We will use the Greek symbol 𝛳 (theta) to represent
the parameter. The symbol can 𝛳 represent the mean µ, the variance σ2, or any
parameter of interest to us. The objective of point estimation is to select a single
number, based on sample data, that is the most plausible value for 𝛳. A numerical
value of a sample statistic will be used as the point estimate.

In general, if X is a random variable with probability distribution f(x), characterized by

the unknown parameter 𝛳, and if X1, X2, … Xn is a random sample of size n from X, the
statistic is called a point estimator of 𝛳.

Note that is a random variable because it is a function of random variables. After the
sample has been selected, takes on a particular numerical value called the point
estimate of 𝛳.

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We may have several different choices for the point estimator of a parameter. For
example, if we wish to estimate the mean of a population, we might consider the
sample mean, the sample median, or perhaps the average of the smallest and largest
observations in the sample as point estimators. In order to decide which, point estimator
of a particular parameter is the best one to use, we need to examine their statistical
properties and develop some criteria for comparing estimators.

6.2 SAMPLING DISTRIBUTIONS & THE CENTRAL LIMIT THEOREM

Why are we so concerned with means? Two reasons are: they give us a middle
ground for comparison, and they are easy to calculate. In this chapter, you will study
means and the central limit theorem.

The central limit theorem (clt for short) is one of the most powerful and useful ideas
in all of statistics. There are two alternative forms of the theorem, and both alternatives
are concerned with drawing finite samples size n from a population with a known mean,
μ, and a known standard deviation, σ. The first alternative says that if we collect samples
of size n with a "large enough n," calculate each sample's mean, and create a histogram
of those means, then the resulting histogram will tend to have an approximate normal
bell shape.

The second alternative says that if we again collect samples of size n that are
"large enough," calculate the sum of each sample and create a histogram, then the
resulting histogram will again tend to have a normal bell-shape.

In either case, it does not matter what the distribution of the original population is, or
whether you even need to know it. The important fact is that the distribution of sample
means and the sums tend to follow the normal distribution.

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The size of the sample, n, that is required in order to be "large enough" depends on the
original population from which the samples are drawn (the sample size should be at least
30 or the data should come from a normal distribution). If the original population is far
from normal, then more observations are needed for the sample means or sums to be
normal. Sampling is done with replacement.

The observed data are also referred to as a random sample, but the use of the same
phrase should not cause any confusion. The assumption of a random sample is
extremely important. If the sample isn’t random and is based on judgment or flawed in
some other way, then statistical methods will not work properly and will lead to
incorrect decisions. The primary purpose in taking a random sample is to obtain
information about the unknown population parameters.

We have encountered statistics before. For example, if X, X2, . . ., Xn is a random sample

of size n, the sample mean 𝑋 , the sample variance S2, and the sample standard
deviation S are statistics. Since a statistic is a random variable, it has a probability
distribution.

I. The Central Limit Theorem for Sample Means (Averages)

Suppose X is a random variable with a distribution that may be known or unknown (it can
be any distribution). Using a subscript that matches the random variable, suppose:

 μX = the mean of X
 σX = the standard deviation of X

If you draw random samples of size n, then as n increases, the

random variable X ˉ which consists of sample means, tends to be
normally distributed

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The central limit theorem for sample means says that if you keep drawing larger and
larger samples (such as rolling one, two, five, and finally, ten dice) and calculating their
means, the sample means form their own normal distribution (the sampling distribution).
The normal distribution has the same mean as the original distribution and a variance
that equals the original variance divided by, the sample size. The variable n is the number
of values that are averaged together, not the number of times the experiment is done.

To put it more formally, if you draw random samples of size n, the distribution of the
random variable X, which consists of sample means, is called the sampling distribution of
the mean. The sampling distribution of the mean approaches a normal distribution as n,
the sample size, increases. The random variable X has a different z-score associated with
it from that of the random variable X. The mean x is the value of X in one sample.

 μX is the average of both X and 𝑋.

 σx = σx/√n = standard deviation of X and is called the
standard error of the mean.

Example 6.1

An unknown distribution has a mean of 90 and a standard deviation of 15. Samples of

size n = 25 are drawn randomly from the population.

a) Find the probability that the sample mean is between 85 and 92.
b) Find the value that is two standard deviations above the expected value, 90, of
the sample mean.

Example 6.2

The length of time, in hours, it takes an "over 40" group of people to play one soccer
match is normally distributed with a mean of two hours and a standard deviation of 0.5
hours. A sample of size n = 50 is drawn randomly from the population. Find the probability
that the sample mean is between 1.8 hours and 2.3 hours.

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Example 6.3

In a recent study reported Oct. 29, 2012 on the Flurry Blog, the mean age of tablet users is
34 years. Suppose the standard deviation is 15 years. Take a sample of size n = 100.

a) What are the mean and standard deviation for the sample mean ages of tablet users?

b) What does the distribution look like?

c) Find the probability that the sample mean age is more than 30 years (the reported
mean age of tablet users in this particular study).

d) Find the 95th percentile for the sample mean age (to one decimal place).

Example 6.4

The mean number of minutes for app engagement by a tablet user is 8.2 minutes. Suppose
the standard deviation is one minute. Take a sample of 60.

a. What are the mean and standard deviation for the sample mean number of app
engagement by a tablet user?

b. Find the 90th percentile for the sample mean time for app engagement for a tablet user.
Interpret this value in a complete sentence.

c. Find the probability that the sample mean is between eight minutes and 8.5 minutes.

II. The Central Limit Theorem for Sums

Suppose X is a random variable with a distribution that may be known or unknown (it can
be any distribution) and suppose:

 μX = the mean of Χ
 σx = the standard deviation of X

If you draw random samples of size n, then as n increases, the random variable ΣX
consisting of sums tends to be normally distributed and ΣΧ ~ N((n)(μΧ), ( √n )(σΧ)).

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The central limit theorem for sums says that if you keep drawing larger and larger samples
and taking their sums, the sums form their own normal distribution (the sampling
distribution), which approaches a normal distribution as the sample size increases. The
normal distribution has a mean equal to the original mean multiplied by the sample size
and a standard deviation equal to the original standard deviation multiplied by the
square root of the sample size.

The random variable ΣX has the following z-score associated with it:

a. Σx is one sum.

b.

 (n)(μX) = the mean of ΣX

 ( √n)(σX) = standard deviation of ΣX

Example 6.5

An unknown distribution has a mean of 90 and a standard deviation of 15. A

sample of size 80 is drawn randomly from the population.

a. Find the probability that the sum of the 80 values (or the total of the 80 values)
is more than 7,500.

b. Find the sum that is 1.5 standard deviations above the mean of the sums.

Example 6.6

In a recent study reported Oct. 29, 2012 on the Flurry Blog, the mean age of tablet
users is 34 years. Suppose the standard deviation is 15 years. The sample of size is 50.

a. What are the mean and standard deviation for the sum of the ages of tablet users?
What is the distribution?

b. Find the probability that the sum of the ages is between 1,500 and 1,800 years.

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It is important for you to understand when to use the central limit theorem. If you are
being asked to find the probability of the mean, use the clt for the mean. If you are being
asked to find the probability of a sum or total, use the clt for sums. This also applies to
percentiles for means and sums.

NOTE:
If you are being asked to find the probability of an individual value, do not use the clt.
Use the distribution of its random variable.

Law of Large Numbers

The law of large numbers says that if you take samples of larger and larger size from any
population, then the mean x ˉ of the sample tends to get closer and closer to μ. From the
central limit theorem, we know that as n gets larger and larger, the sample means follow
a normal distribution. The larger n gets, the smaller the standard deviation gets.
(Remember that the standard deviation for X ˉ is σ/√n.)

This means that the sample mean x ˉ must be close to the population mean μ. We can
say that μ is the value that the sample means approach as n gets larger. The central limit
theorem illustrates the law of large numbers.

Example 6.7

A study involving stress is conducted among the students on a college campus. The
stress scores follow a uniform distribution with the lowest stress score equal to one and
the highest equal to five. Using a sample of 75 students, find:

a. The probability that the mean stress score for the 75 students is less than two.
b. The 90th percentile for the mean stress score for the 75 students.
c. The probability that the total of the 75 stress scores is less than 200.
d. The 90th percentile for the total stress score for the 75 students.

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Example 6.8

In the United States, someone is sexually assaulted every two minutes, on average,
according to a number of studies. Suppose the standard deviation is 0.5 minutes and the
sample size is 100.

a. Find the median, the first quartile, and the third quartile for the sample mean time of
sexual assaults in the United States.

b. Find the median, the first quartile, and the third quartile for the sum of sample times of
sexual assaults in the United States.

c. Find the probability that a sexual assault occurs on the average between 1.75 and 1.85
minutes.

d. Find the value that is two standard deviations above the sample mean.

e. Find the IQR for the sum of the sample times.

6.3 GENERAL CONCEPTS OF POINT ESTIMATION

An estimator should be “close” in some sense to the true value of the unknown
parameter. Formally, we say that is an unbiased estimator of if the expected value
of is equal to . This is equivalent to saying that the mean of the probability distribution
of (or the mean of the sampling distribution of ) is equal to .

When an estimator is unbiased, the bias is zero; that is,

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Variance of a Point Estimator

Suppose that 1 and 2 are unbiased estimators of . This indicates that the distribution
of each estimator is centered at the true value of . However, the variance of these
distributions may be different. Figure 7-1 illustrates the situation. Since 1 has a smaller
variance than 2 the estimator 1 is more likely to produce an estimate close to the true
value . A logical principle of estimation, when selecting among several estimators, is to
choose the estimator that has minimum variance.

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In a sense, the MVUE is most likely among all unbiased estimators to produce an
estimate 𝛳 that is close to the true value of ϴ. It has been possible to develop
methodology to identify the MVUE in many practical situations. While this methodology
is beyond the scope of this book, we give one very important result concerning the
normal distribution.

Standard Error: Reporting a Point Estimate

When the numerical value or point estimate of a parameter is reported, it is usually

desirable to give some idea of the precision of estimation. The measure of precision
usually employed is the standard error of the estimator that has been used.

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Mean Squared Error of an Estimator

Sometimes it is necessary to use a biased estimator. In such cases, the mean square error
of the estimator can be important. The mean square error of an estimator is the
expected squared difference between and .

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Example 6.9

A computer software package was used to calculate some numerical summaries of

a sample of data. The results are displayed here:

a. Fill in the missing quantities.

b. What is the estimate of the mean of the population from which this sample was
drawn?

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