Lecture 5: Sampling Methods

and Central Limit Theorem

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 Outline
• Explain why a sample is the only feasible way to learn
about a population
• Describe methods to select a sample
• Define and construct a sampling distribution of the
sample mean
• Explain the central limit theorem

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 Introduction
• Statistics is a tool for converting data into information.

Statistics

Data Information

• Issues:
− Where does the data come from?
− How is it gathered?
− How do we ensure its accuracy?
− Is the data reliable?
− Is it representative of the population from which it was drawn?

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 Methods of Collecting Data
• There are many methods available to collect or obtain
data for statistical analysis.
• Three of the most popular methods are:
– Direct Observation
– Experiments, and
– Surveys.

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 Surveys
• A survey solicits information from people; e.g., pre-
election polls; marketing surveys.
• The Response Rate (i.e. the proportion of all people
selected who complete the survey) is a key survey
parameter.
• Surveys may be administered in a variety of ways, e.g.,
– Personal Interview,
– Telephone Interview, and
– Self-Administered Questionnaire.

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 Questionnaire Design
• Key design principles:
− Keep the questionnaire as short as possible.
− Ask short, simple, and clearly worded questions.
− Start with demographic questions to help respondents get
started comfortably.
− Use dichotomous (yes | no) and multiple choice questions.
− Use open-ended questions cautiously.
− Avoid using leading-questions.
− Pretest a questionnaire on a small number of people.
− Think about the way you intend to use the collected data
when preparing the questionnaire.
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 Sampling

• Recall that statistical inference permits us to draw

conclusions about a population based on a sample.
• Remember that the sampled population and the target
population should be similar to one another.

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 Why Sample the Population?

The physical impossibility of

checking all items in the
population.

The cost of studying all the

items in a population.
The time-consuming aspect of
contacting the whole
population.

The destructive The adequacy of

nature of certain sample results in most
tests. cases.

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 Sampling Plan and Types of
Sampling
• A sampling plan is just a method or procedure for
specifying how a sample will be taken from a
population.
• Two major types of sampling:
– Probability Sampling
– Non-probability Sampling

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 Probability Sampling

A probability sample is a
sample selected such that
each item or person in the
population being studied has a
known likelihood of being
included in the sample.

Four Most Commonly Used Probability Sampling Methods

1.Simple Random Sampling
2.Systematic Random Sampling
3.Stratified Random Sampling
4.Cluster Sampling

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 Probability Sampling Methods

Simple Random Sample A sample formulated so that each item or

person in the population has the same chance of being included.

EXAMPLE:
A population consists of 845 employees of Nitra Industries. A sample of
52 employees is to be selected from that population. The name of each
employee is written on a small slip of paper and deposited all of the slips in a
box. After they have been thoroughly mixed, the first selection is made by
drawing a slip out of the box without looking at it. This process is repeated
until the sample of 52 employees is chosen.

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 Simple Random Sample: Using
Table of Random Numbers
A population consists of 845 employees of Nitra Industries. A sample
of 52 employees is to be selected from that population.
A more convenient method of selecting a random sample is to use
the identification number of each employee and a table of
random numbers such as the one in Appendix E.

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 Probability Sampling Methods
(cont’d)
Systematic Random Sampling The items or individuals of the
population are arranged in some order. A random starting point
is selected and then every kth member of the population is
selected for the sample.

EXAMPLE
A population consists of 845 employees of Nitra Industries.
A sample of 52 employees is to be selected from that population.

First, k is calculated as the population size divided by the sample size. For Nitra
Industries, we would select every 16th (845/52) employee list. If k is not a whole
number, then round down. Random sampling is used in the selection of the first
name. Then, select every 16th name on the list thereafter.

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 Probability Sampling Methods
(cont’d)

Stratified Random Sampling: A population is first

divided into subgroups, called strata, and a
sample is selected from each stratum.

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 Probability Sampling Methods
(cont’d)
EXAMPLE
Suppose we want to study the advertising expenditures for the
352 largest companies in the United States to determine whether
firms with high returns on equity (a measure of profitability) spent
more of each sales dollar on advertising than firms with a low
return or deficit.

To make sure that the sample is a fair representation of the 352

companies, the companies are grouped on percent return on
equity and a sample proportional to the relative size of the
group is randomly selected.

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 Probability Sampling Methods
(cont’d)
EXAMPLE

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 Probability Sampling Methods
(cont’d)
Cluster Sampling: A population is divided into clusters using
naturally occurring geographic or other boundaries. Then,
clusters are randomly selected and a sample is collected by
randomly selecting from each cluster.

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 Probability Sampling Methods
(cont’d)
EXAMPLE
Suppose you want to determine the views of residents in Oregon about
state and federal environmental protection policies.

Cluster sampling can be used by subdividing the state into small units—
either counties or regions, select at random say 4 regions, then take
samples of the residents in each of these regions and interview them.
(Note that this is a combination of cluster sampling and simple random
sampling.)

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 Non-Probability Sampling

In non-probability sampling, inclusion in the sample is

based on the judgment of the person selecting the
sample.

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 Sample Size

• This is an important issue.

• Numerical techniques for determining sample sizes will
be discussed later.
• For now remember that the larger the sample size is, the
more accurate we can expect the sample estimates to
be.

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 Sampling and Non-Sampling
Errors
The sampling error is the difference
between a sample statistic and its
corresponding population parameter.

For example, X 

Increasing the sample size will reduce this type of error.

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 Sampling and Non-Sampling
Errors
• Non-sampling errors are more serious and are:
– due to mistakes made in the acquisition of data or
– due to the sample observations being selected improperly.

• There are three types of non-sampling errors:

– Errors in data acquisition
– Non-response errors, and
– Selection bias.

• Increasing the sample size will not reduce this type of

error.

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 Sampling Distribution of the
Sample Mean

The sampling distribution of the sample mean is a

probability distribution consisting of all possible
sample means of a given sample size selected
from a population.

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 Example 1
Tartus Industries has seven production employees (considered the population). The
hourly earnings of each employee are given in the table below.
1. What is the population mean?
2. What is the sampling distribution of the sample mean for samples of size 2?
3. What is the mean of the sampling distribution?
4. What observations can be made about the population and the sampling
distribution?

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 Example 1 (cont’d)

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 Example 1 (cont’d)

The sampling distribution of sample means tends to become bell

shaped and to approximate the normal probability distribution.

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 Central Limit Theorem
CENTRAL LIMIT THEOREM If all samples of a particular size are selected from any
population, the sampling distribution of the sample mean is approximately a normal
distribution. This approximation improves with larger samples.

• If the population follows a normal probability

distribution, then for any sample size the
sampling distribution of the sample mean
will also be normal.

• If the population distribution is symmetrical

(but not normal), shape of the distribution of
the sample mean will emerge as normal
with samples as small as 10.

• If a distribution is skewed or has thick tails,

it may require samples of 30 or more to
observe the normality feature.

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 Central Limit Theorem (cont’d)

The mean of the sampling distribution

equals to µ and the variance equals to
σ2/n.

The standard error of the mean is the standard deviation of

the sample means given as:

x = 
n

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 Using the Sampling
Distribution of the Sample Mean
IF SIGMA IS KNOWN

• If a population follows the normal distribution,

the sampling distribution of the sample mean IF SIGMA IS UNKNOWN, OR IF POPULATION IS
will also follow the normal distribution. NON NORMAL

 If the population does not follow the normal

• If the shape is known to be nonnormal, but distribution, but the sample is of at least 30
the sample contains at least 30 observations, observations, the sample means will follow the
the central limit theorem guarantees the normal distribution.
sampling distribution of the mean follows a
normal distribution.
 To determine the probability a sample mean falls
within a particular region, use:
• To determine the probability a sample mean
falls within a particular region, use:

X  X 
z z
 n s n

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