Estimation

Statistical Inference
22 November 2017, The News

• Majority of Pakistanis approve of Punjab, KP govts’ performance –
Gallup Pakistan National Public Opinion Poll cited in The News.
22 November 2017, The News
• The results represent public opinion computed on the basis of views
expressed by anonymous respondents selected randomly and
interviewed face-to-face. Such surveys contain a margin of error, and
should not be taken as a basis for casting votes.
• The combined sample size of the study was more than 6,000
households. Gallup Pakistan carried out the survey from October 10 to
November 1 using an error margin of +-2 to 3% at 95% confidence
level, while the parallel research by Pulse Consultant was conducted
from Oct 8 to Oct 25 with a margin of error of 1.62% at 95%
confidence level.
Several questions arise:
• How do these estimates compare with the true
population percentages?
• What is meant by a margin of error?
• Is the sample of 6000 large enough to represent the

population.
Introduction
• One aspect of inferential statistics is estimation, which is the process
of estimating the value of a parameter from information obtained
from a sample. For example, The Book of Odds, by Michael D. Shook
and Robert L. Shook contains the following statements:
Two types of Estimation
Properties of a Good Estimator
• Sample measures (i.e., statistics) are used to estimate population
measures (i.e., parameters). These statistics are called estimators.
• A good estimator should satisfy the three properties:
•
Confidence Interval
• Either the interval contains the parameter or it does not.
• A degree of confidence can be assigned before an interval estimate is
made.
• For instance, you may wish to be 95% confident that the interval
contains the true population mean.
• If you desire to be more confident, such as 99 or 99.5% confident,
then you must make the interval larger. For example, a 99%
confidence interval for the mean age of college students might be
• Intervals constructed in this way are called confidence intervals. Three
common confidence intervals are used: the 90, the 95, and the 99%
confidence intervals.
• Margin of Error = the maximum error of the estimate.
• For a specific value, say, a α = 0.05, 95% of the sample means will fall
within this error value on either side of the population mean.
Example # 01 – 02
• 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 the 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 the 95% confidence interval
of the population mean.
• Waiting Times in Emergency Rooms: 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 of the population mean.
Example # 03: Credit Union Assets
• The following data represent a sample of the assets (in millions of
dollars) of 30 credit unions in southwestern Pennsylvania. Find the
90% confidence interval of the mean.
Sample Size
• Sample size determination is closely related to statistical estimation.
• Quite often you ask, How large a sample is necessary to make an
accurate estimate?
• it depends on three things: the margin of error, the population
standard deviation, and the degree of confidence.
Example # 04
• Depth of a River: A scientist wishes to estimate the average depth of
a river. He wants to be 99% confident that the estimate is accurate
within 2 feet. From a previous study, the standard deviation of the
depths measured was 4.33 feet.
Example # 05
Example # 06
• Sleeping Time: Ten randomly selected people were asked how long
they slept at night. The mean time was 7.1 hours, and the standard
deviation was 0.78 hour. Find the 95% confidence interval of the
mean time. Assume the variable is normally distributed.
• the data represent a sample of the number of home fires started by
candles for the past several years. (Data are from the National Fire
Protection Association.) Find the 99% confidence interval for the
mean number of home fires started by candles each year.
T-table
Level of 0.10 0.05 0.01
Significance
H1: µ > µo or µ < +1.28, - 1.28 +1.64, -1.64 +2.33, -2.33
µo
H1: µ ≠ µo +1.64, -1.64 +1.96, -1.96 +2.58, - 2.58
Confidence interval for proportions
• A proportion represents a part of a whole.
• It can be expressed as a fraction, decimal, or percentage.
Example # 08
•
Example # 09
• Covering College Costs: A survey conducted by Sallie Mae and Gallup
of 1404 respondents found that 323 students paid for their education
by student loans. Find the 90% confidence of the true proportion of
students who paid for their education by student loans.
Example #10
• Religious Books: A survey of 1721 people found that 15.9% of
individuals purchase religious books at a Christian bookstore. Find the
95% confidence interval of the true proportion of people who
purchase their religious books at a Christian bookstore.
Example # 11
• Home Computers: A researcher wishes to estimate, with 95%
confidence, the proportion of people who own a home computer. A
previous study shows that 40% of those interviewed had a computer
at home. The researcher wishes to be accurate within 2% of the true
proportion. Find the minimum sample size necessary.
Example # 12
• M&M Colors: A researcher wishes to estimate the percentage of
M&M’s that are brown. He wants to be 95% confident and be
accurate within 3% of the true proportion. How large a sample size
would be necessary?

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Statistical Inference

22 November 2017, The News

• What is meant by a margin of error?

• Is the sample of 6000 large enough to represent the

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