CHAPTER 4: ESTIMATION OF

PARAMETERS
 The process of giving conclusions about
parameters in the population are made based
on sample data is called statistical
inference. There are two areas of statistical
inference: estimation and hypothesis
testing.
 An estimate is a value or a range of values that approximate a
parameter. It is based on sample statistics computed from sample
data.
Estimation is the process of estimating parameter values from
information obtained from a sample.
Examples of estimation:
1.One out of 10 Filipino women is currently dieting.
2.Twenty-two percent of Filipinos have flown on commercial airlines.
3.The average salary of Filipino workers is ₱15, 000.00.
4.The average age of senior high school students is within 16-18
years old.
 Computing the Point Estimate of a Population

The arithmetic average computed from the table is

also known as the mean. Suppose we proceed to
finding the mean of all means. The final result is a
number that is called point estimate of the mean
where the samples come from. In symbols,
ഥ𝒙ഥ = 𝝁𝒙ഥ = 𝝁
𝒙
 Example : Suppose our asst. principal wishes to estimate the
average age of students attending classes this semester. The
asst. principal could select the random sample of 100 students
and find the average age of these students, say, 17.4 years.
From the sample mean, the asst. principal could infer that the
average age of all senior high school students of ANS is 17.4
years. This type of estimate is called a point estimate.
 A point Estimate is a specific numerical value
estimate of a parameter. The best point estimate of
the population mean 𝜇 is the sample mean 𝑋.ത
Sample measures such as the sample standard
deviation (s) and sample mean (𝑋)ത are used to
estimate the population standard deviation (𝜎) and
population mean (𝜇) respectively. They are called
estimators.
 Three Properties of a Good Estimator
1.The estimator should be an unbiased estimator. That is the
expected value or the mean of the estimates obtained from
samples of a given size is equal to the parameter being estimated.
2.The estimator should be consistent. For a consistent estimator, as
sample size increases, the value of the estimator approaches the
value of the parameter estimated.
3.The estimator should be a relatively efficient estimator. That is of
all the statistics that can be used to estimate a parameter, the
relatively efficient estimator has the smallest variance.
 Three kinds of estimation:

1.Under estimate (Negative Bias) – the estimate value is less

than the parameter value.
2.On target estimate (Unbiased) - The estimate value is equal
to the parameter value.
3.Overestimate (Positive Bias) – The estimate value is bigger
than the parameter value.
Confidence Interval for the Mean when Population Standard
Deviation 𝝈 is Known

An interval Estimate of a parameter is an interval or a range

of values used to estimate the parameter. This estimate may or
may not contain the value of the parameter being estimated.

Example : An interval estimate for the average age of all shs

students might be 16.3 < 𝜇 < 17.9
A confidence Interval is a specific interval estimate of a
parameter determined by using data obtained from a sample
and by using the specific confidence level of estimate.

Example: 99% confidence interval for the mean age of all shs
students might be 16.3 < 𝜇 < 17.9
 The Confidence Level of an interval estimate of a
parameter is the probability that the interval estimate will
contain the parameter, assuming that a large number of
samples are selected and that the estimation process on the
same parameter is repeated.
Example: 90% or 0.9000 , 95% or 0.9500 , 99% or 0.9900,
etc.
 The z-values determine the confidence interval estimates. Examples,
the middle 95% is the proportion of the region above 𝑧 = −1.96 and
below 𝑧 = 1.96. These z-values determine the 95% confidence interval
estimates. Similarly, 99% is the proportion of the area bound by 𝑧 =
− 2.58 and 𝑧 = 2.58. These z-values are called confidence coefficients.
They are also called critical values. We may also say that the standard
normal z is the test statistic used to calculate the interval boundaries.
Under the normal curve, the total proportion of the area to
the left of 𝑧 = −1.96 and to the right of 𝑧 = 1.96 is 𝑋ത −
𝜎
1.96( ) is denoted by 𝜶 (Greek letter alpha). In statistical
𝑛
analysis, we often use 𝛼 to indicate our level of confidence. If
the confidence is 95%, then 𝛼 is the remaining 5% or 0.05. This
area is outside the boundaries of the interval estimate and is
𝛼
distributed on both tails of the curve. The area at each tail is .
2
This is indicated in the symbol 𝑍𝛼 (read “zee sub alpha over
2
two”).
The general formula for confidence interval for large
samples (𝒏 ≥ 𝟑𝟎) is

𝜎 𝜎
𝑋ത − 𝑍𝛼 < 𝜇 < 𝑋ത + 𝑍𝛼
2 𝑛 2 𝑛
Lower Confidence Upper Confidence
boundary/limit boundary/limit
 𝜎
In general formula for confidence interval, the term 𝑍𝛼 is
2 𝑛
called margin of error, denoted by E which is defined as the
maximum likely difference between the observed sample mean and
the true value of the population mean. Thus, another way of writing
the formula for finding the confidence interval for the population
parameter is:
ഥ−𝑬<𝝁<𝑿
𝑿 ഥ+𝑬

𝜎
Where: 𝐸 = 𝑍𝛼
2 𝑛
 Critical Value/ Critical Value/
Confidence Confidence Confidence Confidence
𝛼 Coefficient 𝛼 Coefficient
Level Level
𝑍𝛼 𝑍𝛼
2 2

90% 0.10 ±1.65 80% 0.20 ±1.28

95% 0.05 ±1.96 98% 0.02 ±2.33
99% 0.01 ±2.58 85% 0.15 ±1.44
76% 0.24 ±1.18 97% 0.03 ±2.17
83% 0.17 ±1.37 88% 0.12 ±1.56
92% 0.08 ±1.75 81% 0.19 ±1.31
 Assumptions for Finding a Confidence Interval for a Mean
When 𝝈 𝐢𝐬 𝐊𝐧𝐨𝐰𝐧
1.The sample is a random sample
2.Either 𝑛 ≥ 30 or the population is normally distributed if
𝑛 < 30.
Rounding Rule for a Confidence Interval for a Mean
When you are computing for a confidence interval for a population mean by
using raw data, round off to one more decimal place than the number of
decimal places in the original data.

When you are computing for a confidence interval for a population mean by
using a sample mean and a standard deviation, round off to the same number of
decimal places as given for the mean.
Applications to Problem Solving
Example 1: Days It Takes to Sell an Aveo
A researcher wishes to estimate the number of days it
takes an automobile dealer to sell a Chevrolet Aveo. A
sample of 50 cars had a mean time on dealer’s lot of 54
days. Assume the population standard deviation to be 6.0
days. Find the best point estimate of the population mean
and 95% confidence interval of the population.
Solution
1.Identify the given:
𝑋ത = 54 𝑑𝑎𝑦𝑠
confidence interval = 95%
𝑍𝛼 = 1.96
2
𝜎=6
The best point estimate of the population mean is the
sample mean 𝑋ത = 54 𝑑𝑎𝑦𝑠.
 𝜎
•Solve for Margin of Error (E) using the formula 𝐸 = 𝑍𝛼
𝜎 2 𝑛
𝐸 = 𝑍𝛼
2 𝑛
6
=1.96 50
E =1.7
Substitute 𝑋ത 𝑎𝑛𝑑 𝐸 in the formula of finding the confidence interval
ഥ−𝑬<𝝁<𝑿
𝑿 ഥ+𝑬
54 − 1.7 < 𝜇 < 54 + 1.7
52.3 < 𝜇 < 55.7
𝟓𝟐 < 𝝁 < 𝟓𝟔
With 95% confidence that the interval between 52.3 and 55.7 days
does contain the population mean, based on a sample of 50
automobiles.
Example 2: GPA’s of Entering Mathematics Majors
A random sample of 40 entering Mathematics majors has
the following GPA’s. Assume that 𝜎 = 0.46.

4.0 3.5 3.0 3.3 3.8 3.1 3.6 4.0 3.9 3.5
3.2 3.0 3.5 3.2 3.0 3.2 4.0 3.0 3.4 3.0
3.0 3.8 5.6 3.0 3.2 3.5 3.2 2.8 3.3 3.1
3.2 2.9 3.0 2.8 4.0 3.7 3.0 3.3 3.2 2.8
Estimate the true mean GPA with 99% confidence.
Solution
1.Given: 𝑋ത = ?
confidence interval = 99%
𝑍𝛼 = 2.58
2
𝜎 = 0.46
𝑛 = 40
1.Find the Point Estimate 𝑋ത
4.0 + 3.2 + 3.0 + 3.2 + 3.5 + ⋯ + 2.8
𝑋ത =
40
ഥ = 𝟑. 𝟑7 ( the sample mean)
𝑿
•Solve for E
𝜎
𝐸 = 𝑍𝛼
2 𝑛
0.46
=2.58 40
E =0.19
Substitute 𝑋ത 𝑎𝑛𝑑 𝐸 in the formula of finding the confidence interval
ഥ−𝑬<𝝁<𝑿
𝑿 ഥ+𝑬
3.37 − 0.19 < 𝜇 < 3.37 + 0.19
𝟑. 𝟏𝟖 < 𝝁 < 𝟑. 𝟔
With 99% confidence that the interval between 3.15 and 3.53
contains the true mean G P A of the population based on the
sample G P A of 40 entering mathematics majors.
1.A survey of 30 emergency room patients found that
the average waiting time for treatment was 174.3
minutes. Assuming that the population standard
deviation is 46.5 minutes, find the best point
estimate of the population mean and the 99%
confidence interval of the population mean.
2. In a recent study of 35 eleventh-grade students, the mean
number of hours per week that they played video games was 16.6
hours. The standard deviation of the population was 2.8.
a. Find the best point estimate of the population mean.
b.Find the 95% confidence interval of the mean of the time playing
video games.
c. Find the 99% confidence interval of the mean of the time playing
video games.
d.Which is larger? Explain why?