Point estimate and confidence

interval estimate
 Definitions

 An estimator of a population parameter is

 a random variable that depends on sample
information . . .
 whose value provides an approximation to this
unknown parameter

 A specific value of that random variable is

called an estimate
 Point and Interval Estimates

 A point estimate is a single number,

 a confidence interval provides additional
information about variability

Lower Upper
Confidence Confidence
Point Estimate Limit
Limit
Width of
confidence interval
 Point Estimates

We can estimate a with a Sample

Population Parameter … Statistic
(a Point Estimate)

Mean μ x
Proportion P p̂
 Confidence Intervals

 How much uncertainty is associated with a

point estimate of a population parameter?

 An interval estimate provides more

information about a population characteristic
than does a point estimate

 Such interval estimates are called confidence

intervals
 Confidence Interval Estimate
 An interval gives a range of values:
 Takes into consideration variation in sample
statistics from sample to sample
 Based on observation from 1 sample
 Gives information about closeness to
unknown population parameters
 Stated in terms of level of confidence
 Can never be 100% confident
 Confidence Interval and
Confidence Level

 If P(a <  < b) = 1 -  then the interval from a

to b is called a 100(1 - )% confidence
interval of .
 The quantity (1 - ) is called the confidence
level of the interval ( between 0 and 1)
 In repeated samples of the population, the true value
of the parameter  would be contained in 100(1 - )%
of intervals calculated this way.
 The confidence interval calculated in this manner is
written as a <  < b with 100(1 - )% confidence
 Estimation Process

Random Sample I am 95%

confident that
μ is between
Population Mean 40 & 60.
(mean, μ, is X = 50
unknown)

Sample
 Confidence Level, (1-)
(continued)
 Suppose confidence level = 95%
 Also written (1 - ) = 0.95
 A relative frequency interpretation:
 From repeated samples, 95% of all the
confidence intervals that can be constructed will
contain the unknown true parameter
 A specific interval either will contain or will
not contain the true parameter
 No probability involved in a specific interval
 General Formula

 The general formula for all confidence

intervals is:

Point Estimate ± (Reliability Factor)(Standard Error)

 The value of the reliability factor

depends on the desired level of
confidence
 Confidence Intervals

Confidence
Intervals

Population Population
Mean Proportion

σ2 Known σ2 Unknown
 Confidence Interval for μ
(σ2 Known)
( X  μ) ( X  μ)
 Assumptions Z
σX

σ
 Population variance σ2 is known n

 Population is normally distributed

 If population is not normal, use large sample

 Confidence interval estimate:

σ σ
x  z α/2  μ  x  z α/2
n n
(where z/2 is the normal distribution value for a probability of /2 in
each tail)
 Margin of Error
 The confidence interval,
σ σ
x  z α/2  μ  x  z α/2
n n

 Can also be written as x  ME

where ME is called the margin of error

σ
ME  z α/2
n

 The interval width, w, is equal to twice the margin of

error
 Reducing the Margin of Error

σ
ME  z α/2
n

The margin of error can be reduced if

 the population standard deviation can be reduced (σ↓)

 The sample size is increased (n↑)

 The confidence level is decreased, (1 – ) ↓

 Finding the Reliability Factor, z/2
 Consider a 95% confidence interval:

1    .95

α α
 .025  .025
2 2

Z units: z = -1.96 0 z = 1.96

Lower Upper
X units: Confidence Point Estimate Confidence
Limit Limit

 Find z.025 = 1.96 from the standard normal distribution table

 Common Levels of Confidence
 Commonly used confidence levels are 90%,
95%, and 99%
Confidence
Confidence
Coefficient, Z/2 value
Level
1 
80% .80 1.28
90% .90 1.645
95% .95 1.96
98% .98 2.33
99% .99 2.58
99.8% .998 3.08
99.9% .999 3.27
 Intervals and Level of Confidence
Sampling Distribution of the Mean

/2 1  /2
x
Intervals μx  μ
extend from x1
σ x2 100(1-)%
xz of intervals
n
to constructed
σ contain μ;
xz
n 100()% do
Confidence Intervals not.
 Example
 A sample of 11 circuits from a large normal
population has a mean resistance of 2.20
ohms. We know from past testing that the
population standard deviation is 0.35 ohms.

 Determine a 95% confidence interval for the

true mean resistance of the population.
 Example
(continued)

 A sample of 11 circuits from a large normal

population has a mean resistance of 2.20
ohms. We know from past testing that the
population standard deviation is .35 ohms.
σ
 Solution: x z
n

 2.20  1.96 (.35/ 11 )

 2.20  .2068

1.9932  μ  2.4068
 Interpretation
 We are 95% confident that the true mean
resistance is between 1.9932 and 2.4068
ohms
 Although the true mean may or may not be
in this interval, 95% of intervals formed in
this manner will contain the true mean
 Confidence Intervals

Confidence
Intervals

Population Population
Mean Proportion

σ2 Known σ2 Unknown
 Student’s t Distribution

 Consider a random sample of n observations

 with mean x and standard deviation s
 from a normally distributed population with mean μ

 Then the variable

x μ
t
s/ n
follows the Student’s t distribution with (n - 1) degrees
of freedom
 Confidence Interval for μ
(σ2 Unknown)

 If the population standard deviation σ is

unknown, we can substitute the sample
standard deviation, s
 This introduces extra uncertainty, since
s is variable from sample to sample
 So we use the t distribution instead of
the normal distribution
 Confidence Interval for μ
(σ Unknown)
(continued)
 Assumptions
 Population standard deviation is unknown
 Population is normally distributed
 If population is not normal, use large sample
 Use Student’s t Distribution
 Confidence Interval Estimate:
S S
x  t n-1,α/2  μ  x  t n-1,α/2
n n
where tn-1,α/2 is the critical value of the t distribution with n-1 d.f.
and an area of α/2 in each tail:
P(tn1  t n1,α/2 )  α/2
 Student’s t Distribution

 The t is a family of distributions

 The t value depends on degrees of
freedom (d.f.)
 Number of observations that are free to vary after
sample mean has been calculated

d.f. = n - 1
 Student’s t Distribution
Note: t Z as n increases

Standard
Normal
(t with df = ∞)

t (df = 13)
t-distributions are bell-
shaped and symmetric, but
have ‘fatter’ tails than the t (df = 5)
normal

0 t
 Student’s t Table

Upper Tail Area

Let: n = 3
df .10 .05 .025 df = n - 1 = 2
 = .10
1 3.078 6.314 12.706 /2 =.05
2 1.886 2.920 4.303
3 1.638 2.353 3.182 /2 = .05

The body of the table

contains t values, not 0 2.920 t
probabilities
 Confidence Intervals

Confidence
Intervals

Population Population
Mean Proportion

σ Known σ Unknown
 Confidence Intervals for the
Population Proportion, p

 An interval estimate for the population

proportion ( P ) can be calculated by
adding an allowance for uncertainty to
the sample proportion ( p̂ )
 Confidence Intervals for the
Population Proportion, p
(continued)

 Recall that the distribution of the sample

proportion is approximately normal if the
sample size is large, with standard deviation

P(1 P)
σP 
n
 We will estimate this with sample data:

pˆ (1 pˆ )
n
 Confidence Interval Endpoints
 Upper and lower confidence limits for the
population proportion are calculated with the
formula

pˆ (1 pˆ ) ˆ (1 pˆ )
p
pˆ  z α/2  P  pˆ  z α/2
n n

 where
 z/2 is the standard normal value for the level of confidence desired
 p̂ is the sample proportion
 n is the sample size
 Example

 A random sample of 100 people

shows that 25 are left-handed.
 Form a 95% confidence interval for
the true proportion of left-handers