Statistics

MODULE 21: Points Estimation of the Population

LEARNING OUTCOMES

At the end of the module, you are expected to exhibit the following competencies:
1. Identify possible point estimators of the population mean.
2. Discuss characteristics of a “good” estimator.
3. Appraise why the sample mean is the “best” estimator of the population mean.

IMPORTANT CONCEPTS

A parameter is a characteristic of the population which is usually unknown and needs to be estimated. On the
other hand, a statistic is computed from a random sample and hence, it is known and is used to estimate the
unknown parameter.

There are two types of estimation: point and interval estimation. In estimating a parameter, the mathematical
expression or formula you used in coming up with the estimate is referred to as estimator while the estimate is a
numerical value that you arrived at when you apply the estimator using the sample data.

With several estimators, we must choose and use the “best” estimator but how do we choose the “best”? An
estimator could be evaluated based on the two statistical properties: accuracy and precision, which are both
measures of closeness. Accuracy is a measure of closeness of the estimates to the true value while precision is a
measure of closeness of the estimates to each other.

To illustrate, take the bull’s eye in a dart board as the parameter and the ‘hits’ made on the board as the
estimates. There could be a “hit” that is near the bull’s eye or an estimate that is near the parameter. On the
other hand, there could be a “hit” that is far from the bull’s eye or an estimate that is far from the parameter. As
shown in the following figure, Estimate No. 1 is far from the parameter value while Estimate No. 3 is near the
parameter value.

An accurate estimator will have estimates that, on the average, are near the parameter value. When the
estimates on the average are equal to the true value, the estimator is said to unbiased. Thus, an unbiased
estimator is one whose average value is equal to the parameter itself. If the average value of the estimates
deviates from the parameter value then the estimator is said to biased. Bias can then be measured as the
difference between the average value of the estimator (i.e. the expected value of the sampling distribution) and
the parameter value or mathematically, we compute bias as:

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Bias (Estimator, Parameter) = Expected value of the Estimator – Parameter Value

If, on the average, the estimates are greater than the parameter value or the bias is positive, then we say the
estimator overestimates the parameter. On the other hand, if on the average, the estimates are less than the
parameter value or the bias is negative, then we say that the estimator underestimates the parameter. When
bias is equal to zero, the estimator is unbiased.

In terms of precision, an estimator is precise if the estimates are close to each other. Otherwise, the estimator is
not precise. A measure of precision of the estimator is its standard error, which is the square root of the
estimator’s variance. The smaller the standard error, the more precise the estimator is.

Ideally, we choose an estimator that is both accurate and precise. An example of this is the sample mean
(computed from using a simple random sample of size n), which is an accurate and precise estimator of the
population mean. However, we could not find, in all cases, such an ideal estimator. For practical reasons, one can
opt to use a biased and less precise estimator. For example, a quality control engineer would use the minimum
value of life span of an electric bulb rather than the sample mean in assessing the quality of a batch of
manufactured electric bulbs. For efficiency and practical reasons, the engineer does not need to wait for a sample
of n bulbs to bust in order to compute the sample mean. Instead, he could use the life span of the first bulb as an
estimate of the parameter which is the true value of the life span of the batch of manufactured electric bulbs.

The following figures illustrate the different kinds of estimators based on their accuracy and precision:

An estimator that is both accurate and precise:

An estimator that is accurate but not precise:

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An estimator that is precise but not accurate:

An estimator that is neither accurate nor precise:

• As mentioned before, the sample mean, computed as the arithmetic mean of observations obtained using a
simple random sample, is an accurate and precise estimator of the population mean. It is a “good” estimator of
the population mean. That is why it is usually referred to as the Best Linear Unbiased Estimator (BLUE) of the
population mean. It is “best” since it is the most precise as it has the smallest variance among all possible
estimators of the population mean. It is linear in function and it is accurate as it is an unbiased estimator.

• Illustration of the Computation: Consider the following observed weights (in kilograms) of a random sample of
20 learners and use it to estimate the true value of the average weight of learners enrolled in the class.

40 45 46 48 48 50 55 55 56 58
58 59 60 60 62 62 64 64 65 66
The sample mean is computed as:

Thus, we say the average weight of all learners in the class is estimated to be around 56.05 kg based on a simple
random sample of 20 observations.

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PRACTICE SKILLS

1. A company that manufactures electronic calculators uses a certain type of plastic. An alternative plastic
material is introduced in the market and the manager of the company is thinking of shifting to this material.
He will decide to shift if the mean breaking strength of the new material is greater than 155. It is known that
the breaking strengths of the new plastic material follow the normal distribution and have a standard
deviation of 10 psi (pounds per square inch). Six samples of the new plastic materials were randomly selected
and their breaking strengths were determined. The data obtained were 156, 154, 168, 157, 160 and 158.
Estimate the true mean breaking strength of the new plastic material and measure the precision of this
estimate.

2. The nickel metal Hydride (Nimh) battery is one of the highly advertised rechargeable batteries today. It is
lighter and can last up to 2 to 4 times longer than alkaline or standard Nickel-Cadmium (NiCd) batteries. To
evaluate its performance, a random sample of 10 Nimh batteries was taken. The number of photos taken
using each battery in a digital camera is given as follows: 405, 564, 342, 456, 435, 543, 473, 452, 462, and 475.
Estimate the true mean number of photos taken using the Nimh battery. Also, provide a measure of precision
of this estimate.

3. The head of the Philippine University (PU) observes a decline on the alcoholic expenditures of learners from a
monthly expenditure of Php 350 in the previous year. To check on this, he randomly selected 10 PU learners
who drink alcoholic beverages and asked for the amount, in pesos, that they usually spent on alcoholic
beverages in a month. It is known that the usual amount spent on alcoholic beverages by learners who drink
alcoholic beverages follows the normal distribution with standard deviation of Php 10. The data collected are:
400, 235, 200, 250, 200, 300, 500, 430, 420, and 220. Estimate the true average amount spent on alcoholic
beverages by learners who drink alcoholic beverages.

4. A local government official observes an increase in the number of individuals with cardiovascular and obesity
problems in his barangay. In order to improve the health conditions of his constituents, he aims to promote
an easy and cheap way to reduce individuals’ weight. It is known that obesity results to a greater risk of
having illnesses like diabetes and heart problems. He encouraged his constituents to participate in his Dance
for Life project every weekend for 3 months. To know if the program is effective in reducing their weight, he
randomly selected 12 participants from the group who completed the program. The weight loss data of the
12 randomly selected participants, in kilograms, after completing the program are: 0.5, 0.7, 0.9, 1.1, 1.2, 1.3,
1.4, 2.0, 2.3, 2.4, 2.7, and 3.0. It is known that the weight loss of those who have completed the dance
program follows a normal distribution with variance of 3.24 kg2 . Provide a point estimate of the average
weight loss of the participants who have completed the dance program. Give also a measure of the
estimate’s precision.
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
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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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