 Estimation from samples to population

 Estimation of population mean

 Estimation of population proportion
 Sample size distribution

Mary Jane T. Hugo MST-Sci

Presenter
  OBJECTIVES:
1. Define estimation
2. Differentiate point estimation from interval
estimation
3. Find the interval estimate for a population
mean (when is known and unknown) and
the population proportion
4. Determine the sample size for finding
confidence interval for the population mean
and proportion; and
5. Illustrate on how to construct interval
estimate using excel
Estimation
is the process used to calculate these population
parameters by analyzing only a small random
sample from the population

There are two forms of estimation:

• Point estimation (maximally likely value for parameter)

• Interval estimation (also called confidence interval for
parameter)

Point Estimate +/- Margin of Error

For example, suppose we want to estimate the mean
summer income of a class of business students.

For n= 25 students

 It is calculated and average is found to be Php

400/week

 An alternative statement is:

The mean income is between Php 380 and 420
per week.
Confidence Intervals
Used to express the precision and uncertainty
associated with a particular sampling method.

CI consists of 3 parts:

1. Confidence level
2. Statistics
3. Margin of Error
Confidence Level:
describes the uncertainty of the sampling method

• Statistics & Margin of Error

describe the precision of the method by defining an
interval estimate

Interval Estimate
= sample statistic + margin of error
 Interval Estimate of a Population Mean

The general form of an interval estimate of a

population mean is
x  Margin of Error
 Interval Estimate of a Population Mean:
s Known
 In order to develop an interval estimate of a population
mean, the margin of error must be computed using either:
• the population standard deviation s , or
• the sample standard deviation s

 s is rarely known exactly, but often a good estimate can be

obtained based on historical data or other information.
 Interval Estimate of a Population Mean:
𝛼 Known
  There is a 1 - probability that the value of a
sample mean will provide a margin of error of z /2  x
or less.

Sampling
distribution
of x
   1 -of all  
/2 /2
x values

x
𝜇
 
z /2  x z /2  x
  Interval Estimate of a Population Mean:
Known

Sampling
distribution
of x
 1 - of all
  /2   /2
x values
interval
does not x
m
include m
x z /2  x interval
includes m
[------------------------- x -------------------------]
[------------------------- x -------------------------]
[------------------------- x -------------------------]
 Interval Estimate of a Population Mean:
s Known
 Interval Estimate of m

x  z /2
n
 
where: x is the sample mean
1 - is the confidence coefficient
z /2 is the z value providing an area of
/2 in the upper tail of the standard
normal probability distribution
s is the population standard deviation
n is the sample size
 Interval Estimate of a Population Mean:
s Known
 Values of za/2 for the Most Commonly Used
Confidence Levels

Confidence Table
Level a a/2 Look-up Area za/2
90% .10 .05 .9500 1.645
95% .05 .025 .9750 1.960
99% .01 .005 .9950 2.576
 Interval Estimate of a Population Mean:
s Known
Example
95% CI for µ.
90% CI for µ. z1−.05/2
n = 10 = z.975 = 1.96.
SEM = 4.30 μ = 29.0 ± (1.96)(4.30)
x = 29.0. = 29.0 ± 8.4
The z quantile for 10%
= (20.6, 37.4)
confidence is
z1−.10/2 = z.95 99% CI for µ.
= 1.64 α = .01 for 99%
μ = 29.0 ± (1.64)(4.30) confidence
=29.0 ± 7.1
μ = 29.0 ± (2.58)(4.30)
= (21.9, 36.1).
= 29.0 ± 11.1
= (17.9, 40.1)
Here are confidence interval lengths (UCL – LCL) of the
three intervals just calculated:

Confidence Level Confidence Interval Confidence Interval Length

90% (21.9, 36.1) 36.1 − 21.9 = 14.2
95% (20.6, 37.4) 37.4 − 20.6 = 16.8
99% (17.9, 40.1) 40.1 − 17.9 = 22.2
 Interval Estimate of a Population Mean:
s Known
 Example: Discount Sounds
Discount Sounds has 260 retail outlets throughout
the PH. The firm is evaluating a potential
location for a new outlet, based in part, on the mean
annual income of the individuals in the marketing
area of the new location.
A sample of size n = 36 was taken; the sample
mean income is 41,100. The population is not
believed to be highly skewed. The population
standard deviation is estimated to be 4,500, and the
confidence coefficient to be used in the interval
estimate is 0.95.
   Interval Estimate of a Population Mean:
Known
 Example: Discount Sounds
𝒙 =41, 100
 ´  n= 36

x  Margin of Error z 


x  z /2
n
  , 100 ±1.96 ( 4,500 )
41 Thus, at 95% confidence,
√ 36 the margin of error is 1,470.

  , 100 ±1.96 ( 4,500 )

41
6

41
  , 100 ±1.96 (750)

41
  , 100 ±1,470
  Interval Estimate of a Population Mean:
Known
 Example: Discount Sounds
 Interval estimate of is:

41,100 + 1,470
or
39,630 to 42,570

We are 95% confident that the interval contains the

population mean.
  Using Excel to Construct a
Confidence Interval: Known Case
 Excel Formula Worksheet
A B C
1 Income Sample Size =COUNT(A2:A37)
2 45,600 Sample Mean =AVERAGE(A2:A37)
3 39,601
4 40,035 Population Std. Dev. 4500
5 41,735 Confidence Coeff. 0.95
6 37,600 Lev. of Significance =1-C5
7 46,080
8 48,925 Margin of Error =CONFIDENCE.NORM(C6,C4,C1)
9 45,350
Note:
10 35,900 Point Estimate =C2
Rows 13-37
11 37,550 Lower Limit =C10-C8
are not shown.
12 34,745 Upper Limit =C10+C8
  Using Excel to Construct a
Confidence Interval: Known Case
 Excel Value Worksheet
A B C
1 Income Sample Size 36
2 45,600 Sample Mean 41,100.00
3 39,601
4 40,035 Population Std. Dev. 4500
5 41,735 Confidence Coeff. 0.95
6 37,600 Lev. of Significance 0.95
7 46,080
8 48,925 Margin of Error 1,470.00
9 45,350
Note:
10 35,900 Point Estimate 41,100.00
Rows 13-37
11 37,550 Lower Limit 39,630.00
are not shown.
12 34,745 Upper Limit 42,570.00
  Interval Estimate of a Population Mean:
Known
 Example: Discount Sounds

Confidence Margin
Level of Error Interval Estimate
90% 3.29 78.71 to 85.29
95% 3.92 78.08 to 85.92
99% 5.15 76.85 to 87.15

In order to have a higher degree of confidence,

the margin of error and thus the width of the
confidence interval must be larger.
  Interval Estimate of a Population Mean:
Known
 Adequate Sample Size

In most applications, a sample size of n = 30 is

adequate.

If the population distribution is highly skewed or

contains outliers, a sample size of 50 or more is
recommended.
 Interval Estimate of a Population Mean:
s Known
 Adequate Sample Size

If the population is not normally distributed but is

roughly symmetric, a sample size as small as 15
will suffice.

If the population is believed to be at least

approximately normal, a sample size of less than 15
can be used.
 Interval Estimate of a Population Mean:
s Unknown
 If an estimate of the population standard deviation s cannot
be developed prior to sampling, we use the sample
standard deviation s to estimate s .
  This is the unknown case.
 In this case, the interval estimate for m is based on the t
-distribution.
 (We’ll assume for now that the population is normally
distributed.)
 t -Distribution

A t distribution with more degrees of freedom has

less dispersion.

As the degrees of freedom increases, the difference

between the t distribution and the standard normal
probability distribution becomes smaller and
smaller.
t -Distribution
 t -Distribution

A t distribution with more degrees of freedom has

less dispersion.

As the degrees of freedom increases, the difference

between the t distribution and the standard normal
probability distribution becomes smaller and
smaller.
 t Distribution

t distribution
Standard (20 degrees
normal of freedom)
distribution

t distribution
(10 degrees
of freedom)

z, t
0
  Interval Estimate of a Population Mean:
Unknown
 Interval Estimate

s
x  t /2
n

 
where: 1 - = the confidence coefficient
t /2 = the t value providing an area of /2
in the upper tail of a t distribution
n - 1 degrees of freedom
s = the sample standard deviation
  Interval Estimate of a Population Mean:
Unknown
 Example: Apartment Rents
A reporter for a student newspaper is writing an
article on the cost of off-campus housing. A sample
of 16 efficiency apartments within a half-mile of
campus resulted in a sample mean of 750 per month
and a sample standard deviation of 55.
Let us provide a 95% confidence interval estimate
of the mean rent per month for the population of
efficiency apartments within a half-mile of campus.
We will assume this population to be normally
distributed.
 Interval Estimate of a Population Mean:
s Unknown
  At 95% confidence, 1 - = .05, and /2 = .025.
t.025 is based on n - 1 = 16 - 1 = 15 degrees of freedom.
In the t distribution table we see that t.025 = 2.131.
Degrees Area in Upper Tail
of Freedom .20 .100 .050 .025 .010 .005
15 .866 1.341 1.753 2.131 2.602 2.947
16 .865 1.337 1.746 2.120 2.583 2.921
17 .863 1.333 1.740 2.110 2.567 2.898
18 .862 1.330 1.734 2.101 2.520 2.878
19 .861 1.328 1.729 2.093 2.539 2.861
. . . . . . .
   Interval Estimate of a Population Mean:
Unknown
 Example: Apartment Rates
𝒙 =750
 ´  n= 16

x  Margin of Error t 

s
x  t.025
n
  ±2.131 ( 55 )
750 Thus, at 95% confidence,
√ 16 the margin of error is 29.30
55
7  50 ±2.131( )
4

7  50 ±2.131(13.75)

 7 50 ± 29.30
 Interval Estimate of a Population Mean:
s Unknown
 Interval Estimate
s
x  t.025 Margin
n of Error

55
750  2.131  650  29.30
16

We are 95% confident that the mean rent per month

for the population of efficiency apartments within a
half-mile of campus is between 720.70 and 779.30.
 Using Excel’s
Descriptive Statistics Tool
Step 1 Click the Data tab on the Ribbon
Step 2 In the Analysis group, click Data Analysis
Step 3 Choose Descriptive Statistics from the list of
Analysis Tools
Step 4 When the Descriptive Statistics dialog box
appears:
(see details on next slide)
 Using Excel’s
Descriptive Statistics Tool
 Using Excel’s
Descriptive Statistics Tool
 Excel Value Worksheet
A B C D
1 Rent Rent
2 775
Point
3 810 Mean 650 Estimate
4 720 Standard Error 13.75348
5 700 Median 664
6 670 Mode #N/A
7 795 Standard Deviation 55.01394
8 768 Sample Variance 3026.533
9 660 Kurtosis -0.62925
10 750 Skewness -0.77274
11 645 Range 170
12 805 Minimum 545
13 780 Maximum 715
14 790 Sum 10400 Margin
15 815 Count 16 of Error
16 757 Confidence Level (95%) 29.31488
  Interval Estimate of a Population Mean:
Unknown
 Adequate Sample Size

In most applications, a sample size of n = 30 is

adequate when using the expression x  t / 2 s n to
develop an interval estimate of a population mean.

If the population distribution is highly skewed or

contains outliers, a sample size of 50 or more is
recommended.
  Interval Estimate of a Population Mean:
Unknown
 Adequate Sample Size (continued)

If the population is not normally distributed but is

roughly symmetric, a sample size as small as 15
will suffice.

If the population is believed to be at least

approximately normal, a sample size of less than 15
can be used.
Summary of Interval Estimation Procedures
for a Population Mean

Can the
Yes No
population standard
deviation s be assumed
known ?
Use the sample
standard deviation
s Known s to estimate s
Case
Use Use
 s Unknown s
x  z /2 Case x  t /2
n n
 Sample Size for an Interval Estimate
of a Population Mean

Let E = the desired margin of error.

E is the amount added to and subtracted from the

point estimate to obtain an interval estimate.

If a desired margin of error is selected prior to

sampling, the sample size necessary to satisfy the
margin of error can be determined.
 Sample Size for an Interval Estimate
of a Population Mean

 Margin of Error

E  z /2
n

 Necessary Sample Size

( z / 2 ) 2  2
n
E2
 Sample Size for an Interval Estimate
of a Population Mean

The Necessary Sample Size equation requires a

value for the population standard deviation s .

If s is unknown, a preliminary or planning value

for s can be used in the equation.

1. Use the estimate of the population standard deviation

computed in a previous study.

2. Use a pilot study to select a preliminary study and

use the sample standard deviation from the study.

3. Use judgment or a “best guess” for the value of s .

 Sample Size for an Interval Estimate
of a Population Mean
 Example: Discount Sounds
Recall that Discount Sounds is evaluating a potential location for a new
retail outlet, based in part, on the mean annual income of the individuals
in the marketing area of the new location.

Suppose that Discount Sounds’ management team

wants an estimate of the population mean such that
there is a .95 probability that the sampling error is
500 or less.

How large a sample size is needed to meet the

required precision?
 Sample Size for an Interval Estimate
of a Population Mean

z /2  500
n
  At 95% confidence, z.025 = 1.96. Recall that = 4,500.
( z / 2 ) 2  2
n
E2
(1.96)2 (4, 500)2
n 2
 311.17  312
(500)
A sample of size 312 is needed to reach a desired
precision of + 500 at 95% confidence.
 Interval Estimate
of a Population Proportion

The general form of an interval estimate of a

population proportion is
p  Margin of Error
 Interval Estimate
of a Population Proportion

The sampling distribution of p plays a key role in

computing the margin of error for this interval
estimate.

The sampling distribution of p can be approximated

by a normal distribution whenever np > 5 and
n(1 – p) > 5.
 Interval Estimate
of a Population Proportion
 Normal Approximation of Sampling Distribution of p

Sampling p(1  p)
distribution p 
n
of p

  /2  1 -
of all   /2
p values
p
p
z /2 p z /2 p
 Interval Estimate
of a Population Proportion
 Interval Estimate

p (1  p )
p  z / 2
n

 
where: 1 - 𝛼 is the confidence coefficient
z /2 is the z value providing an area of
/2 in the upper tail of the standard
normal probability distribution
is thep sample proportion
 Interval Estimate
of a Population Proportion
 Example: Political Science, Inc.

Political Science, Inc. (PSI) specializes in voter polls

and surveys designed to keep political office seekers
informed of their position in a race.
Using telephone surveys, PSI interviewers ask
registered voters who they would vote for if the
election were held that day.
 Interval Estimate
of a Population Proportion
 Example: Political Science, Inc.

In a current election campaign, PSI has just found

that 220 registered voters, out of 500 contacted, favor
a particular candidate. PSI wants to develop a 95%
confidence interval estimate for the proportion of the
population of registered voters that favor the
candidate.
 Interval Estimate
of a Population Proportion

 
where: n = 500, = 220/500 = .44, z/2 = 1.96
p (1  p )
p  z / 2
n p
.44(1  .44)
.44  1.96 = .44 + .0435
500

PSI is 95% confident that the proportion of all voters

that favor the candidate is between 0.3965 and 0.4835.
 Using Excel to Construct
a Confidence Interval
 Excel Formula Worksheet
A B C
1 Favor Sample Size =COUNTA(A2:A501)
2 Yes Response of Interest Yes
3 Yes Count for Response =COUNTIF(A2:A501,C2)
4 No Sample Proportion =C3/C1
5 Yes
Note:
Rows 16-501
6 No Confid. Coefficient 0.95
are not shown.
7 No Lev. of Significance =1-C6
8 No z Value =NORM.S.INV(1-C7/2)
9 No
10 Yes Standard Error =SQRT(C4*(1-C4)/C1)
11 No Margin of Error =C8*C10
12 Yes
13 No Point Estimate =C4
14 Yes Lower Limit =C13-C11
15 Yes Upper Limit =C13+C11
 Using Excel to Construct
a Confidence Interval
 Excel Value Worksheet
A B C
1 Favor Sample Size 500
2 Yes Response of Interest Yes
3 Yes Count for Response 220
4 No Sample Proportion 0.4400
Note:
5 Yes
Rows 16-501
6 No Confid. Coefficient 0.95
are not shown.
7 No Lev. of Significance 0.05
8 No z Value 1.9600
9 No
10 Yes Standard Error 0.02220
11 No Margin of Error 0.04351
12 Yes
13 No Point Estimate 0.4400
14 Yes Lower Limit 0.3965
15 Yes Upper Limit 0.4835
 Sample Size for an Interval Estimate
of a Population Proportion
 Margin of Error

p (1  p )
E  z / 2
n

Solving for the necessary sample size, we get

( z / 2 ) 2 p (1  p )
n
E2
However, p will not be known until after we have
selected the sample. We will use the planning value
p* for p.
 Sample Size for an Interval Estimate
of a Population Proportion
 Necessary Sample Size

( z / 2 )2 p* (1  p* )
n
E2

The planning value p* can be chosen by:

1. Using the sample proportion from a previous sample of
the same or similar units, or
2. Selecting a preliminary sample and using the
sample proportion from this sample.
3. Use judgment or a “best guess” for a p* value.
4. Otherwise, use .50 as the p* value.
 Sample Size for an Interval Estimate
of a Population Proportion
 Example: Political Science, Inc.

Suppose that PSI would like a .99 probability that

the sample proportion is within + .03 of the
population proportion.
How large a sample size is needed to meet the
required precision? (A previous sample of similar
units yielded .44 for the sample proportion.)
 Sample Size for an Interval Estimate
of a Population Proportion
p(1  p )
z /2  .03
n

At 99% confidence, z.005 = 2.576. Recall that p = .44.

( z /2 )2 p(1  p) (2.576)2 (.44)(.56)
n   1817
E2 (.03) 2

A sample of size 1817 is needed to reach a desired

precision of + .03 at 99% confidence.
Thank you for
listening. 