ECONOMETRICS

TOPIC-
NORMAL
DISTRIBUTION

MADE BY-
DISHA
MA(ECONOMICS)
ECO/19/08
 ACKNOWLEDGEMENT

Primarily i would han god for being able o

complete this project with success . then i
would like to thank my agriculural
economics teacher Dr.AMITA MARWAH
and Mrs.ASHA SRIVASTAVA , whose
valuable guidance has been the ones that
helped me patch this project and make it full
proof success his suggestions and his
instruction has served as the major
contributor of the project.
And i would like to thank my parents and
friends who helped me alot.
At last i would like to thank my classmates
who have help me alot.
NORMAL
DISTRIBUTION

PROPERTISE AND USES

INTRODUCTION:-
Normal distribution, also called Gaussian distribution,
the most common distribution function for
independent, randomly generated variables. Its
familiar bell-shaped curve is ubiquitous in statistical
reports, from survey analysis and quality control to
resource allocation.
The graph of the normal distribution is characterized
by two parameters: the mean, or average, which is
the maximum of the graph and about which the
graph is always symmetric; and the standard
deviation, which determines the amount of
dispersion away from the mean. A small standard
deviation (compared with the mean) produces a
steep graph, whereas a large standard deviation
(again compared with the mean) produces a flat
graph.
A normal distribution in a variate with mean and
variance is a statistic distribution with probability
density function

(1)

on the domain . While statisticians and

mathematicians uniformly use the term "normal
distribution" for this distribution, physicists
sometimes call it a Gaussian distribution and,
because of its curved flaring shape, social scientists
refer to it as the "bell curve." Feller (1968) uses the
symbol for in the above equation, but then
switches to in Feller (1971).
HISTORY OF NORMAL
DISTRIBUTION
The term “Gaussian distribution” refers to the
German mathematician Carl Friedrich Gauss, who
first developed a two-parameter exponential function
in 1809 in connection with studies of astronomical
observation errors. This study led Gauss to
formulate his law of observational error and to
advance the theory of the method of least squares
approximation. Another famous early application of
the normal distribution was by the British physicist
James Clerk Maxwell, who in 1859 formulated his
law of distribution of molecular velocities—later
generalized as the Maxwell-Boltzmann distribution
law.

The French mathematician Abraham de Moivre, in

his Doctrine of Chances (1718), first noted that
probabilities associated with discretely generated
random variables (such as are obtained by flipping a
coin or rolling a die) can be approximated by the
area under the graph of an exponential function.
This result was extended and generalized by the
French scientist Pierre-Simon Laplace, in his
Théorie analytique des probabilités (1812; “Analytic
Theory of Probability”), into the first central limit
theorem, which proved that probabilities for almost
all independent and identically distributed random
variables converge rapidly (with sample size) to the
area under an exponential function—that is, to a
normal distribution. The central limit theorem
permitted hitherto intractable problems, particularly
those involving discrete variables, to be handled with
calculus.
PARAMETERS OF
NORMAL DISTRIBUTION
As with any probability distribution, the parameters for
the normal distribution define its shape and probabilities
entirely. The normal distribution has two parameters, the
mean and standard deviation. The normal distribution
does not have just one form. Instead, the shape changes
based on the parameter values, as shown in the graphs
below.
Mean
The mean is the central tendency of the distribution. It
defines the location of the peak for normal distributions.
Most values cluster around the mean. On a graph,
changing the mean shifts the entire curve left or right on
the X-axis.
shifts the entire curve left or right on the X-axis.

Standard deviation
The standard deviation is a measure of variability. It
defines the width of the normal distribution. The standard
deviation determines how far away from the mean the
values tend to fall. It represents the typical distance
between the observations and the average.

On a graph, changing the standard deviation either

tightens or spreads out the width of the distribution along
the X-axis. Larger standard deviations produce
distributions that are more spread out
When you have narrow distributions, the probabilities are
higher that values won’t fall far from the mean. As you
increase the spread of the distribution, the likelihood that
observations will be further away from the mean also
increases.
Population parameters versus sample estimates
The mean and standard deviation are parameter values
that apply to entire populations. For the normal
distribution, statisticians signify the parameters by using
the Greek symbol μ (mu) for the population mean and σ
(sigma) for the population standard deviation.

Unfortunately, population parameters are usually

unknown because it’s generally impossible to measure an
entire population. However, you can use random samples
to calculate estimates of these parameters. Statisticians
represent sample estimates of these parameters using x̅ for
the sample mean and s for the sample standard deviation.

PROPERTIES OF NORMAL DISTRIBUTON

 The mean of a normally distributed population

lies at the center of its normal curve.
  For a normal curve, the mean, median and
mode are the same value.
 The two tails of the normal probability
distribution extend indefinitely and never touch
the horizontal axis.
 Since there is only one maximum point,
therefore, the normal curve is unimodal,
x = m ± 6 , y = f(x)
 As distinguished from binomial and Poisson
distributions where variable is discrete, the
variable distributed according to the normal
curve is a continuous one.
 First and third quartiles are equidistant from the
median.
 Linear combination of independent normal
varieties is also a normal variate .