Statistics

MODULE 20: Concepts of Point and Interval Estimation

LEARNING OUTCOMES

At the end of the module, you are expected to exhibit the following competencies:
1. Classify a decision process as one that makes use of inferential statistics, or not.
2. Illustrate point and interval estimation.
3. Differentiate point from interval estimation.

IMPORTANT CONCEPTS

At this point, you should have already imbibed the idea that in reality they do not have the whole population to
work on. Hence, they should make use of a representative subset of the population which they referred to in
previous lessons as a random sample. From this random sample, they will generate statistics they will use to
make inferences about the population and/or its parameters. This process is referred to as inferential statistics
and is illustrated below.

Note that the sample taken from the population must be a random sample obtained using one of the sampling
techniques discussed in the previous chapter. Likewise, the inferences that they will make are subject to
uncertainty which means that they are not 100% sure of the inferences or conclusions they’ll make about the
population or its parameters, based on the statistics generated from the random sample. In other words, there is
a chance or likelihood that they will make a wrong inference and that they will try to measure this likelihood so
that they can minimize it. This is the reason why probability measure was discussed in earlier chapter.

Development of the Concept of Estimation

In making inferences about the population, learners can either provide a value or values for the parameter or
evaluate a statement about the parameter. This chapter will focus on the former, which is generally referred to as
estimation. For this lesson, we will discuss two ways in estimation, namely: point and interval estimation and
differentiate one from the other.

Write on 1/4 sheet of paper the following:

1. Your “best” guess of your teacher’s age by giving a 2 as a single number.
2. The same as in Number 1, but this time I will give 21-65 as a range of values wherein my age would most likely
fall

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Concepts of Point and Interval Estimation
3. Rate your confidence from 0% (not confident) to 100% (very confident) in your educated guess of the range of
values in Number 2.

Differentiate point from interval estimation

• There is no right or wrong numerical value for the given answers. However, there might be misconceptions or
misunderstanding of the concepts when they provided their answers.

• On the first item, learners should give one logical number between 21 and 65 (inclusive). The student should
have given only one number since you asked them to give a point estimate. A point estimate is a numerical
value and it identifies a location or a position in the distribution of possible values. The student’s guess of your
age should be between 21 and 65 for it to be logical since one usually starts working or teaching at the age of
21 and retires at the age of 65 (compulsory retirement age).

• On the second item, tell learners they should have given a logical range of values or set of values with lower and
upper limits. The logical lower limit should be at least 21 while the upper limit should be at most 65. The
reasons behind these numbers are similar to what were stated earlier. What they have given is their interval
estimate of your age. An interval estimate is a range of values where most likely the true value will fall.

• As stated in item 3, the percentage should be within 0% to 100%. This measure of confidence in the interval
estimate is referred to as confidence coefficient. When combined with their estimate in item 2, such is now
referred to as confidence interval estimate. Hence, a confidence interval estimate is a range of values where
one has a certain percentage of confidence that the true value will likely fall in.

• In point estimation, since you are giving only a single value, there are only two possibilities, that is, the estimate
is either wrong or correct. Also, there is no measure of how confident one is in his/her estimate. On the other
hand, the interval estimate gives more than one possible values as estimates. In addition, the confidence
coefficient provides a measure of confidence in the estimate.

PRACTICE SKILLS

1. For each of the following situations, state whether inferential statistics is applicable or not. Explain your
answer.

a. The government would like to know the per capita rice consumption per day of Filipinos.
b. The effectiveness of a newly developed cure of cancer.
c. A presidential candidate decides to take a survey through text messaging to determine the proportion of
voters who are likely to vote for him/her.
d. A farmer wants to estimate the number of pigs he has in the pig pen. He decides to capture 20 pigs, puts
a red mark on the captured pigs, and then, ets them loose. After a day or so, the farmer decides to
recapture another set of pigs, say, 10 of them, and notices that only one of them has a red mark, and so
he estimates that he has 20/(0.1) = 200 pigs.
e. An auditor of a government office wants to assess what proportion of experiment records were done
correctly. Instead of going over 10,000 records, she decides to sample the first 100 records on her desk,

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and notices that 97 of them were done well. She concludes that 97% of all the records given to her were
done well.

REFERENCES

Richardson, M, Using Dice to Introduce Sampling Distributions. STatistics Education Web (STEW). Retrieved from
http://www.amstat.org/education/stew/pdfs/UsingDicetoIntroduceSamplingDistributio ns.doc

De Veau, R. D., Velleman, P. F., and Bock, D. E. (2006). Intro Stats. Pearson Ed. Inc.

Workbooks in Statistics 1: 11th Edition. Institute of Statistics, UP Los Baños, College Laguna 4031

Probability and statistics: Module 24. (2013). Australian Mathematical Sciences Institute and Education Services
Australia. Retrieved from http://www.amsi.org.au/ESA_Senior_Years/PDF/InferenceProp4g.pdf

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