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Inferences Based On A Single Sample: Estimation With Confidence Intervals
Inferences Based On A Single Sample: Estimation With Confidence Intervals
Chapter 7
7-1
Learning Objectives
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7-2
Thinking Challenge
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Suppose you’re
interested in the
average amount of
money that students
in this class (the
population) have on
them. How would
you find out?
7-3
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Introduction
to Estimation
7-4
Statistical Methods
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Statistical
Methods
Descriptive Inferential
Statistics Statistics
Hypothesis
Estimation
Testing
7-5
Estimation Process
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7-6
Estimation Process
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Population
Mean, , is
unknown
7-7
Estimation Process
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Mean
Mean, , is X= 50
unknown
Sample
7-8
Estimation Process
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7-9
Unknown Population
Parameters Are Estimated
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7 - 11
Estimation Methods
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Estimation
7 - 12
Estimation Methods
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Estimation
Point
Estimation
7 - 13
Estimation Methods
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Estimation
Point Interval
Estimation Estimation
7 - 14
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Point Estimation
7 - 15
Estimation Methods
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Estimation
Point Interval
Estimation Estimation
7 - 16
Point Estimation
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7 - 17
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Interval Estimation
7 - 18
Estimation Methods
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Estimation
Point Interval
Estimation Estimation
7 - 19
Interval Estimation
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7 - 20
Key Elements of
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Interval Estimation
7 - 21
Key Elements of
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Interval Estimation
Sample statistic
(point estimate)
7 - 22
Key Elements of
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Interval Estimation
Sample statistic
Confidence
interval
(point estimate)
Confidence Confidence
limit (lower) limit (upper)
7 - 23
Key Elements of
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Interval Estimation
A probability that the population parameter
falls somewhere within the interval.
Sample statistic
Confidence
interval
(point estimate)
Confidence Confidence
limit (lower) limit (upper)
7 - 24
Confidence Limits
for Population Mean
We know the distribution of X-bar (for
large n:
CLT says it’s normally distributed with
mean Mu)
For any z, look up Pr X z X
z X z X
Confidence Depends on
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Interval (z)
7 - 26
Confidence Depends on
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Interval (z)
x_
X
7 - 27
Confidence Depends on
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Interval (z)
X= ± Zx
x_
X
7 - 28
Confidence Depends on
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Interval (z)
X= ± Zx
x_
X
-1.65x +1.65x
90% Samples
7 - 29
Confidence Depends on
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Interval (z)
X= ± Zx
x_
X
-1.65x +1.65x
-1.96x +1.96x
90% Samples
95% Samples
7 - 30
Confidence Depends on
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Interval (z)
X= ± Zx
x_
X
-2.58x -1.65x +1.65x +2.58x
-1.96x +1.96x
90% Samples
95% Samples
99% Samples
7 - 31
Confidence Level
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7 - 32
Intervals
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Equivalent formulations:
X z X
X z X , z X
X z X , X z X
Therefore, can draw intervals around
either one, mu or x-bar:
Pr X z X , z X Pr X z X , X z X
7 - 33
But, Be Careful…
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7 - 34
Intervals &
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Confidence Level
Sampling x_
Distribution /2 /2
1 -
of Mean _
X
x =
Intervals (1 - ) % of
extend from intervals
X - ZX to contain .
X + ZX % do not.
Intervals derived from
7 - 35 many samples
Factors Affecting
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Interval Width
1. Data Dispersion Intervals Extend from
Measured by X - ZX toX + ZX
2. Sample Size
—
X = / n
3. Level of Confidence
(1 - )
(Affects Z)
7 - 37
Confidence Interval
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Estimates
Confidence
Intervals
7 - 38
Confidence Interval
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Estimates
Confidence
Intervals
Mean
7 - 39
Confidence Interval
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Estimates
Confidence
Intervals
Mean Proportion
7 - 40
Confidence Interval
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Estimates
Confidence
Intervals
7 - 41
Confidence Interval
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Estimates
Confidence
Intervals
Known
7 - 42
Confidence Interval
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Estimates
Confidence
Intervals
Known Unknown
7 - 43
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7 - 44
Confidence Interval
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Estimates
Confidence
Intervals
Known Unknown
7 - 45
Confidence Interval
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Mean ( Known)
1. Assumptions
Population Standard Deviation Is Known
Population Is Normally Distributed
If Not Normal, Can Be Approximated by
Normal Distribution (n 30)
7 - 46
Confidence Interval
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Mean ( Known)
1. Assumptions
Population Standard Deviation Is Known
Population Is Normally Distributed
If Not Normal, Can Be Approximated by
Normal Distribution (n 30)
2. Confidence Interval Estimate
X Z / 2 X Z / 2
n n
7 - 47
Estimation Example
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Mean ( Known)
The mean of a random sample of n = 25
isX = 50. Set up a 95% confidence
interval estimate for if = 10.
7 - 48
Estimation Example
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Mean ( Known)
The mean of a random sample of n = 25
isX = 50. Set up a 95% confidence
interval estimate for if = 10.
X Z / 2 X Z / 2
n n
10 10
50 1.96 50 1.96
25 25
46.08 53.92
7 - 49
Thinking Challenge
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7 - 50
Confidence Interval
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Solution*
X Z / 2 X Z / 2
n n
.05 .05
1.99 1645
. 199
. 1.645
100 100
1.982 1.998
7 - 51
Check Your
Understanding
You take a sample
Compute x-bar and confidence interval of 1.96*sigma around
x-bar
1. Is Pr(mu lies in the confidence interval)=.95?
Suppose you take another sample
2. Is Pr(x-bar for new sample lies in the first confidence interval)
= .95?
3. Is Pr(confidence interval computed from the second sample
contains mu) = .95?
Suppose you combine the two samples
4. Will the confidence interval be larger or smaller than the
individual intervals computed?
5. Will the confidence level be lower or higher?
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7 - 53
Confidence Interval
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Estimates
Confidence
Intervals
Known Unknown
7 - 54
Large Samples
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7 - 55
Another Way To Think
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About It
Define variable X X X
Z
X / n s/ n
X-bar is the sampling distribution of the mean of a
sample of Xs
Z is the normalized variable of X-bar
mu= 0 and sigma = 1
By the CLT, X-bar is normally distributed (large samples)
So Z is normally distributed
Therefore,
pr Z Z pr Z Z pr Z Z
2 2
7 - 56
2 2 2
Confidence Interval
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Cookbook
X Z X
Interval to compute:
2
Compute sample mean, X
Z
Find 2
7 - 57
Problems for Small Samples
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7 - 58
Solution for Small
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Samples
1. Assumptions
Population of X Is Normally Distributed
2. Use Student’s t Distribution
1. Define variable
X
T
s / n-1
2. T has the Student distribution with n degrees of
freedom (When X is normally distributed)
• There’s a different Student distribution for different degrees of
freedom
• As n gets large, Student distribution approximates a normal
distribution with mean = 0 and sigma = 1
7 - 59
Student’s t Distribution
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Standard
Normal
Bell-Shaped
t (df = 13)
Symmetric
t (df = 5)
‘Fatter’ Tails
Z
t
0
7 - 60
Confidence Interval
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Mean ( Unknown)
Find t-value associated with desired
confidence level alpha
T
X Pr T t / 2,n1
s/ n
1001 confidence interval is
X t s s
/ 2,n1 , X t / 2,n1
n n
7 - 61
Student’s t Table
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7 - 62
Student’s t Table
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7 - 63
Student’s t Table
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t values
7 - 64
Student’s t Table
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/2
v t.10 t.05 t.025
0 t
t values
7 - 65
Student’s t Table
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Assume:
/2 n=3
v t.10 t.05 t.025 df = n - 1 = 2
= .10
1 3.078 6.314 12.706
/2 =.05
2 1.886 2.920 4.303
0 t
t values
7 - 66
Student’s t Table
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Assume:
/2 n=3
v t.10 t.05 t.025 df = n - 1 = 2
= .10
1 3.078 6.314 12.706
/2 =.05
2 1.886 2.920 4.303
0 t
t values
7 - 67
Student’s t Table
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Assume:
/2 n=3
v t.10 t.05 t.025 df = n - 1 = 2
= .10
1 3.078 6.314 12.706
/2 =.05
2 1.886 2.920 4.303
0 t
t values
7 - 68
Student’s t Table
© 2003 Pearson Prentice Hall
Assume:
/2 n=3
v t.10 t.05 t.025 df = n - 1 = 2
= .10
1 3.078 6.314 12.706
/2 =.05
2 1.886 2.920 4.303
0 t
t values 2.920
7 - 69
Degrees of Freedom (df)
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7 - 70
Estimation Example
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Mean ( Unknown)
A random sample of n = 25 hasx = 50 &
s = 8. Set up a 95% confidence interval
estimate for .
7 - 71
Estimation Example
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Mean ( Unknown)
A random sample of n = 25 hasx = 50 &
s = 8. Set up a 95% confidence interval
estimate for .
S S
X t / 2, n 1 X t / 2, n 1
n n
8 8
50 2.0639 50 2.0639
25 25
46.69 53.30
7 - 72
Thinking Challenge
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7 - 73
Confidence Interval
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Solution*
X = 3.7
S = 0.38987
n = 6, df = n - 1 = 6 - 1 = 5
S / n = 0.38987 / 6 = 1.592
t.05,5 = 2.0150
3.7 - (2.015)(1.592) 3.7 + (2.015)(1.592)
3.38 4.02
7 - 74
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7 - 75
Confidence Interval
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Estimates
Confidence
Intervals
Known Unknown
7 - 76
Confidence Interval
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Proportion
7 - 77
Confidence Interval
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Proportion of Population
Two Categorical Outcomes
Mean of 0-1 variables, each with prob. p
Xi pq
pq
count of 1' s X i X
X n
n n
7 - 78
Normal Approximation Can
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Be Used
pq pq
X z X , X z X p z , p z
n n
pˆ qˆ pˆ qˆ
pˆ z , pˆ z
n n
7 - 79
Confidence Interval
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Proportion
1. Assumptions
Two Categorical Outcomes
Population Follows Binomial Distribution
Normal Approximation Can Be Used
ˆ 1 p
p ˆ
p3
If ˆ Does Not Include 0 or 1
n
2. Confidence Interval Estimate
(1 p )
p (1 p )
p
p z 2 p p z 2
n n
7 - 80
Estimation Example
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Proportion
A random sample of 400 graduates
showed 32 went to grad school. Set up a
95% confidence interval estimate for p.
7 - 81
Estimation Example
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Proportion
A random sample of 400 graduates
showed 32 went to grad school. Set up a
95% confidence interval estimate for p.
(1 p )
p (1 p )
p
p Z / 2 p p Z / 2
n n
.08 (1 .08) .08 (1 .08)
.08 1.96 p .08 1.96
400 400
.053 p .107
7 - 82
Thinking Challenge
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You’re a production
manager for a newspaper.
You want to find the %
defective. Of 200
newspapers, 35 had
defects. What is the
90% confidence interval
estimate of the population
proportion defective?
7 - 83
Confidence Interval
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Solution*
(1 p )
p (1 p )
p
p z / 2 p p z / 2
n n
.1308 p .2192
7 - 84
Review
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Define
Z
2
7 - 85
Review
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7 - 86
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7 - 87
Finding Sample Sizes
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for Estimating
I don’t want to
X Error
(1) Z sample too much
x x or too little!
(2) Error Z x Z
n
2 2
Z
(3) n
Error 2
Error Is Also Called Bound, B, or
Margin of Error or Sampling Error, SE
7 - 88
Determining Sample Size
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7 - 89
Determining Sample Size
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7 - 90
Sample Size Example
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7 - 91
Sample Size Example
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n
Z 2
1.645 45
2 2 2
219.2 220
Error 2
52
7 - 92
Thinking Challenge
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Z 2 2
n
Error 2
1.96 400
2 2
502
245.86 246
7 - 94
Public Opinion Poll
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7 - 95
Public Opinion Poll
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Solution*
2 2 2 2 2
z
1.96 pq 1.96 * .5
n
2 2 2
B .04 .04
600
Even if p is near .5, 95% confidence interval will be
plus/minus 4 percent
If p is much smaller, will the confidence interval be
larger or smaller? (Hint: try p=.1)
If you expect p is 10-30%, rather than 50%, do you
need a bigger or smaller sample to get 95%
confidence of plus/minus 4 percent?
7 - 96
Conclusion
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7 - 97
End of Chapter