Statistical Inference

Introduction
 STATISTICAL INFERENCE
• Statistical inference is the process of
reaching conclusions about characteristics of
an entire population using data from a subset, or
sample, of that Population.

• The process of making guesses about the

truth about a population parameter from a
sample statistic.
• To Draw the conclusion about the
population parameter by using sample
information.
 Sample
statistics
n

Σ x
µˆ = X n = ni =1
n

Σi =1( x – Xn)
i
σˆ 2 = s 2 =2 n– 1
Truth (not *hat notation ^ is often used to

observable) indicate “estimate”

Sample
Population (observation)
parameter
s
N N

Σ
i=1
µ= N
x
σ 2
=
Σi=1(x i – µ )2 Make guesses about
N
the whole
population
 Estimation
• There are…
two types of
inference: estimation and
hypothesis testing; estimation is
introduced first.

• The objective of estimation is to

determine the approximate value of a
population parameter on the basis of a
sample statistic.

• E.g., the sample mean ( ) is

employed to estimate the population
mean ( ).
 Estimation
• …of estimation is to determine
The objective
the approximate value of a population
parameter on the basis of a sample statistic.

• There are two types of estimators:

• Point Estimator

• Interval Estimator
 Point
Estimator…
• A point estimator draws inferences
about a population by estimating the value
of an unknown parameter using a single
value or point.
 Interval Estimator…
• An interval estimator draws inferences
about a population by estimating the value of an
unknown parameter using an interval.

• That is we say (with some % certainty)

that the population parameter of interest is
between some lower and upper bounds.
 Point & Interval Estimation…
• For example, suppose we want to estimate
the mean summer income of a class of
business students. For n=25 students,
• is calculated to be 400 $/week.

• point estimate interval estimate

• An alternative statement is:

• The mean income is between 380 and 420 $/week.
Testing of Hypothesis
• A procedure which enables us to decide on the basis of
information obtained from the sample taken from the
population whether to reject or don’t reject any
specified statement or hypothesis regarding the value of
the population parameter in a statistical problem is
known as testing of hypothesis.
• Is a procedure to determine the whether or not an
assumption about some parameter of a population
supported by the sample information.
Hypothesis Testing

H1
Left-tailed Test:- Average Marks
at Least 45
H0: µ  45
H1: µ < 45
Points Left

Reject H0 Fail to reject H0

Values that
differ significantly
from 45 45
Right-tailed Test: Average Marks
at most 45
H0: µ  45
H1: µ > 45
Points Right

Fail to reject H0 Reject H0

Values that
differ significantly
45 from 45
Two-tailed Test Average Marks
equal to 45
H0: µ = 45 α is divided equally
the two tails of the critical
between
region
H1: µ s 45
Means less than or greater
than

Reject H0 Fail to reject H0 Reject H0

45

Values that differ significantly from

45
 Type I and Type II Errors
True State of Nature

The null ( H 0) The null ( H 0 )

hypothesis hypothesis
is true is false
Correct
We decide to
Type I error Decision
reject the
α No Error
null hypothesis
Decision

1-β

We don't Correct
reject Decision Type II error
the No Error β
null 1-α
hypothesis
Significance Level
Probability of committing a Type-I error is called the
level of significance, denoted by α . By α =5% we mean
that there are 5 chances in 100 of incorrectly rejecting a
true null hypothesis. To put it in another way we say that
we are 95% confident in making the correct decision.
Level of Confidence
The probability of not committing a Type-I error, (1- α ), is
called the level of confidence, or confidence co-efficient.

Power of a Test
The probability of not committing a Type-II error, (1-β), is
called the power of the test. 15
Test Statistic
• A statistic on which the decision of
rejecting or don’t rejecting the
null hypothesis is based is called a
test statistic
• In testing of hypothesis the sampling
distribution of the test statistic is
based on the assumption that the null
hypothesis is true.

16
Decision Rule Critical Value

• Critical region/Rejection
region
Critical region is that part of the sampling
distribution of a statistic for which the HO is
rejected. A null hypothesis is rejected if the
value of test- statistic is not consistent with
the HO. CR is associated with H1. AR RR

• Non-rejection Region
Non-rejection region is that part of the sampling
distribution of a statistic for which the HO is
not rejected.
Critical Values:
The values that separate Rejection and Non-
rejection regions are called Critical values

17
Conclusion:-
Reject Ho if the calculated value of test
statistic falls in the rejection region
otherwise don’t reject Ho

18
The Basic Problem ?
Now suppose that our sample statistic reveals a mark of
88 percent. This value is relatively close to 90 percent,
but is it close enough for us to don’t reject the hypothesis?
Whether we don’t reject or reject the hypothesis, we can’t
be absolutely certain that our decision is correct;
therefore, we will have to learn to deal with uncertainty in
our decision making.

19
 General Procedure for Hypothesis Testing
Step-1:- Formulate the null and alternative hypotheses
Step-2:- Decide upon a significance level,
Step-3:- Choose an appropriate test statistic
Step-4:- Calculation
Step-5:- Determine the Critical Region (CR). The
location of the CR depends upon the form of alternative
hypothesis.
• If >, choose the right tail as the CR
• If <, choose the left tail as the CR
• If ≠ , choose a two-tailed CR
Step-6:-Conclusion: Reject null hypothesis if the
computed value of test Statistic falls in the CR,
otherwise don’t reject null hypothesis.
20
 Test of hypothesis included in the
course

• About Single population mean

μ
• About difference between population
means μ1 – μ2
• About Single population proportion
P
• About difference between
population proportions P1- P2
• About several proportions
• About several means

21
EXAMPLE:- It is claimed that the average marks of the B.Sc
students of A section in MATH-101 course is more than 45 with
standard deviation is 2 marks. To test this claim a random
sample of 25 students was selected and recorded their marks in
MATH-101. Would you agree with the claim if the random
sample showed an average of 50 marks?

POPULATION Step 1:- Construction of hypotheses

µ > 45 Ho : µ  45
H1: µ > 45
µ  45
Step 2:- Level of significance
α = 5%

Step-3:- Test Statistic Step-4:-Calculation

t= X – t Cal = 50 – 45
σ2 22
µ =12.50
n 25
σ 27
Step-5 Critical Region:-

t > tα
t > t 0 .0 5
t > 1 .711
Step-6

Conclusion: Since
reject
t
cal =12.50 fall in the Rejection Region so we
H0
tcal=
Acceptance Region 12.50 Rejectio
n
ttab =1.711 Region

-5 -4 - -2 -1 0 1 2 4 5
3 3
4
EXAMPLE:- It is claimed that the average marks of the B.Sc
students of A section in MATH-101 course is more than 45. To
test this claim a random sample of 49 students were selected
and recorded their marks in MATH-101. Would you agree with
the claim if the random sample showed an average of 50 marks
and a standard deviation of 2 marks?

POPULATION Step 1:- Construction of hypotheses

µ > 45 Ho : µ  45
H1: µ > 45
µ  45
Step 2:- Level of significance
α = 5%

Step-3:- Test Statistic Step-4:-Calculation

t= X – tCal =
50 – 45
µ s2 22
=17.50
n 49 31
Step-5 Critical Region:-

t > tα ( n –1) d . f

t > t 0 .0 5 ( 2 4 d .f)
t > 1 .7 1 1
Step-6
H 0
Conclusion: Since tcal =17.50 fall in the Rejection Region so we reject

tcal =
Acceptance Region 17.50 Rejectio
n
ttab =1.711 Region

-5 -4 - -2 -1 0 1 2 4 5
3 3
0
EXAMPLE:- It is claimed that the average marks of the B.Sc
students of B section in MATH-101 course is less than 45. To
test this claim a random sample of 25 students was selected
and recorded their marks in MATH-101. Would you agree with
the claim if the random sample showed an average of 40 marks
and a standard deviation of 2 marks?
Step 1:- Construction of hypotheses
POPULATION Ho : µ ≥ 45
µ < H1: µ < 45
45
Step 2:- Level of significance
µ ≥ 45 α = 5%
Step-3:- Test Statistic

t= X – Step-4:-Calculation
µ s2
n tCal = 40 – 45 = –
22
12.50
25 0
Step-5 Critical Region:-

t < – tα (n –1)d . f
t< –t
0 .0 5 (2 4 )d . f
t < – 1 .7 1
Step-6
Conclusion: Since tcal 1 =–12.50 fall in the Rejection Region so we reject
H0

tcal = –12.50
Rejectio ttab = – Acceptance Region
n 1.711
Region

-5 -4 - -2 -1 0 1 2 4 5
3 3
0
EXAMPLE:- It is claimed that the average marks of the B.Sc
students of C section in MATH-101 course is equal to 45. To
test this claim a random sample of 25 students was selected
and recorded their marks in MATH-101. Would you agree with
the claim if the random sample showed an average of 50
marks and a standard deviation of 2 marks?

POPULATION Step 1:- Construction of hypotheses

µ = 45 Ho : µ
µ ≠ 45
= 45 H1: µ
Step 2:- Level of significance
≠ 45 α = 5%=0.05
Step-3:- Test Statistic
Step-4:-Calculation
t= X –
µ s2 tCal = 50 – 45
n 22
=12.50
25 0
Step-5 Critical Region:-
t > tα t < – tα
2 (n –1)d . f 2 (n –1)d . f
t > t< –
0 .0 2 5 (2 4 )d . 0 .0 2 5 (2 4 )d .
t t
Step-6
t > 2f .0 6 4 t < – f2 .0 6
Conclusion: Since 4tcal =12.50 fall in the Rejection Region so we reject
H0

tcal = 12.50
Rejectio ttab = – Acceptan ttab = Rejectio
n ce Region n
2.064 2.064
Region Region

-5 -4 - -2 -1 0 1 2 4 5
3 3
0
EXAMPLE:- It is claimed that an automobile is driven on the
average more than 12,000 miles per year. To test this claim a
random sample of 100 automobiles owners are asked to keep
a record of the miles they travel. Would you agree with the
claim if the random sample showed an average of 12500
miles and a standard deviation of 2400 miles?
Construction of hypotheses
POPULATION Ho : µ  12000
µ > 12000 H1: µ >
12000
µ  12000
Level of
significance
α
Step-4:-
= Calculation
t=X–µ 5
%
tCa =12500–12000=2.08
2400
l
s2
Step-3:- Test 2

n
Statistic 100
0
Step-5 Critical Region:-

t > 1 .6 6
Step-6 > tα (n –1)d . f
Conclusion: Since tt fall in the Rejection Region so we reject
H0 cal
> t
=2.08 0 .0 5 (9 9 )d .
f tcal =
Acceptance Region
ttab2.08
= Rejectio
n
1.66 Region

-5 -4 - -2 -1 0 1 2 4 5
3 3
0
EXAMPLE:- It has been found from experience that the mean
breaking strength of a particular brand of thread is 9.63N.
Recently a sample of 36 pieces of thread showed a mean
breaking strength of 8.93N and standard deviation of 1.40N.
Can we conclude that the thread has become inferior?
Construction of hypotheses
POPULATION Ho : µ  9.63
H1: µ
µ < 9.63
µ  9.63 Level of significance
< 9.63 α = 5%

Step-3:- Test Statistic Step-4:-

Calculation
t= X– tCal = 8.93–9.63 = –
1.402
µ s2 36
3.0
n

0
Step-5 Critical Region:-

t < – tα (n –1)d . f
t< –t
0 .0 5 (3 5 )d . f
t < – 1 .6 9
Step-6
Conclusion: Since 0tcal = –3.00 fall in the Rejection Region so we
reject
H0

tcal ttab = –
= –3.00 Acceptance Region
Rejection 1.690
Region
-2 -1 0 1 2 4 5
-5 -4 -3
3
0
EXAMPLE:- The mean lifetime of bulbs produced by a
company has in past been 1120 hours. A sample of 9
electric light bulbs recently chosen from a supply of
newly produced battery showed a mean lifetime of 1170
hours with a standard deviation of 120 hours. Test that
mean lifetime of the bulbs has not changed
Step-1 Construction of hypotheses
POPULATION Ho: µ
µ =1120
= 1120 H1: µ
µ s 1120
s 1120
Step-2. Level of
Step-3:- Test Statistic
significance
Step-4:-
Calculation α=
t= X– 5% tCal = 1170–1120 =1.25
1202
µ s2 9
n
0
Step-5 Critical Region:-
t > tα t < – tα
2 (n –1)d . f 2 (n –1)d . f
t > 0 .0 2 5 t < – 0 .0 2 5
t t
Step-6
t > 2(8 .3
)d . 0f 6 t < – (28 ).3
d.0
f

6
Conclusion: Since tcal =1.25 does not fall in the Rejection Region so
we do not reject
H0
tcal =
Rejectio ttab = – 1.25 t
Acceptan
tab = Rejectio
n ce Region n
2.064 2.064
Region Region

-5 -4 - -2 -1 0 1 2 4 5
3 3
0
EXAMPLE:- Workers at a production facility are required to assemble a certain part in 2.3
minutes in order to meet production criteria. The assembly rate per part is assumed to be
normally distributed. Six workers are selected at random and time in assembling is recorded.
The assembly times (in minutes) for the six workers are as follows. The manager wants to
determine that the mean assembling time is according to production criteria.

Worker 1 2 3 4 5 6 TOTAL
Time 2 2.4 1.7 1.9 2.8 1.8 12.6
(X-X)2 0.01 0.09 0.16 0.04 0.49 0.09 0.88
12.6 0.88
X Σ X = = S2 Σ (X – X)2 = = 0.176
= 2.1 = n– 5
n 1
6
POPULATION
Step.1. Construction of hypotheses Ho: µ ≥
µ ≥ 2.3
2.3 H1: µ
µ < <
2.3 Step.2. Level of significance 2.3
α = 5%
Step-3:- Test Statistic Step-4:-
Calculation
t= X– tCal = 2.1–2.3 =–1.17
0.176
µ s2 6
n 0
Step-5 Critical Region:-

t < – tα (n –1)d .
f
t< –t
t < – 02.0 .0
5 (51)d . f
Step-6
5
Conclusion: Since tcal = –1.16 does not fall in the Rejection Region
so we don,t reject H0

tcal = –1.17
Rejection Acceptance Region
Region
ttab = –2.015

-2 -1 0 1 2 4 5
-5 -4 -3
3
0
 Interval Estimation
If IfP opulation
P opulationvariance
varianceknow
known nthen
then
C .I C .I
(
( σ2 ⎞ 2
σ
–
–
|
⎞
|
± Z
X ± Z αα/ /22 |
| nn ||
⎝| |
⎝⎠
If P opulation variance U n know n then
C .I ⎠ ( 2
–
– (
|
S
S
2 ⎞
⎞|
X ± t
X ± t α / 2 ( n –1 ) d . f
α / 2 ( n –1 ) d . f | n
n ||
⎝| ⎠| 0
| ⎝ ⎠
Example:- A researcher wishes to estimate the average amount of money
that a student from university spends for food per day. A random sample of
36 students is selected and the sample mean is found to be Rs 45.suppose
that population standard deviation of Rs.3. Estimate 90 % confidence limits
for the average amount of money that the students from the university
( 2 ⎞
spend on food per day. –
σ
(| 2 ⎞
–
±Z
XX ± α /2 |
Z α /2 | σ
n |
|
|
| n |
⎝ (
( ⎞
⎠ | 2
|
45±
⎠
0.05)
2
|
3
Z ⎝⎞ 3 6 ⎠|
45
45±(1.645)(0.5) |
Width of C.I
45 ±0.82
3
45.82- 44.18
|
1.64 45-0.82, 45+0.82
± Z 0.05
)
| 36
( 49.316 , 50.684) | 0
⎝
 Example:- A researcher wishes to estimate the average marks of the
students in Math-101 course of A section. A random sample of 25
students is selected and the sample mean is found to be 50 with standard
deviation 2. Estimate 90 % confidence Interval for the Average Marks.
( 2
–
( S 2
|⎞ S |
–
⎞
XX ±± tt αα/ /22( (nn––11) )dd. . f| | nn |
| ⎝ ⎠
f
⎞ | ( 2 ⎞
| |
± 0 . 0 5 t( 2 04 . )0 5 ( 2 4 )
2 |
2
|
50± t ⎝| 25 |
⎝ ⎠
⎠ 2|5
50±(1.711)(0.4)
|
|
Width of C.I ⎝
50.684- 49.316 50 ±0.684
⎠
1.368 50-0.684, 50+0.684
( 49.316 , 50.684) 0
Example:- A researcher wishes to estimate the average marks of the
students in Math-101 course of A section. A random sample of 25
students is selected and the sample mean is found to be 50 with
standard deviation of 2. Estimate 95 % confidence Interval for the
Average Marks. ( 2
–
( S2
–
⎞ ⎞| S |
X ± tt αα // 22 (( nn –1
X ± –1 ) d . |f|
)d.f
nn |
| ⎝ ⎠
||( ⎞2
|| | 2
2 |
5 0 ± 0 . 0 2 5 ( 2 4 )⎝|
t 2⎝ 25 |
⎠
50±(2.064)(0.4)
⎠⎞
Width of C.I 50± t 0.
50.826- 49.174 50 ±0.826 |
025(24)
1.652
50-0.826, 50+0.826 2| 5
||
( 49.174 , 50.826)
||
⎝
 Example:- A researcher wishes to estimate the average amount of money
that a student from university spends for food per day. A random sample of
36 students is selected and the sample mean is found to be Rs 45 with
standard deviation of Rs.3. Estimate 95 % confidence limits for the
average amount of money that the students from the university spend on
food per day. ( 2
–
S2 ⎞(
–
⎞ | S |
XX ±± t α / 2 ( n – 1 ) d . |f | nn |
|
α /2(n– 1)
((⎝ ⎞
d.f
⎠|| 2
|
4 5 ± t 0.05(35)|
2 3
⎞⎝ 3 6 ⎠|
45
⎠
45±(1.69)(0.5) |
Width of C.I
45 ±0.84
3
45.84- 44.16
|
1.68 45-0.84, 45+0.84
± t 0.05(3
5)
( 44.16 , 45.84) | 0

36
|
 Example:-The following data represents the daily milk production of a
random sample of 10 cows from a particular breed
12,15,11,13,16,19,15,16,18,15. Construct 95% C.I for the average milk
production of all the cows of that particular breed.

(
– (| 2
X ± tα / 2 (n – 1) ⎞
2 S |
|
n |
⎞⎝
–
| S ⎠
| ( 22 .89
1 5 ±t α / 2 ( n – 1() || 22 n.89 ⎞
±±
X1 5

|| t .02 | ⎞ 10 |||
.02 55 (( 99 ))⎝|| 10 ⎠
⎝
t ⎝
⎠
15± (2.262)*(1.51)
Width of C.I ⎠
18.42- 11.58 15 ±3.42
6.84 15-3.42, 15+3.42
( 11.58 , 18.42) 0