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Statistics, Seventh Edition

5
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SAMPLING AND SAMPLING DISTRIBUTIONS

5–1
5–2
Using Statistics 181
Sample Statistics as Estimators of Population
Parameters 183
5–3 Sampling Distributions 190
5–4 Estimators and Their Properties 201
5–5 Degrees of Freedom 205
5–6 Using the Computer 209

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5–7 Summary and Review of Terms 213
Case 6 Acceptance Sampling of Pins 216

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LEARNING OBJECTIVES

After studying this chapter, you should be able to:

• Take random samples from populations.
• Distinguish between population parameters and sample statistics.

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• Apply the central limit theorem.
• Derive sampling distributions of sample means and proportions.
• Explain why sample statistics are good estimators of
population parameters.
• Judge one estimator as better than another based on desirable
properties of estimators.

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• Apply the concept of degrees of freedom.
• Identify special sampling methods.
• Compute sampling distributions and related results using
templates.

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5–1 Using Statistics
Statistics is a science of inference. It is the science
of generalization from a part (the randomly
chosen sample) to the whole (the population).1
Recall from Chapter 1 that the population is
the entire collection of measurements in which we are interested, and the sample is
a smaller set of measurements selected from the population. A random sample of

1
n elements is a sample selected from the population in such a way that every set of
n elements is as likely to be selected as any other set of n elements.2 It is important
that the sample be drawn randomly from the entire population under study. This
increases the likelihood that our sample will be truly representative of the population
of interest and minimizes the chance of errors. As we will see in this chapter, random
sampling also allows us to compute the probabilities of sampling errors, thus provid-
ing us with knowledge of the degree of accuracy of our sampling results. The need
to sample correctly is best illustrated by the well-known story of the Literary Digest

1
(see page 182).
In 1936, the widely quoted Literary Digest embarked on the project of predicting
the results of the presidential election to be held that year. The magazine boasted it
would predict, to within a fraction of the percentage of the votes, the winner of the
election—incumbent President Franklin Delano Roosevelt or the Republican gover-
nor of Kansas, Alfred M. Landon. The Digest tried to gather a sample of staggering
proportion—10 million voters! One problem with the survey was that only a fraction

1
of the people sampled, 2.3 million, actually provided the requested information.
Should a link have existed between a person’s inclination to answer the survey and
his or her voting preference, the results of the survey would have been biased: slanted
toward the voting preference of those who did answer. Whether such a link did exist
in the case of the Digest is not known. (This problem, nonresponse bias, is discussed in
Chapter 16.) A very serious problem with the Digest ’s poll, and one known to have
affected the results, is the following.
The sample of voters chosen by the Literary Digest was obtained from lists of

1
telephone numbers, automobile registrations, and names of Digest readers. Remember
that this was 1936—not as many people owned phones or cars as today, and those
who did tended to be wealthier and more likely to vote Republican (and the same
goes for readers of the Digest). The selection procedure for the sample of voters was
thus biased (slanted toward one kind of voter) because the sample was not randomly
chosen from the entire population of voters. Figure 5–1 demonstrates a correct sam-
pling procedure versus the sampling procedure used by the Literary Digest.
As a result of the Digest error, the magazine does not exist today; it went bankrupt
soon after the 1936 election. Some say that hindsight is useful and that today we
know more statistics, making it easy for us to deride mistakes made more than 60 years
ago. Interestingly enough, however, the ideas of sampling bias were understood in
1936. A few weeks before the election, a small article in The New York Times criticized
the methodology of the Digest poll. Few paid it any attention.

1
Not all of statistics concerns inferences about populations. One branch of statistics, called descriptive statistics, deals
with describing data sets—possibly with no interest in an underlying population. The descriptive statistics of Chapter 1,
when not used for inference, fall in this category.
2
This is the definition of simple random sampling, and we will assume throughout that all our samples are simple random
samples. Other methods of sampling are discussed in Chapter 6.
184 Aczel−Sounderpandian: 5. Sampling and Sampling Text © The McGraw−Hill
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182 Chapter 5

Digest Poll Gives Landon 32 States

Landon Leads 4–3 in Last Digest Poll
Final Tabulation Gives Him States, and will lead President Roosevelt
370 Electoral Votes to 161 for about four to three in their share of the
President Roosevelt popular vote, if the final figures in The
Governor Landon will win the elec- Literary Digest poll, made public yes-
tion by an electoral vote of 370 to 161, terday, are verified by the count of the
will carry thirty-two of the forty-eight ballots next Tuesday.

The New York Times, October 30, 1936. Copyright © 1936 by The New York Times
Company. Reprinted by permission.

Roosevelt’s Plurality Is 11,000,000

History’s Largest Poll
46 States Won by President,
Maine and Vermont by Landon
Many Phases to Victory
Democratic Landslide Looked Upon and electoral majority since the United
as Striking Personal Triumph for States became a continental nation—a
Roosevelt margin of approximately 11,000,000
By Arthur Krock plurality of all votes cast, and 523 votes
As the count of ballots cast Tuesday in in the electoral college to 8 won by the
the 1936 Presidential election moved Republican Presidential candidate,
toward completion yesterday, these Governor Alfred M. Landon of Kansas.
facts appeared: The latter carried only Maine and
Franklin Delano Roosevelt was re- Vermont of the forty-eight States of the
elected President, and John N. Garner Union . . . .
Vice President, by the largest popular

The New York Times, November 5, 1936. Copyright © 1936 by The New York Times
Company. Reprinted by permission.

Sampling is very useful in many situations besides political polling, including

business and other areas where we need to obtain information about some popula-
tion. Our information often leads to a decision. There are also situations, as demon-
strated by the examples in the introduction to this book, where we are interested in
a process rather than a single population. One such process is the relationship between
advertising and sales. In these more involved situations, we still make the assumption
of an underlying population—here, the population of pairs of possible advertising and
sales values. Conclusions about the process are reached based on information in our
data, which are assumed to constitute a random sample from the entire population.
The ideas of a population and of a random sample drawn from the population are
thus essential to all inferential statistics.
Aczel−Sounderpandian: 5. Sampling and Sampling Text © The McGraw−Hill 185
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Sampling and Sampling Distributions 183

FIGURE 5–1 A Good Sampling Procedure and the One Used by the Literary Digest

A Good Sampling Procedure

Sample

Sample is randomly chosen from

the entire population

Population

The Literary Digest Poll

Sample Sample is chosen from

the population of
people who have
phones and/or
cars and/or are Digest
readers

Democrats Republicans

Population

People who
have phones and/or cars
and/or are Digest readers

In statistical inference we are concerned with populations; the samples are of no

interest to us in their own right. We wish to use our known random sample in the
extraction of information about the unknown population from which it is drawn.
The information we extract is in the form of summary statistics: a sample mean, a
sample standard deviation, or other measures computed from the sample. A statistic
such as the sample mean is considered an estimator of a population parameter—the
population mean. In the next section, we discuss and define sample estimators and
population parameters. Then we explore the relationship between statistics and param-
eters via the sampling distribution. Finally, we discuss desirable properties of statistical
estimators.

5–2 Sample Statistics as Estimators

of Population Parameters
A population may be a large, sometimes infinite, collection of elements. The popula-
tion has a frequency distribution—the distribution of the frequencies of occurrence of its
elements. The population distribution, when stated in relative frequencies, is also the
probability distribution of the population. This is so because the relative frequency of
a value in the population is also the probability of obtaining the particular value
when an element is randomly drawn from the entire population. As with random
variables, we may associate with a population its mean and its standard deviation.
186 Aczel−Sounderpandian: 5. Sampling and Sampling Text © The McGraw−Hill
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Statistics, Seventh Edition

184 Chapter 5

In the case of populations, the mean and the standard deviation are called parameters.
They are denoted by  and , respectively.

A numerical measure of a population is called a population parameter, or

simply a parameter.

Recall that in Chapter 4 we referred to the mean and the standard deviation of a nor-
mal probability distribution as the distribution parameters. Here we view parameters as
descriptive measures of populations. Inference drawn about a population parameter
is based on sample statistics.

A numerical measure of the sample is called a sample statistic, or simply

a statistic.

Population parameters are estimated by sample statistics. When a sample statistic is

used to estimate a population parameter, the statistic is called an estimator of the
parameter.

An estimator of a population parameter is a sample statistic used to esti-

mate the parameter. An estimate of the parameter is a particular numerical
value of the estimator obtained by sampling. When a single value is used
as an estimate, the estimate is called a point estimate of the population
parameter.

The sample mean X is the sample statistic used as an estimator of the population
mean . Once we sample from the population and obtain a value of X (using equa-
tion 1–1), we will have obtained a particular sample mean; we will denote this par-
ticular value by x . We may have, for example, x
12.53. This value is our estimate
of . The estimate is a point estimate because it constitutes a single number. In this
chapter, every estimate will be a point estimate—a single number that, we hope, lies
close to the population parameter it estimates. Chapter 6 is entirely devoted to the
concept of an interval estimate—an estimate constituting an interval of numbers rather
than a single number. An interval estimate is an interval believed likely to contain
the unknown population parameter. It conveys more information than just the point
estimate on which it is based.
In addition to the sample mean, which estimates the population mean, other sta-
tistics are useful. The sample variance S 2 is used as an estimator of the population
variance 2. A particular estimate obtained will be denoted by s 2. (This estimate is
computed from the data using equation 1–3 or an equivalent formula.)
As demonstrated by the political polling example with which we opened this
chapter, interest often centers not on a mean or standard deviation of a population,
but rather on a population proportion. The population proportion parameter is also
called a binomial proportion parameter.

The population proportion p is equal to the number of elements in the

population belonging to the category of interest, divided by the total
number of elements in the population.

The population proportion of voters for Governor Landon in 1936, for example,
was the number of people who intended to vote for the candidate, divided by the
total number of voters. The estimator of the population proportion p is the sample
proportion P$, defined as the number of binomial successes in the sample (i.e., the num-
ber of elements in the sample that belong to the category of interest), divided by the
Aczel−Sounderpandian: 5. Sampling and Sampling Text © The McGraw−Hill 187
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Sampling and Sampling Distributions 185

sample size n. A particular estimate of the population proportion p is the sample

proportion p$.

The sample proportion is

x
p$ = n (5–1)

where x is the number of elements in the sample found to belong to the

category of interest and n is the sample size.

Suppose that we want to estimate the proportion of consumers in a certain area who
are users of a certain product. The (unknown) population proportion is p. We esti-
mate p by the statistic P$, the sample proportion. Suppose a random sample of 100
consumers in the area reveals that 26 are users of the product. Our point estimate of
p is then p$
x
n
26
100
0.26. As another example, let’s look at a very important
problem, whose seriousness became apparent in early 2007, when more than a dozen
dogs and cats in the United States became sick, and some died, after being fed pet
food contaminated with an unknown additive originating in China. The culprit was
melamine, an artificial additive derived from coal, which Chinese manufacturers
have been adding to animal feed, and it was the cause of the death of pets and has even
caused problems with the safety of eating farm products.3 The wider problem of just
how this harmful additive ended up in animal feed consumed in the United States is
clearly statistical in nature, and it could have been prevented by effective use of sam-
pling. It turned out that in the whole of 2006, Food and Drug Administration (FDA)
inspectors sampled only 20,662 shipments out of 8.9 million arriving at American
ports.4 While this sampling percentage is small (about 0.2%), in this chapter you will
learn that correct scientific sampling methods do not require larger samples, and good
information can be gleaned from random samples of this size when they truly repre-
sent the population of all shipments. Suppose that this had indeed been done, and
that 853 of the sampled shipments contained melamine. What is the sample estimate
of the proportion of all shipments to the United States tainted with melamine? Using
equation 5–1, we see that the estimate is 853
20,662
0.0413, or about 4.13%.
In summary, we have the following estimation relationships:
Estimator Population
(Sample Statistic) Parameter
⎯⎯⎯⎯→
estimates 
X
⎯⎯⎯⎯→
S 2
estimates 2
⎯⎯⎯⎯→
P$ estimates p

Let us consider sampling to estimate the population mean, and let us try to visu-
alize how this is done. Consider a population with a certain frequency distribution.
The frequency distribution of the values of the population is the probability distribu-
tion of the value of an element in the population, drawn at random. Figure 5–2 shows
a frequency distribution of some population and the population mean . If we knew
the exact frequency distribution of the population, we would be able to determine 
directly in the same way we determine the mean of a random variable when we
know its probability distribution. In reality, the frequency distribution of a popula-
tion is not known; neither is the mean of the population. We try to estimate the pop-
ulation mean by the sample mean, computed from a random sample. Figure 5–2
shows the values of a random sample obtained from the population and the resulting
sample mean x , computed from the data.

3
Alexei Barrionuevo, “U.S. Says Some Chicken Feed Tainted,” The New York Times, May 1, 2007, p. C6.
4
Alexei Barrionuevo, “Food Imports Often Escape Scrutiny,” The New York Times, May 1, 2007, p. C1.
188 Aczel−Sounderpandian: 5. Sampling and Sampling Text © The McGraw−Hill
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Statistics, Seventh Edition

186 Chapter 5

FIGURE 5–2 A Population Distribution, a Random Sample from the Population, and Their
Respective Means

Frequency distribution
Sample mean of the
population
x

x x x
x x x x x xx x x x x x x x
x

Population
mean
Sample points

In this example, x happens to lie close to , the population parameter it esti-

mates, although this does not always happen. The sample statistic X is a random
variable whose actual value depends on the particular random sample obtained. The
random variable X has a relatively high probability of being close to the population
mean it estimates, and it has decreasing probabilities of falling farther and farther
from the population mean. Similarly, the sample statistic S is a random variable with
a relatively high probability of being close to , the population parameter it estimates.
Also, when sampling for a population proportion p, the estimator P$ has a relatively
high probability of being close to p. How high a probability, and how close to the
parameter? The answer to this question is the main topic of this chapter, presented in
the next section. Before discussing this important topic, we will say a few things about
the mechanics of obtaining random samples.

Obtaining a Random Sample

All along we have been referring to random samples. We have stressed the importance

F
of the fact that our sample should always be drawn randomly from the entire popula-
V tion about which we wish to draw an inference. How do we draw a random sample?

S To obtain a random sample from the entire population, we need a list of all the ele-
ments in the population of interest. Such a list is called a frame. The frame allows us
to draw elements from the population by randomly generating the numbers of the
CHAPTER 8
elements to be included in the sample. Suppose we need a simple random sample of
100 people from a population of 7,000. We make a list of all 7,000 people and assign
each person an identification number. This gives us a list of 7,000 numbers—our frame
for the experiment. Then we generate by computer or by other means a set of 100 ran-
dom numbers in the range of values from 1 to 7,000. This procedure gives every set
of 100 people in the population an equal chance of being included in the sample.
As mentioned, a computer (or an advanced calculator) may be used for generat-
ing random numbers. We will demonstrate an alternative method of choosing ran-
dom numbers—a random number table. Table 5–1 is a part of such a table. A random
number table is given in Appendix C as Table 14. To use the table, we start at any
point, pick a number from the table, and continue in the same row or the same col-
umn (it does not matter which), systematically picking out numbers with the number
of digits appropriate for our needs. If a number is outside our range of required num-
bers, we ignore it. We also ignore any number already obtained.
For example, suppose that we need a random sample of 10 data points from a pop-
ulation with a total of 600 elements. This means that we need 10 random drawings of
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TABLE 5–1 Random Numbers

10480 15011 01536 02011 81647 91646 69179 14194

22368 46573 25595 85393 30995 89198 27982 53402
24130 48360 22527 97265 76393 64809 15179 24830
42167 93093 06243 61680 07856 16376 93440 53537
37570 39975 81837 16656 06121 91782 60468 81305
77921 06907 11008 42751 27756 53498 18602 70659

elements from our frame of 1 through 600. To do this, we note that the number 600
has three digits; therefore, we draw random numbers with three digits. Since our
population has only 600 units, however, we ignore any number greater than 600 and
take the next number, assuming it falls in our range. Let us decide arbitrarily to
choose the first three digits in each set of five digits in Table 5–1; and we proceed by
row, starting in the first row and moving to the second row, continuing until we have
obtained our 10 required random numbers. We get the following random numbers:
104, 150, 15, 20, 816 (discard), 916 (discard), 691 (discard), 141, 223, 465, 255, 853
(discard), 309, 891 (discard), 279. Our random sample will, therefore, consist of the
elements with serial numbers 104, 150, 15, 20, 141, 223, 465, 255, 309, and 279. A
similar procedure would be used for obtaining the random sample of 100 people
from the population of 7,000 mentioned earlier. Random number tables are included
in books of statistical tables.
In many situations obtaining a frame of the elements in the population is impos-
sible. In such situations we may still randomize some aspect of the experiment and
thus obtain a random sample. For example, we may randomize the location and the
time and date of the collection of our observations, as well as other factors involved.
In estimating the average miles-per-gallon rating of an automobile, for example, we
may randomly choose the dates and times of our trial runs as well as the particular
automobiles used, the drivers, the roads used, and so on.

Other Sampling Methods

Sometimes a population may consist of distinct subpopulations, and including a cer-
tain number of samples from each subpopulation may be useful. For example, the
students at a university may consist of 54% women and 46% men. We know that men
and women may have very different opinions on the topic of a particular survey. Thus
having proper representation of men and women in the random sample is desirable.
If the total sample size is going to be 100, then a proper representation would mean
54 women and 46 men. Accordingly, the 54 women may be selected at random from
a frame of only women students, and the 46 men may be selected similarly. Together
they will make up a random sample of 100 with proper representation. This method
of sampling is called stratified sampling.

In a stratified sampling the population is partitioned into two or more

subpopulations called strata, and from each stratum a desired number of
samples are selected at random.

Each stratum must be distinct in that it differs from other strata in some aspect that is
relevant to the sampling experiment. Otherwise, stratification would yield no benefit.
Besides sex, another common distinction between strata is their individual variances.
For example, suppose we are interested in estimating the average income of all the
families in a city. Three strata are possible: high-income, medium-income, and low-
income families. High-income families may have a large variance in their incomes,
medium-income families a smaller variance, and low-income families the least variance.
190 Aczel−Sounderpandian: 5. Sampling and Sampling Text © The McGraw−Hill
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188 Chapter 5

Then, by properly representing the three strata in a stratified sampling process, we

can achieve a greater accuracy in the estimate than by a regular sampling process.
Sometimes, we may have to deviate from the regular sampling process for practi-
cal reasons. For example, suppose we want to find the average opinion of all voters in
the state of Michigan on a state legislation issue. Assume that the budget for the sam-
pling experiment is limited. A normal random sampling process will choose voters
all over the state. It would be too costly to visit and interview every selected voter.
Instead, we could choose a certain number of counties at random and from within the
chosen counties select voters at random. This way, the travel will be restricted to chosen
counties only. This method of sampling is called cluster sampling. Each county in
our example is a cluster. After choosing a cluster at random if we sample every item or
person in that cluster, then the method would be single-stage cluster sampling. If
we choose a cluster at random and select items or people at random within the chosen
clusters, as mentioned in our example, then that is two-stage cluster sampling.
Multistage cluster sampling is also possible. For example, we might choose counties
at random, then choose townships at random within the chosen counties, and finally
choose voters at random within the chosen townships.
At times, the frame we have for a sampling experiment may itself be in random
order. In such cases we could do a systematic sampling. Suppose we have a list of
3,000 customers and the order of customers in the list is random. Assume that we need
a random sample of 100 customers. We first note that 3,000
100
30. We then pick a
number between 1 and 30 at random—say, 18. We select the 18th customer in the list
and from there on, we pick every 30th customer in the list. In other words, we pick the
18th, 48th, 78th, and so on. In general, if N is the population size and n is the sample
size, let N
n = k where k is a rounded integer. We pick a number at random between 1
and k—say, l. We then pick the kth, (l  k)th, (l  2k)th, . . . , items from the frame.
Systematic sampling may also be employed when a frame cannot be prepared.
For example, a call center manager may want to select calls at random for monitor-
ing purposes. Here a frame is impossible but the calls can reasonably be assumed to
arrive in a random sequence, thus justifying a systematic selection of calls. Starting at
a randomly selected time, one may choose every k th call where k depends on the call
volume and the sample size desired.
Nonresponse
Nonresponse to sample surveys is one of the most serious problems that occur in
practical applications of sampling methodology. The example of polling Jewish peo-
ple, many of whom do not answer the phone on Saturday, mentioned in the New York
Times article in 2003 (see Chapter 1), is a case in point. The problem is one of loss of
information. For example, suppose that a survey questionnaire dealing with some
issue is mailed to a randomly chosen sample of 500 people and that only 300 people
respond to the survey. The question is: What can you say about the 200 people who
did not respond? This is a very important question, and there is no immediate answer
to it, precisely because the people did not respond; we know nothing about them.
Suppose that the questionnaire asks for a yes or no answer to a particular public issue
over which people have differing views, and we want to estimate the proportion of
people who would respond yes. People may have such strong views about the issue
that those who would respond no may refuse to respond altogether. In this case, the
200 nonrespondents to our survey will contain a higher proportion of “no” answers
than the 300 responses we have. But, again, we would not know about this. The result
will be a bias. How can we compensate for such a possible bias?
We may want to consider the population as made up of two strata: the respon-
dents’ stratum and the nonrespondents’ stratum. In the original survey, we managed
to sample only the respondents’ stratum, and this caused the bias. What we need to do
is to obtain a random sample from the nonrespondents’ stratum. This is easier said than
done. Still, there are ways we can at least reduce the bias and get some idea about the
Aczel−Sounderpandian: 5. Sampling and Sampling Text © The McGraw−Hill 191
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Sampling and Sampling Distributions 189

proportion of “yes” answers in the nonresponse stratum. This entails callbacks:

returning to the nonrespondents and asking them again. In some mail questionnaires,
it is common to send several requests for response, and these reduce the uncertainty.
There may, however, be hard-core refusers who just do not want to answer the
questionnaire. Such people are likely to have very distinct views about the issue in
question, and if you leave them out, there will be a significant bias in your conclu-
sions. In such a situation, gathering a small random sample of the hard-core refusers
and offering them some monetary reward for their answers may be useful. In cases
where people may find the question embarrassing or may worry about revealing
their personal views, a random-response mechanism whereby the respondent ran-
domly answers one of two questions—one the sensitive question, and the other an
innocuous question of no relevance—may elicit answers. The interviewer does not
know which question any particular respondent answered but does know the proba-
bility of answering the sensitive question. This still allows for computation of the
aggregated response to the sensitive question while protecting any given respondent’s
privacy.

PROBLEMS

5–1. Discuss the concepts of a parameter, a sample statistic, an estimator, and an

estimate. What are the relations among these entities?
5–2. An auditor selected a random sample of 12 accounts from all accounts receiv-
able of a given firm. The amounts of the accounts, in dollars, are as follows: 87.50,
123.10, 45.30, 52.22, 213.00, 155.00, 39.00, 76.05, 49.80, 99.99, 132.00, 102.11. Com-
pute an estimate of the mean amount of all accounts receivable. Give an estimate of
the variance of all the amounts.
5–3. In problem 5–2, suppose the auditor wants to estimate the proportion of all the
firm’s accounts receivable with amounts over $100. Give a point estimate of this
parameter.
5–4. An article in the New York Times describes an interesting business phenomenon.
The owners of small businesses tend to pay themselves much smaller salaries than
they would earn had they been working for someone else.5 Suppose that a random
sample of small business owners’ monthly salaries, in dollars, are as follows: 1,000,
1,200, 1,700, 900, 2,100, 2,300, 830, 2,180, 1,300, 3,300, 7,150, 1,500. Compute point
estimates of the mean and the standard deviation of the population monthly salaries of
small business owners.
5–5. Starbucks regularly introduces new coffee drinks and attempts to evaluate
how these drinks fare by estimating the price its franchises can charge for them
and sell enough cups to justify marketing the drink.6 Suppose the following random
sample of prices a new drink sells for in New York (in dollars) is available:
4.50, 4.25, 4.10, 4.75, 4.80, 3.90, 4.20, 4.55, 4.65, 4.85, 3.85, 4.15, 4.85, 3.95, 4.30,
4.60, 4.00. Compute the sample estimators of the population mean and standard
deviation.
5–6. A market research worker interviewed a random sample of 18 people about
their use of a certain product. The results, in terms of Y or N (for Yes, a user of the
product, or No, not a user of the product), are as follows: Y N N Y Y Y N Y N Y Y Y
N Y N Y Y N. Estimate the population proportion of users of the product.

5
Eva Tahmincioglu, “When the Boss Is Last in Line for a Paycheck,” The New York Times, March 22, 2007, p. C5.
6
Burt Helm, “Saving Starbucks’ Soul,” BusinessWeek, April 9, 2007, p. 56.
192 Aczel−Sounderpandian: 5. Sampling and Sampling Text © The McGraw−Hill
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Statistics, Seventh Edition

190 Chapter 5

5–7. Use a random number table (you may use Table 5–1) to find identification
numbers of elements to be used in a random sample of size n
25 from a population
of 950 elements.
5–8. Find five random numbers from 0 to 5,600.
5–9. Assume that you have a frame of 40 million voters (something the Literary
Digest should have had for an unbiased polling). Randomly generate the numbers of
five sampled voters.
5–10. Suppose you need to sample the concentration of a chemical in a production
process that goes on continuously 24 hours per day, 7 days per week. You need to
generate a random sample of six observations of the process over a period of one
week. Use a computer, a calculator, or a random number table to generate the six
observation times (to the nearest minute).

5–3 Sampling Distributions

The sampling distribution of a statistic is the probability distribution of
all possible values the statistic may take when computed from random
samples of the same size, drawn from a specified population.

F
Let us first look at the sample mean X . The sample mean is a random variable. The
V possible values of this random variable depend on the possible values of the elements

S in the random sample from which X is to be computed. The random sample, in turn,
depends on the distribution of the population from which it is drawn. As a random
variable, X has a probability distribution. This probability distribution is the sampling
CHAPTER 8
distribution of X .

The sampling distribution of X is the probability distribution of all possi-

ble values the random variable X may take when a sample of size n is taken
from a specified population.

Let us derive the sampling distribution of X in the simple case of drawing a sample
of size n
2 items from a population uniformly distributed over the integers 1
through 8. That is, we have a large population consisting of equal proportions of the
values 1 to 8. At each draw, there is a 1
8 probability of obtaining any of the values 1
through 8 (alternatively, we may assume there are only eight elements, 1 through 8,
and that the sampling is done with replacement). The sample space of the values of
the two sample points drawn from this population is given in Table 5–2. This is an
example. In real situations, sample sizes are much larger.

TABLE 5–2 Possible Values of Two Sample Points from a Uniform Population of
the Integers 1 through 8

Second
Sample First Sample Point
Point
1 2 3 4 5 6 7 8
1 1,1 2,1 3,1 4,1 5,1 6,1 7,1 8,1
2 1,2 2,2 3,2 4,2 5,2 6,2 7,2 8,2
3 1,3 2,3 3,3 4,3 5,3 6,3 7,3 8,3
4 1,4 2,4 3,4 4,4 5,4 6,4 7,4 8,4
5 1,5 2,5 3,5 4,5 5,5 6,5 7,5 8,5
6 1,6 2,6 3,6 4,6 5,6 6,6 7,6 8,6
7 1,7 2,7 3,7 4,7 5,7 6,7 7,7 8,7
8 1,8 2,8 3,8 4,8 5,8 6,8 7,8 8,8
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TABLE 5–3 The Sampling Distribution of X for a Sample of Size 2 from a

Uniformly Distributed Population of the Integers 1 to 8

Particular Value x Probability of x Particular Value x Probability of x

1 1/64 5 7/64
1.5 2/64 5.5 6/64
2 3/64 6 5/64
2.5 4/64 6.5 4/64
3 5/64 7 3/64
3.5 6/64 7.5 2/64
4 7/64 8 1/64
4.5 8/64 1.00

Using the sample space from the table, we will now find all possible values of the
sample mean X and their probabilities. We compute these probabilities, using the fact
that all 64 sample pairs shown are equally likely. This is so because the population is uni-
formly distributed and because in random sampling each drawing is independent of the
other; therefore, the probability of a given pair of sample points is the product (1
8)(1
8)

1
64. From Table 5–2, we compute the sample mean associated with each of the 64 pairs
of numbers and find the probability of occurrence of each value of the sample mean. The
values and their probabilities are given in Table 5–3. The table thus gives us the sam-
pling distribution of X in this particular sampling situation. Verify the values in Table 5–3
using the sample space given in Table 5–2. Figure 5–3 shows the uniform distribution of
the population and the sampling distribution of X , as listed in Table 5–3.
Let us find the mean and the standard deviation of the population. We can do this
by treating the population as a random variable (the random variable being the value
of a single item randomly drawn from the population; each of the values 1 through 8
has a 1
8 probability of being drawn). Using the appropriate equations from Chapter 3,
we find 
4.5 and 
2.29 (verify these results).
Now let us find the expected value and the standard deviation of the random vari-
able X . Using the sampling distribution listed in Table 5–3, we find E( X )
4.5 and
 x
1.62 (verify these values by computation). Note that the expected value of X
is equal to the mean of the population; each is equal to 4.5. The standard deviation of
X , denoted  x , is equal to 1.62, and the population standard deviation  is 2.29.
But observe an interesting fact: 2.29> 12 = 1.62. The facts we have discovered in this
example are not an accident—they hold in all cases. The expected value of the sample

FIGURE 5–3 The Population Distribution and the Sampling Distribution of the Sample Mean

The population distribution The sampling distribution of X for a sample of size n = 2

0.15 0.15
Probability

Probability

0.10 0.10

0.05 0.05

0.00 0.00
1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8
Value of x 1.5 2.5 3.5 4.5 5.5 6.5 7.5
Value of x
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192 Chapter 5

mean X is equal to the population mean  and the standard deviation of X is equal
to the population standard deviation divided by the square root of the sample size.
Sometimes the estimated standard deviation of a statistic is called its standard error.

The expected value of the sample mean is7

E(X) =  (5–2)
8
The standard deviation of the sample mean is
SD(X ) = x = > 2n (5–3)

We know the two parameters of the sampling distribution of X : We know the

mean of the distribution (the expected value of X ) and we know its standard
deviation. What about the shape of the sampling distribution? If the population itself
is normally distributed, the sampling distribution of X is also normal.

When sampling is done from a normal distribution with mean  and standard
deviation , the sample mean X has a normal sampling distribution:
X  N(, 2>n) (5–4)

Thus, when we sample from a normally distributed population with mean  and
standard deviation , the sample mean has a normal distribution with the same center,
, as the population but with width (standard deviation) that is 1> 1n the size of the
width of the population distribution. This is demonstrated in Figure 5–4, which
shows a normal population distribution and the sampling distribution of X for differ-
ent sample sizes.
The fact that the sampling distribution of X has mean  is very important. It means
that, on the average, the sample mean is equal to the population mean. The distribution of
the statistic is centered on the parameter to be estimated, and this makes the statistic X a
good estimator of . This fact will become clearer in the next section, where we discuss
estimators and their properties. The fact that the standard deviation of X is > 1n
means that as the sample size increases, the standard deviation of X decreases, making X
more likely to be close to . This is another desirable property of a good estimator, to
be discussed later. Finally, when the sampling distribution of X is normal, this allows
us to compute probabilities that X will be within specified distances of . What
happens in cases where the population itself is not normally distributed?
In Figure 5–3, we saw the sampling distribution of X when sampling is done
from a uniformly distributed population and with a sample of size n
2. Let us now
see what happens as we increase the sample size. Figure 5–5 shows results of a sim-
ulation giving the sampling distribution of X when the sample size is n
5, when the
sample size is n
20, and the limiting distribution of X —the distribution of X as the
sample size increases indefinitely. As can be seen from the figure, the limiting distri-
bution of X is, again, the normal distribution.

7
The proof of equation 5–2 relies on the fact that the expected value of the sum of several random variables is equal
to the sum of their expected values. Also, from equation 3–6 we know that the expected value of aX, where a is a number,
is equal to a times the expected value of X. We also know that the expected value of each element X drawn from the pop-
ulation is equal to , the population mean. Using these facts, we find the following: E (X )
E(X
n)
(1
n)E(X )

(1
n)n
.
8
The proof of equation 5–3 relies on the fact that, when several random variables are independent (as happens in ran-
dom sampling), the variance of the sum of the random variables is equal to the sum of their variances. Also, from equa-
tion 3–10, we know that the variance of aX is equal to a2V(X). The variance of each X drawn from the population is equal
to 2. Using these facts, we find V (X )
V (X
n)
(1
n)2(2)
(1
n)2(n2)
2
n. Hence, SD (X )
> 1n.
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FIGURE 5–4 A Normally Distributed Population and the Sampling Distribution of the Sample
Mean for Different Sample Sizes

Density

Sampling distribution of X
for n = 16

Sampling distribution of X
for n = 4

Sampling distribution of X
for n = 2

Normal population

Value
µ

FIGURE 5–5 The Sampling Distribution of X as the Sample Size Increases

Probability

n=5

x
Probability
n = 20

x
Density
Large n

/n

x

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Statistics, Seventh Edition

194 Chapter 5

The Central Limit Theorem

The result we just stated—that the distribution of the sample mean X tends to the nor-
mal distribution as the sample size increases—is one of the most important results in
statistics. It is known as the central limit theorem.

F
The Central Limit Theorem (and additional properties)
V When sampling is done from a population with mean  and finite standard
S deviation , the sampling distribution of the sample mean X will tend to a
normal distribution with mean  and standard deviation > 1n as the
CHAPTER 7 sample size n becomes large.
For “large enough” n X ' N(,  2>n) (5–5)

The central limit theorem is remarkable because it states that the distribution of
the sample mean X tends to a normal distribution regardless of the distribution of the
population from which the random sample is drawn. The theorem allows us to make
probability statements about the possible range of values the sample mean may take.
It allows us to compute probabilities of how far away X may be from the population
mean it estimates. For example, using our rule of thumb for the normal distribution,
we know that the probability that the distance between X and  will be less than
> 1n is approximately 0.68. This is so because, as you remember, the probability
that the value of a normal random variable will be within 1 standard deviation of its
mean is 0.6826; here our normal random variable has mean  and standard deviation
> 1n. Other probability statements can be made as well; we will see their use shortly.
When is a sample size n “large enough” that we may apply the theorem?
The central limit theorem says that, in the limit, as n goes to infinity (n → ∞), the dis-
tribution of X becomes a normal distribution (regardless of the distribution of the popu-
lation). The rate at which the distribution approaches a normal distribution does depend,
however, on the shape of the distribution of the parent population. If the population itself
is normally distributed, the distribution of X is normal for any sample size n, as stated
earlier. On the other hand, for population distributions that are very different from a
normal distribution, a relatively large sample size is required to achieve a good normal
approximation for the distribution of X . Figure 5–6 shows several parent population dis-
tributions and the resulting sampling distributions of X for different sample sizes.
Since we often do not know the shape of the population distribution, some gen-
eral rule of thumb telling us when a sample is large enough that we may apply the
central limit theorem would be useful.

In general, a sample of 30 or more elements is considered large enough

for the central limit theorem to take effect.

We emphasize that this is a general, and somewhat arbitrary, rule. A larger mini-
mum sample size may be required for a good normal approximation when the popu-
lation distribution is very different from a normal distribution. By the same token, a
smaller minimum sample size may suffice for a good normal approximation when
the population distribution is close to a normal distribution.
Throughout this book, we will make reference to small samples versus large samples.
By a small sample, we generally mean a sample of fewer than 30 elements. A large sam-
ple will generally mean a sample of 30 or more elements. The results we will discuss as
applicable for large samples will be more meaningful, however, the larger the sample
size. (By the central limit theorem, the larger the sample size, the better the approxima-
tion offered by the normal distribution.) The “30 rule” should, therefore, be applied with
caution. Let us now look at an example of the use of the central limit theorem.
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FIGURE 5–6 The Effects of the Central Limit Theorem: The Distribution of X for Different
Populations and Different Sample Sizes

Normal Uniform Right-skewed

Parent
population:

Distribution of X:

n=2

n = 10

n = 30

Mercury makes a 2.4-liter V-6 engine, the Laser XRi, used in speedboats. The com- EXAMPLE 5–1
pany’s engineers believe that the engine delivers an average power of 220 horse-
power and that the standard deviation of power delivered is 15 horsepower. A
potential buyer intends to sample 100 engines (each engine to be run a single time).
What is the probability that the sample mean X will be less than 217 horsepower?

In solving problems such as this one, we use the techniques of Chapter 4. There we Solution
used  as the mean of the normal random variable and  as its standard deviation.
Here our random variable X is normal (at least approximately so, by the central
limit theorem because our sample size is large) and has mean . Note, however,
that the standard deviation of our random variable X is > 1n and not just . We
proceed as follows:

217 - 
P (X 6 217) = P ¢ Z 6 ≤
> 1n
217 - 220
= P ¢Z 6 ≤ = P (Z 6 - 2) = 0.0228
15> 2100

Thus, if the population mean is indeed 
220 horsepower and the standard devia-
tion is 
15 horsepower, the probability that the potential buyer’s tests will result in
a sample mean less than 217 horsepower is rather small.
198 Aczel−Sounderpandian: 5. Sampling and Sampling Text © The McGraw−Hill
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196 Chapter 5

FIGURE 5–7 A (Nonnormal) Population Distribution and the Normal Sampling Distribution
of the Sample Mean When a Large Sample Is Used

Density
Normal
σ distribution of X
σy!n
Standard deviation Standard deviation of X
of population
Distribution of population

Value
µ Mean of both population and X

Figure 5–7 should help clarify the distinction between the population distribution
and the sampling distribution of X . The figure emphasizes the three aspects of the
central limit theorem:

1. When the sample size is large enough, the sampling distribution of X is

normal.
2. The expected value of X is .
3. The standard deviation of X is > 1n.

The last statement is the key to the important fact that as the sample size increases,
the variation of X about its mean  decreases. Stated another way, as we buy more
information (take a larger sample), our uncertainty (measured by the standard devia-
tion) about the parameter being estimated decreases.

EXAMPLE 5–2 Eastern-Based Financial Institutions

Second-Quarter EPS and Statistical Summary

Corporation EPS ($) Summary

Bank of New York 2.53 Sample size 13
Bank Boston 4.38 Mean EPS 4.7377
Banker’s Trust NY 7.53 Median EPS 4.3500
Chase Manhattan 7.53 Standard deviation 2.4346
Citicorp 7.93
Fleet 4.35
MBNA 1.50
Mellon 2.75
JP Morgan 7.25
PNC Bank 3.11
Republic Bank 7.44
State Street Bank 2.04
Summit 3.25

This example shows random samples from the data above. Here 100 random sam-
ples of five banks each are chosen with replacement. The mean for each sample is
computed, and a frequency distribution is drawn. Note the shape of this distribution
(Figure 5–8).
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Data
Set RS 1 RS 2 RS 3 RS 4 RS 5 RS 6 RS 7 RS 8 RS 9 RS 10 RS 11 RS 12 RS 13 RS 14 RS 15 RS 16 RS 17 RS 18 RS 19 RS 20
2.53 2.04 2.53 3.25 7.53 4.35 7.93 2.04 7.53 2.04 7.53 3.11 3.25 2.75 7.44 7.44 2.04 2.53 7.93 7.53
2.53 7.53 7.53 2.04 2.75 4.38 1.50 2.53 3.25 3.25 3.25 3.11 7.53 7.53 2.53 4.35 7.53 3.11 4.35 4.38 3.11
4.38 7.93 7.44 7.93 7.93 2.04 7.93 7.53 4.35 2.04 7.53 2.75 1.50 3.25 3.25 7.44 7.53 7.53 4.35 7.25 3.25
7.53 2.53 3.25 4.38 2.04 4.35 7.25 2.75 7.53 3.11 7.93 1.50 7.53 1.50 3.11 2.53 7.53 1.50 1.50 4.35 2.53
7.53 2.75 4.38 4.38 2.53 7.93 3.11 3.25 4.35 2.04 7.53 7.53 2.75 7.53 7.44 3.11 3.25 3.11 4.38 3.25 3.11
7.93 Mean 4.65 4.93 4.25 3.70 5.25 4.83 4.80 4.30 3.59 5.66 4.48 4.48 4.61 3.82 4.97 6.66 3.46 3.42 5.43 3.91
4.35 RS 21 RS 22 RS 23 RS 24 RS 25 RS 26 RS 27 RS 28 RS 29 RS 30 RS 31 RS 32 RS 33 RS 34 RS 35 RS 36 RS 37 RS 38 RS 39 RS 40
1.50 3.11 1.50 2.75 7.53 7.44 7.93 2.53 7.93 7.53 4.38 7.93 7.93 7.44 4.35 7.53 7.93 4.38 4.35 7.44 2.53
2.75 2.04 2.04 7.53 2.04 4.35 1.50 3.11 1.50 7.53 7.53 7.93 7.53 3.25 7.25 1.50 2.75 7.93 3.25 7.53 3.25
7.25 3.25 1.50 2.04 4.38 2.75 7.53 3.25 3.11 4.38 2.53 2.75 4.35 4.38 7.25 4.35 1.50 7.93 3.11 4.35 2.53
3.11 4.38 3.25 7.53 2.53 4.35 2.75 7.25 7.93 7.44 3.11 7.93 7.53 3.25 4.35 4.35 2.04 4.35 1.50 3.25 1.50
7.44 2.75 2.75 7.93 2.75 2.04 2.75 1.50 1.50 3.11 7.44 3.11 3.11 7.44 7.53 7.93 2.04 4.38 2.04 2.53 7.53
2.04 Mean 3.11 2.21 5.56 3.85 4.19 4.49 3.53 4.39 6.00 5.00 5.93 6.09 5.15 6.15 5.13 3.25 5.79 2.85 5.02 3.47
3.25
RS 41 RS 42 RS 43 RS 44 RS 45 RS 46 RS 47 RS 48 RS 49 RS 50 RS 51 RS 52 RS 53 RS 54 RS 55 RS 56 RS 57 RS 58 RS 59 RS 60
1.50 1.50 2.75 2.75 4.35 7.53 7.44 7.53 4.35 7.44 3.25 2.53 2.53 7.53 7.25 2.75 7.53 1.50 2.75 2.75
4.38 7.25 7.44 4.35 1.50 7.93 3.25 4.35 3.11 7.25 2.75 7.53 7.53 4.38 7.53 2.04 2.75 1.50 7.93 7.53
4.38 7.25 1.50 4.35 3.25 3.25 7.25 7.53 7.44 3.11 4.35 2.75 1.50 4.38 1.50 7.53 3.11 2.04 3.11 7.53
3.11 4.38 2.75 3.11 2.75 7.53 2.04 7.25 4.35 3.11 4.35 7.53 7.53 4.38 7.25 1.50 7.93 7.25 7.93 7.53
3.25 7.53 2.04 4.38 7.44 2.04 3.11 4.38 3.25 7.53 4.35 1.50 2.04 7.53 3.25 7.93 2.75 2.75 7.25 3.11
Mean 3.32 5.58 3.30 3.79 3.86 5.66 4.62 6.21 4.50 5.69 3.81 4.37 4.23 5.64 5.36 4.35 4.81 3.01 5.79 5.69
RS 61 RS 62 RS 63 RS 64 RS 65 RS 66 RS 67 RS 68 RS 69 RS 70 RS 71 RS 72 RS 73 RS 74 RS 75 RS 76 RS 77 RS 78 RS 79 RS 80
4.38 7.93 3.25 7.53 3.25 2.53 7.25 3.11 7.25 7.53 2.04 7.44 7.25 7.25 7.44 3.25 7.53 7.44 2.53 3.25
3.25 4.35 7.53 7.44 3.11 7.53 3.11 7.25 7.53 2.75 2.75 7.53 4.38 7.44 7.25 1.50 4.35 4.38 1.50 4.38
7.93 7.53 3.25 4.35 3.11 7.25 7.25 7.44 7.53 7.53 7.44 4.38 7.25 7.53 2.75 7.25 3.11 1.50 7.53 3.25
3.25 2.53 7.25 7.44 4.38 2.75 1.50 7.93 3.25 4.38 7.93 3.11 3.11 1.50 3.25 7.25 3.11 7.53 2.53 3.25
4.35 4.38 3.25 3.25 7.53 4.38 4.38 2.75 7.93 7.25 7.53 7.53 2.04 2.75 3.11 2.04 2.75 2.53 3.25 2.75
Mean 4.63 5.34 4.91 6.00 4.28 4.89 4.70 5.70 6.70 5.89 5.54 6.00 4.81 5.29 4.76 4.26 4.17 4.68 3.47 3.38
RS 81 RS 82 RS 83 RS 84 RS 85 RS 86 RS 87 RS 88 RS 89 RS 90 RS 91 RS 92 RS 93 RS 94 RS 95 RS 96 RS 97 RS 98 RS 99 RS 100
7.53 3.25 7.44 7.93 2.04 7.53 2.75 7.93 7.53 7.25 7.93 7.53 7.53 3.25 2.75 7.93 7.44 2.04 4.35 7.53
3.25 3.11 7.53 2.04 7.53 7.93 4.38 1.50 4.38 4.38 7.25 7.25 3.11 7.93 3.11 2.04 2.04 7.53 7.93 7.53
7.25 7.25 7.25 7.93 7.93 3.11 2.75 7.93 4.38 2.75 2.04 7.93 1.50 2.75 2.04 3.25 4.38 7.53 2.75 7.25
3.11 1.50 7.53 2.04 2.53 3.11 7.25 3.11 2.75 7.53 4.38 7.53 2.04 7.93 4.38 4.35 2.75 7.93 3.25 2.53
4.38 7.53 2.53 1.50 7.25 4.35 7.44 4.35 7.53 1.50 1.50 7.53 7.25 4.38 7.25 2.75 4.35 7.53 2.53 7.53
Mean 5.10 4.53 6.46 4.29 5.46 5.21 4.91 4.96 5.31 4.68 4.62 7.55 4.29 5.25 3.91 4.06 4.19 6.51 4.16 6.47

FIGURE 5–8 EPS Mean Distribution—Excel Output

A B
25
1 Distribution
2
20 3 2.002.49 1
4 2.502.99 1
Frequency

15 5 3.003.49 10
6 3.503.99 10
10 7 4.004.49 18
8 4.504.99 21
5 9 5.005.49 14
10 5.505.99 13
0 11 6.006.49 8
2.00–2.49

2.50–2.99

3.00–3.49

3.50–3.99

4.00–4.49

4.50–4.99

5.00–5.49

5.50–5.99

6.00–6.49

6.50–6.99

7.00–7.49

7.50–7.99

12 6.506.99 3
13 7.007.49 0
14 7.507.99 1
Range
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Statistics, Seventh Edition

198 Chapter 5

Figure 5–8 shows a graph of the means of the samples from the banks’ data using
Excel.

The History of the Central Limit Theorem

What we call the central limit theorem actually comprises several theorems developed
over the years. The first such theorem was discussed at the beginning of Chapter 4 as
the discovery of the normal curve by Abraham De Moivre in 1733. Recall that De
Moivre discovered the normal distribution as the limit of the binomial distribution.
The fact that the normal distribution appears as a limit of the binomial distribution as
n increases is a form of the central limit theorem. Around the turn of the twentieth
century, Liapunov gave a more general form of the central limit theorem, and in 1922
the final form we use in applied statistics was given by Lindeberg. The proof of the
necessary condition of the theorem was given in 1935 by W. Feller [see W. Feller, An
Introduction to Probability Theory and Its Applications (New York: Wiley, 1971), vol. 2]. A
proof of the central limit theorem is beyond the scope of this book, but the interested
reader is encouraged to read more about it in the given reference or in other books.

The Standardized Sampling Distribution of the Sample Mean

When  Is Not Known
To use the central limit theorem, we need to know the population standard deviation,
. When  is not known, we use its estimator, the sample standard deviation S, in its
place. In such cases, the distribution of the standardized statistic

X - 
(5–6)
S> 1n

(where S is used in place of the unknown ) is no longer the standard normal distribution.
If the population itself is normally distributed, the statistic in equation 5–6 has a t distribution with
n  1 degrees of freedom. The t distribution has wider tails than the standard normal distri-
bution. Values and probabilities of t distributions with different degrees of freedom are
given in Table 3 in Appendix C. The t distribution and its uses will be discussed in detail
in Chapter 6. The idea of degrees of freedom is explained in section 5–5 of this chapter.

The Sampling Distribution of the Sample Proportion P̂

The sampling distribution of the sample proportion P$ is based on the binomial distri-
bution with parameters n and p, where n is the sample size and p is the population
proportion. Recall that the binomial random variable X counts the number of suc-
cesses in n trials. Since P$
X
n and n is fixed (determined before the sampling), the
distribution of the number of successes X leads to the distribution of P$.
As the sample size increases, the central limit theorem applies here as well. Figure 5–9
shows the effects of the central limit theorem for a binomial distribution with p = 0.3.
The distribution is skewed to the right for small values of n but becomes more sym-
metric and approaches the normal distribution as n increases.
We now state the central limit theorem when sampling for the population
proportion p.

As the sample size n increases, the sampling distribution of P$ approaches a

normal distribution with mean p and standard deviation 1p(1 - p)>n.

(The estimated standard deviation of P$ is also called its standard error.) In order for us
to use the normal approximation for the sampling distribution of P$, the sample size
needs to be large. A commonly used rule of thumb says that the normal approxima-
tion to the distribution of P$ may be used only if both np and n(1  p) are greater than 5.
We demonstrate the use of the theorem with Example 5–3.
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Sampling and Sampling Distributions 199

FIGURE 5–9 The Sampling Distribution of P$ When p
0.3, as n Increases

Sampling distribution of P when n = 2

0.5

0.4
Probability

0.3
0.2
0.1
0.0 x
0 1 2
1
p=0 2
1

Sampling distribution of P when n = 10

0.3
Probability

0.2

0.1

0.0 x
0 1 2 3 4 5 6 7 8 9 10
1 2 3 4 5 6 7 8 9
p=0 10 10 10 10 10 10 10 10 10
1

Sampling distribution of P when n = 15

0.3
Probability

0.2

0.1

0.0 x
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
1 2 3 4 5 6 7 8 9 10 11 12 13 14
p=0 15 15 15 15 15 15 15 15 15 15 15 15 15 15
1

In recent years, convertible sport coupes have become very popular in Japan. Toyota EXAMPLE 5–3
is currently shipping Celicas to Los Angeles, where a customizer does a roof lift and
ships them back to Japan. Suppose that 25% of all Japanese in a given income and
lifestyle category are interested in buying Celica convertibles. A random sample of 100
Japanese consumers in the category of interest is to be selected. What is the probability
that at least 20% of those in the sample will express an interest in a Celica convertible?

We need P(P$  0.20). Since np
100(0.25)
25 and n(1  p)
100(0.75)
75, Solution
both numbers greater than 5, we may use the normal approximation to the distribution
of P$. The mean of P$ is p
0.25, and the standard deviation of P$ is 2p(1 - p)>n

0.0433. We have

0.20 - 0.25
P (P$ Ú 0.20) = P ¢Z Ú ≤ = P (Z Ú -1.15) = 0.8749
0.0433
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200 Chapter 5

Sampling distributions are essential to statistics. In the following chapters, we will

make much use of the distributions discussed in this section, as well as others that will
be introduced as we go along. In the next section, we discuss properties of good
estimators.

PROBLEMS

5–11. What is a sampling distribution, and what are the uses of sampling distributions?
5–12. A sample of size n
5 is selected from a population. Under what conditions
is the sampling distribution of X normal?
5–13. In problem 5–12, suppose the population mean is 
125 and the population
standard deviation is 20. What are the expected value and the standard deviation of X ?
5–14. What is the most significant aspect of the central limit theorem?
5–15. Under what conditions is the central limit theorem most useful in sampling
to estimate the population mean?
5–16. What are the limitations of small samples?
5–17. When sampling is done from a population with population proportion
p
0.1, using a sample size n
2,what is the sampling distribution of P$ ? Is it reason-
able to use a normal approximation for this sampling distribution? Explain.
5–18. If the population mean is 1,247, the population variance is 10,000, and the
sample size is 100, what is the probability that X will be less than 1,230?
5–19. When sampling is from a population with standard deviation 
55, using
a sample of size n
150, what is the probability that X will be at least 8 units away
from the population mean ?
5–20. The Colosseum, once the most popular monument in Rome, dates from
about AD 70. Since then, earthquakes have caused considerable damage to the huge
structure, and engineers are currently trying to make sure the building will survive
future shocks. The Colosseum can be divided into several thousand small sections.
Suppose that the average section can withstand a quake measuring 3.4 on the Richter
scale with a standard deviation of 1.5. A random sample of 100 sections is selected and
tested for the maximum earthquake force they can withstand. What is the probability
that the average section in the sample can withstand an earthquake measuring at least
3.6 on the Richter scale?
5–21. According to Money, in the year prior to March 2007, the average return for
firms of the S&P 500 was 13.1%.9 Assume that the standard deviation of returns was
1.2%. If a random sample of 36 companies in the S&P 500 is selected, what is the
probability that their average return for this period will be between 12% and 15%?
5–22. An economist wishes to estimate the average family income in a certain pop-
ulation. The population standard deviation is known to be $4,500, and the economist
uses a random sample of size n
225. What is the probability that the sample mean
will fall within $800 of the population mean?
5–23. When sampling is done for the proportion of defective items in a large ship-
ment, where the population proportion is 0.18 and the sample size is 200, what is the
probability that the sample proportion will be at least 0.20?
5–24. A study of the investment industry claims that 58% of all mutual funds out-
performed the stock market as a whole last year. An analyst wants to test this claim
and obtains a random sample of 250 mutual funds. The analyst finds that only 123

9
“Market Benchmarks,” Money, March 2007, p. 128.
Aczel−Sounderpandian: 5. Sampling and Sampling Text © The McGraw−Hill 203
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Sampling and Sampling Distributions 201

of the funds outperformed the market during the year. Determine the probability that
another random sample would lead to a sample proportion as low as or lower than
the one obtained by the analyst, assuming the proportion of all mutual funds that out-
performed the market is indeed 0.58.
5–25. According to a recent article in Worth, the average price of a house on Marco
Island, Florida, is $2.6 million.10 Assume that the standard deviation of the prices is
$400,000. A random sample of 75 houses is taken and the average price is computed.
What is the probability that the sample mean exceeds $3 million?
5–26. It has been suggested that an investment portfolio selected randomly by
throwing darts at the stock market page of The Wall Street Journal may be a sound (and
certainly well-diversified) investment.11 Suppose that you own such a portfolio of 16
stocks randomly selected from all stocks listed on the New York Stock Exchange
(NYSE). On a certain day, you hear on the news that the average stock on the NYSE
rose 1.5 points. Assuming that the standard deviation of stock price movements that
day was 2 points and assuming stock price movements were normally distributed
around their mean of 1.5, what is the probability that the average stock price of your
portfolio increased?
5–27. An advertisement for Citicorp Insurance Services, Inc., claims “one person in
seven will be hospitalized this year.” Suppose you keep track of a random sample of
180 people over an entire year. Assuming Citicorp’s advertisement is correct, what is
the probability that fewer than 10% of the people in your sample will be found to
have been hospitalized (at least once) during the year? Explain.
5–28. Shimano mountain bikes are displayed in chic clothing boutiques in Milan,
Italy, and the average price for the bike in the city is $700. Suppose that the standard
deviation of bike prices is $100. If a random sample of 60 boutiques is selected, what
is the probability that the average price for a Shimano mountain bike in this sample
will be between $680 and $720?
5–29. A quality-control analyst wants to estimate the proportion of imperfect jeans
in a large warehouse. The analyst plans to select a random sample of 500 pairs of
jeans and note the proportion of imperfect pairs. If the actual proportion in the entire
warehouse is 0.35, what is the probability that the sample proportion will deviate
from the population proportion by more than 0.05?

5–4 Estimators and Their Properties12

F
The sample statistics we discussed— X , S, and P$ —as well as other sample statistics to
be introduced later, are used as estimators of population parameters. In this section, we
V
discuss some important properties of good statistical estimators: unbiasedness, efficiency,
consistency, and sufficiency. S
CHAPTER 8
An estimator is said to be unbiased if its expected value is equal to the
population parameter it estimates.

Consider the sample mean X . From equation 5–2, we know E(X )
. The sample
mean X is, therefore, an unbiased estimator of the population mean . This means that if
we sample repeatedly from the population and compute X for each of our samples,
in the long run, the average value of X will be the parameter of interest . This is an
important property of the estimator because it means that there is no systematic bias
away from the parameter of interest.

10
Elizabeth Harris, “Luxury Real Estate Investment,” Worth, April 2007, p. 76.
11
See the very readable book by Burton G. Malkiel, A Random Walk Down Wall Street (New York: W. W. Norton, 2003).
12
An optional, but recommended, section.
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202 Chapter 5

FIGURE 5–10 The Sample Mean X as an Unbiased Estimator of the Population Mean 

The target of sampling: 

x x
x
x
x
Sample means X
x
x x 
x
x
x x

x
x

If we view the gathering of a random sample and the calculating of its mean as
shooting at a target—the target being the population parameter, say, —then the fact
that X is an unbiased estimator of  means that the device producing the estimates is
aiming at the center of the target (the parameter of interest), with no systematic deviation
away from it.

Any systematic deviation of the estimator away from the parameter of

interest is called a bias.

The concept of unbiasedness is demonstrated for the sample mean X in Figure 5–10.
Figure 5–11 demonstrates the idea of a biased estimator of . The hypothetical
estimator we denote by Y is centered on some point M that lies away from the param-
eter . The distance between the expected value of Y (the point M ) and  is the bias.
It should be noted that, in reality, we usually sample once and obtain our estimate.
The multiple estimates shown in Figures 5–10 and 5–11 serve only as an illustration
of the expected value of an estimator as the center of a large collection of the actual
estimates that would be obtained in repeated sampling. (Note also that, in reality, the
“target” at which we are “shooting” is one-dimensional—on a straight line rather than
on a plane.)

FIGURE 5–11 An Example of a Biased Estimator of the Population Mean 

A systematic bias

Y Y
Y
Y Y
Y Y Y
A biased estimator, Y
 M Y
Y Y
Y
Y
Y
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FIGURE 5–12 Two Unbiased Estimators of , Where the Estimator X Is Efficient

Relative to the Estimator Z

An unbiased and
efficient estimator
z
X
z
z z
z
z
x x x z
Z z x x
x
An unbiased z x  x
estimator of  z
x z x z
with large variance x z
(inefficient) x x z
z z
z
z

The next property of good estimators we discuss is efficiency.

An estimator is efficient if it has a relatively small variance (and standard

deviation).

Efficiency is a relative property. We say that one estimator is efficient relative to

another. This means that the estimator has a smaller variance (also a smaller standard
deviation) than the other. Figure 5–12 shows two hypothetical unbiased estimators of
the population mean . The two estimators, which we denote by X and Z, are unbi-
ased: Their distributions are centered at . The estimator X , however, is more effi-
cient than the estimator Z because it has a smaller variance than that of Z. This is
seen from the fact that repeated estimates produced by Z have a larger spread about
their mean  than repeated estimates produced by X .
Another desirable property of estimators is consistency.

An estimator is said to be consistent if its probability of being close to the

parameter it estimates increases as the sample size increases.

The sample mean X is a consistent estimator of . This is so because the standard

deviation of X is  x
> 1n. As the sample size n increases, the standard deviation
of X decreases and, hence, the probability that X will be close to its expected value 
increases.
We now define a fourth property of good estimators: sufficiency.

An estimator is said to be sufficient if it contains all the information in the

data about the parameter it estimates.

Applying the Concepts of Unbiasedness, Efficiency,

Consistency, and Sufficiency
We may evaluate possible estimators of population parameters based on whether they
possess important properties of estimators and thus choose the best estimator to be used.
For a normally distributed population, for example, both the sample mean and the
sample median are unbiased estimators of the population mean . The sample mean,
however, is more efficient than the sample median. This is so because the variance of
the sample median happens to be 1.57 times as large as the variance of the sample
206 Aczel−Sounderpandian: 5. Sampling and Sampling Text © The McGraw−Hill
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204 Chapter 5

mean. In addition, the sample mean is a sufficient estimator because in computing it

we use the entire data set. The sample median is not sufficient; it is found as the point
in the middle of the data set, regardless of the exact magnitudes of all other data ele-
ments. The sample mean X is the best estimator of the population mean , because it
is unbiased and has the smallest variance of all unbiased estimators of . The sample
mean is also consistent. (Note that while the sample mean is best, the sample median is
sometimes used because it is more resistant to extreme observations.)
The sample proportion P$ is the best estimator of the population proportion p.
Since E(P$ )
p, the estimator P$ is unbiased. It also has the smallest variance of all
unbiased estimators of p.
What about the sample variance S 2? The sample variance, as defined in equa-
tion 1–3, is an unbiased estimator of the population variance 2. Recall equation 1–3:

©(xi - x)2
S2 =
n - 1

Dividing the sum of squared deviations in the equation by n rather than by n  1 seems
logical because we are seeking the average squared deviation from the sample mean. We
have n deviations from the mean, so why not divide by n? It turns out that if we were to
divide by n rather than by n  1, our estimator of 2 would be biased. Although the
bias becomes small as n increases, we will always use the statistic given in equation 1–3
as an estimator of 2. The reason for dividing by n  1 rather than n will become clearer
in the next section, when we discuss the concept of degrees of freedom.
Note that while S 2 is an unbiased estimator of the population variance 2, the
sample standard deviation S (the square root of S 2) is not an unbiased estimator of the
population standard deviation . Still, we will use S as our estimator of the population
standard deviation, ignoring the small bias that results and relying on the fact that
S 2 is the unbiased estimator of 2.

PROBLEMS

5–30. Suppose that you have two statistics A and B as possible estimators of the same
population parameter. Estimator A is unbiased, but has a large variance. Estimator B
has a small bias, but has only one-tenth the variance of estimator A. Which estimator
is better? Explain.
5–31. Suppose that you have an estimator with a relatively large bias. The estimator
is consistent and efficient, however. If you had a generous budget for your sampling
survey, would you use this estimator? Explain.
5–32. Suppose that in a sampling survey to estimate the population variance, the
biased estimator (with n instead of n  1 in the denominator of equation 1–3) was used
instead of the unbiased one. The sample size used was n
100, and the estimate obtained
was 1,287. Can you find the value of the unbiased estimate of the population variance?
5–33. What are the advantages of a sufficient statistic? Can you think of a possible
disadvantage of sufficiency?
5–34. Suppose that you have two biased estimators of the same population param-
eter. Estimator A has a bias equal to 1
n (that is, the mean of the estimator is 1
n unit
away from the parameter it estimates), where n is the sample size used. Estimator B
has a bias equal to 0.01 (the mean of the estimator is 0.01 unit away from the param-
eter of interest). Under what conditions is estimator A better than B?
5–35. Why is consistency an important property?
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5–5 Degrees of Freedom

Suppose you are asked to choose 10 numbers. You then have the freedom to choose
10 numbers as you please, and we say you have 10 degrees of freedom. But suppose
a condition is imposed on the numbers. The condition is that the sum of all the num-
bers you choose must be 100. In this case, you cannot choose all 10 numbers as you
please. After you have chosen the ninth number, let’s say the sum of the nine numbers
is 94. Your tenth number then has to be 6, and you have no choice. Thus you have
only 9 degrees of freedom. In general, if you have to choose n numbers, and a condi-
tion on their total is imposed, you will have only (n — 1) degrees of freedom.
As another example, suppose that I wrote five checks last month, and the total
amount of these checks is $80. Now if I know that the first four checks were for $30,
$20, $15, and $5, then I don’t need to be told that the fifth check was for $10. I can sim-
ply deduce this information by subtraction of the other four checks from $80. My
degrees of freedom are thus four, and not five.
In Chapter 1, we saw the formula for the sample variance

S 2
SSD
(n  1)

where SSD is the sum of squared deviations from the sample mean. In particular,
note that SSD is to be divided by (n  1) rather than n. The reason concerns the
degrees of freedom for the deviations. A more complex case of degrees of freedom
occurs in the use of a technique called ANOVA, which is discussed in Chapter 9. In
the following paragraphs, we shall see the details of these cases.
We first note that in the calculation of SSD, the deviations are taken from the
sample mean x and not from the population mean . The reason is simple: While
sampling, almost always, the population mean  is not known. Not knowing the popu-
lation mean, we take the deviations from the sample mean. But this introduces a down-
ward bias in the deviations. To see the bias, refer to Figure 5–13, which shows the
deviation of a sample point x from the sample mean and from the population mean.
It can be seen from Figure 5–13 that for sample points that fall to the right of the
midpoint between  and x , the deviation from the sample mean will be smaller than
the deviation from the population mean. Since the sample mean is where the sample
points gravitate, a majority of the sample points are expected to fall to the right of the
midpoint. Thus, overall, the deviations will have a downward bias.
To compensate for the downward bias, we use the concept of degrees of freedom.
Let the population be a uniform distribution of the values {1, 2, . . . , 10}. The mean of
this population is 5.5. Suppose a random sample of size 10 is taken from this popu-
lation. Assume that we are told to take the deviations from this population mean.

FIGURE 5–13 Deviations from the Population Mean and the Sample Mean

Deviation of
x from 
Deviation of x from x
X
o * * * * * ¥ * * *x *
 Legend
x
o Population mean
Midpoint ¥ Sample mean
between * Sample point
 and x
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206 Chapter 5

FIGURE 5–14 SSD and df

df  10
Deviation Deviation
Sample from Deviation Squared
1 10 5.5 4.5 20.25
2 3 5.5 2.5 6.25
3 2 5.5 3.5 12.25
4 6 5.5 0.5 0.25
5 1 5.5 4.5 20.25
6 9 5.5 3.5 12.25
7 6 5.5 0.5 0.25
8 4 5.5 1.5 2.25
9 10 5.5 4.5 20.25
10 7 5.5 1.5 2.25
SSD 96.5

In Figure 5–14, the Sample column shows the sampled values. The calculation of
SSD is shown taking deviations from the population mean of 5.5. The SSD works out
to 96.5. Since we had no freedom in taking the deviations, all the 10 deviations are completely
left to chance. Hence we say that the deviations have 10 degrees of freedom.
Suppose we do not know the population mean and are told that we can take the
deviation from any number we choose. The best number to choose then is the sam-
ple mean, which will minimize the SSD (see problem 1–85). Figure 5–15a shows the
calculation of SSD where the deviations are taken from the sample mean of 5.8.
Because of the downward bias, the SSD has decreased to 95.6. The SSD would
decrease further if we were allowed to select two different numbers from which the
deviations are taken. Suppose we are allowed to use one number for the first five data
points and another for the next five. Our best choices are the average of the first five
numbers, 4.4, and the average of next five numbers, 7.2. Only these choices will min-
imize the SSD. The minimized SSD works out to 76, as seen in Figure 5–15b.
We can carry this process further. If we were allowed 10 different numbers from
which the deviations are taken, then we could reduce the SSD all the way to zero.

FIGURE 5–15 SSD and df (continued )

df  10  1  9 df  10  2  8
Deviation Deviation Deviation Deviation
Sample from Deviation Squared Sample from Deviation Squared
1 10 5.8 4.2 17.64 10 4.4 5.6 31.36
2 3 5.8 2.8 7.84 3 4.4 1.4 1.96
3 2 5.8 3.8 14.44 2 4.4 2.4 5.76
4 6 5.8 0.2 0.04 6 4.4 1.6 2.56
5 1 5.8 4.8 23.04 1 4.4 3.4 11.56
6 9 5.8 3.2 10.24 9 7.2 1.8 3.24
7 6 5.8 0.2 0.04 6 7.2 1.2 1.44
8 4 5.8 1.8 3.24 4 7.2 3.2 10.24
9 10 5.8 4.2 17.64 10 7.2 2.8 7.84
10 7 5.8 1.2 1.44 7 7.2 0.2 0.04
SSD 95.6 SSD 76
(a) (b)
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FIGURE 5–16 SSD and df (continued)

df  10  10  0
Deviation Deviation
Sample from Deviation Squared
1 10 10 0 0
2 3 3 0 0
3 2 2 0 0
4 6 6 0 0
5 1 1 0 0
6 9 9 0 0
7 6 6 0 0
8 4 4 0 0
9 10 10 0 0
10 7 7 0 0
SSD 0

How? See Figure 5–16. We choose the 10 numbers equal to the 10 sample points
(which in effect are 10 means). In the case of Figure 5–15a , we had one choice, and
this takes away 1 degree of freedom from the deviations. The df of SSD is then
declared as 10  1
9. In Figure 5–15b, we had two choices and this took away 2
degrees of freedom from the deviations. Thus the df of SSD is 10  2
8. In
Figure 5–16, the df of SSD is 10  10
0.
In every one of these cases, dividing the SSD by only its corresponding df will yield an
unbiased estimate of the population variance 2. Hence the concept of the degrees of free-
dom is important. This also explains the denominator of (n  1) in the formula for
sample variance S 2. For the case in Figure 5–15a, SSD/df
95.6
9
10.62, and this
is an unbiased estimate of the population variance.
We can now summarize how the number of degrees of freedom is determined. If we
take a sample of size n and take the deviations from the (known) population mean, then
the deviations, and therefore the SSD, will have df
n. But if we take the deviations
from the sample mean, then the deviations, and therefore the SSD, will have df
n  1.
If we are allowed to take the deviations from k ( n) different numbers that we choose,
then the deviations, and therefore the SSD, will have df
n  k. While choosing each
of the k numbers, we should choose the mean of the sample points to which that num-
ber applies. The case of k 1 will be seen in Chapter 9, “Analysis of Variance.”

A sample of size 10 is given below. We are to choose three different numbers from EXAMPLE 5–4
which the deviations are to be taken. The first number is to be used for the first five
sample points; the second number is to be used for the next three sample points; and
the third number is to be used for the last two sample points.
Sample
1 93
2 97
3 60
4 72
5 96
6 83
7 59
8 66
9 88
10 53
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208 Chapter 5

1. What three numbers should we choose to minimize the SSD?

2. Calculate the SSD with the chosen numbers.
3. What is the df for the calculated SSD?
4. Calculate an unbiased estimate of the population variance.

Solution 1. We choose the means of the corresponding sample points: 83.6, 69.33, 70.5.
2. SSD
2030.367. See the spreadsheet calculation below.
3. df
10  3
7.
4. An unbiased estimate of the population variance is SSD/df
2030.367
7

290.05.
Deviation
Sample Mean Deviation Squared
1 93 83.6 9.4 88.36
2 97 83.6 13.4 179.56
3 60 83.6 23.6 556.96
4 72 83.6 11.6 134.56
5 96 83.6 12.4 153.76
6 83 69.33 13.6667 186.7778
7 59 69.33 10.3333 106.7778
8 66 69.33 3.33333 11.11111
9 88 70.5 17.5 306.25
10 53 70.5 17.5 306.25
SSD 2030.367
SSD/df 290.0524

PROBLEMS

5–36. Three random samples of sizes, 30, 48, and 32, respectively, are collected,
and the three sample means are computed. What is the total number of degrees of
freedom for deviations from the means?
5–37. The data points in a sample of size 9 are 34, 51, 40, 38, 47, 50, 52, 44, 37.
a. If you can take the deviations of these data from any number you select,
and you want to minimize the sum of the squared deviations (SSD), what
number would you select? What is the minimized SSD? How many
degrees of freedom are associated with this SSD? Calculate the mean
squared deviation (MSD) by dividing the SSD by its degrees of freedom.
(This MSD is an unbiased estimate of population variance.)
b. If you can take the deviations from three different numbers you select, and
the first number is to be used with the first four data points to get the devi-
ations, the second with the next three data points, and the third with the
last two data points, what three numbers would you select? What is the
minimized SSD? How many degrees of freedom are associated with this
SSD? Calculate MSD.
c. If you can select nine different numbers to be used with each of the nine
data points, what numbers would you select? What is the minimized
SSD? How many degrees of freedom are associated with this SSD? Does
MSD make sense in this case?
d. If you are told that the deviations are to be taken with respect to 50, what
is the SSD? How many degrees of freedom are associated with this SSD?
Calculate MSD.
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Sampling and Sampling Distributions 209

5–38. Your bank sends you a summary statement, giving the average amount of all
checks you wrote during the month. You have a record of the amounts of 17 out of
the 19 checks you wrote during the month. Using this and the information provided
by the bank, can you figure out the amounts of the two missing checks? Explain.
5–39. In problem 5–38, suppose you know the amounts of 18 of the 19 checks you
wrote and the average of all the checks. Can you figure out the amount of the missing
check? Explain.
5–40. You are allowed to take the deviations of the data points in a sample of size n,
from k numbers you select, in order to calculate the sum of squared deviations (SSD).
You select them to minimize SSD. How many degrees of freedom are associated with
this SSD? As k increases, what happens to the degrees of freedom? What happens to
SSD? What happens to MSD
SSD/df(SSD)?

5–6 Using the Computer

Using Excel for Generating Sampling Distributions
Figure 5–17 shows the template that can be used to calculate the sampling distribu-
tion of a sample mean. It is largely the same as the normal distribution template. The
additional items are the population distribution entries at the top. To use the tem-
plate, enter the population mean and standard deviation in cells B5 and C5. Enter
the sample size in cell B8. In the drop-down box in cell I4, select Yes or No to answer
the question “Is the population normally distributed?” The sample mean will follow

FIGURE 5–17 The Template for Sampling Distribution of a Sample Mean

[Sampling Distribution.xls; Sheet: X-bar]

A B C D E F G H I J K L
1 Sampling Distribution of Sample Mean Mercury Engines
2  known
3 Population Distribution
4 Mean Stdev Is the population normal? No
5 220 15
6
7 Sample Size Sampling Distribution of X-bar
8 n 100 Mean Stdev
9 220 1.5
10
11
12
13
14
15
16 P(<x) x x P(>x) x1 P(x1<X<x2) x2
17 0.0228 217 221 0.2525 219 0.7437 224
18
19
20
21
22 Inverse Calculations
23
24
25
26
27
28 P(<x) x x P(>x) Symmetric Intervals
29 0.9 221.92 218.08 0.9 x1 P(x1<X<x2) x2
30 216.1363 0.99 223.86374
31 217.0601 0.95 222.93995
32 217.5327 0.9 222.46728
33
34
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210 Chapter 5

FIGURE 5–18 The Template for Sampling Distribution of a Sample Proportion

[Sampling Distribution.xls; Sheet: P-hat]

A B C D E F G H I J K L
1 Sampling Distribution of Sample Proportion Sport coupes
2
3 Population Proportion
4 p
5 0.25
6
7 Sample Size Sampling Distribution of P-hat
8 n 100 Mean Stdev
9 0.25 0.0433
10
11 Both np and n(1-p) must be at least 5, for results in this area.
12
13
14
15
16
17 P(<x) x x P(>x) x1 P(x1<P hat<x2) x2
18 0.2442 0.22 0.2 0.8759 0.2 0.2846 0.24
19
20
21
22
23 Inverse Calculations Both np and n(1-p) must be at least 5, for results in this area.
24
25
26
27
28
29 P(<x) x x P(>x) Symmetric Intervals
30 0.85 0.2949 0.2051 0.85 x1 P(x1<P hat<x2) x2
31 0.1385 0.99 0.3615
32 0.1651 0.95 0.3349
33 0.1788 0.9 0.3212
34
35

a normal distribution if either the population is normally distributed or the sample

size is at least 30. Only in such cases should this template be used. In other cases, a
warning message—“Warning: The sampling distribution cannot be approximated as
normal. Results appear anyway”—will appear in cell A10.
To solve Example 5–1, enter the population mean 220 in cell B5 and the popula-
tion standard deviation 15 in cell C5. Enter the sample size 100 in cell B8. To find
the probability that the sample mean will be less than 217, enter 217 in cell C17. The
answer 0.0228 appears in cell B17.
Figure 5–18 shows the template that can be used to calculate the sampling distri-
bution of a sample proportion. To use the template, enter the population proportion
in cell E5 and the sample size in cell B8.
To solve Example 5–3, enter the population proportion 0.25 in cell E5 and the
sample size 100 in cell B8. Enter the value 0.2 in cell E17 to get the probability of the
sample proportion being more than 0.2 in cell F17. The answer is 0.8749.
In addition to the templates discussed above, you can use Excel statistical tools to
develop a variety of statistical analyses.
The Sampling analysis tool of Excel creates a sample from a population by treat-
ing the input range as a population. You can also create a sample that contains only the
values from a particular part of a cycle if you believe that the input data is periodic.
The Sampling analysis tool is accessible via Data Analysis in the Analysis group on
the Data tab. If the Data Analysis command is not available, you need to load the
Analysis ToolPack add-in program as described in Chapter 1.
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Sampling and Sampling Distributions 211

FIGURE 5–19 Generating a Random Sample by Excel

As an example, imagine you have a sample of size 10 from a population and you
wish to generate another sample of size 15 from this population. You can start by
choosing Sampling from Data Analysis. The Sampling dialog box will appear as
shown in Figure 5–19. Specify the input range which represents your initial sample,
cells B3 to B12. In the Sampling Method section you can indicate that you need a
random sample of size 15. Determine the output range in the Output Options section.
In Figure 5–19 the output has been placed in the column labeled Generated Sample
starting from cell D3.
Another very useful tool of Excel is the Random Number Generation analysis
tool, which fills a range with independent random numbers that are drawn from one
of several distributions. Start by choosing the Random Number Generation analysis
tool from Data Analysis in the Analysis group on the Data tab. Then the Random
Number Generation dialog box will appear as shown in Figure 5–20. The number of

FIGURE 5–20 Generating Random Samples from Specific Distributions

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Statistics, Seventh Edition

212 Chapter 5

variables and number of random numbers at each set are defined by the values 2 and
10, respectively. The type of distribution and its parameters are defined in the next
section. Define the output range in the Output Options. The two sets of random num-
bers are labeled Sample 1 and Sample 2 in Figure 5–20.

Using MINITAB for Generating Sampling Distributions

In this section we will illustrate how to use the Random Number Generation tool
of MINITAB for simulating sampling distributions. To develop a random sample
from a specific distribution you have to start by choosing Calc
Random Data
from the menu. You will observe a list of all distributions. Let’s start by generating
a random sample of size 10 from a binomial distribution with parameters 10 and
0.6 for number of trials and event probability, respectively. After choosing Calc

Random Data
Binomial from the menu, the Binomial Distribution dialog box
will appear as shown in Figure 5–21. You need to specify the size of your sample as
the number of rows of data to generate. As can be seen, the number 10 has been
entered in the corresponding edit box. Specify the name of the column that will
store the generated random numbers. Define the parameters of the binomial distri-
bution in the next section. Then press the OK button. The generated binomial ran-
dom numbers as well as corresponding Session commands will appear as shown in
Figure 5–21.
MINITAB also enables you to generate a sample with an arbitrary size from
a specific sample space with or without replacement. You need to specify the members
of your sample space in a column. Imagine we need to generate a sample of size 8
from a sample space that has been defined in the first column. Start by choosing Calc

Random Data
Sample Form Columns from the menu bar. You need to specify

FIGURE 5–21 Using MINITAB for Generating Sampling Distributions

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Sampling and Sampling Distributions 213

the size of your sample, the column that contains your sample space, and the column
that will store the generated random numbers. You can also specify that the sampling
occurs with or without replacement.

5–7 Summary and Review of Terms

In this chapter, we saw how samples are randomly selected from populations for the
purpose of drawing inferences about population parameters. We saw how sample
statistics computed from the data—the sample mean, the sample standard deviation,
and the sample proportion—are used as estimators of population parameters. We
presented the important idea of a sampling distribution of a statistic, the proba-
bility distribution of the values the statistic may take. We saw how the central limit
theorem implies that the sampling distributions of the sample mean and the sample
proportion approach normal distributions as the sample size increases. Sampling
distributions of estimators will prove to be the key to the construction of confidence
intervals in the following chapter, as well as the key to the ideas presented in later
chapters. We also presented important properties we would like our estimators to
possess: unbiasedness, efficiency, consistency, and sufficiency. Finally, we discussed
the idea of degrees of freedom.

ADDITIONAL PROBLEMS

5–41. Suppose you are sampling from a population with mean 
1,065 and stan-
dard deviation 
500. The sample size is n
100. What are the expected value
and the variance of the sample mean X ?
5–42. Suppose you are sampling from a population with population variance 2

1,000,000. You want the standard deviation of the sample mean to be at most 25.
What is the minimum sample size you should use?
5–43. When sampling is from a population with mean 53 and standard deviation
10, using a sample of size 400, what are the expected value and the standard devia-
tion of the sample mean?
5–44. When sampling is for a population proportion from a population with actual
proportion p
0.5, using a sample of size n
120, what is the standard deviation of
our estimator P$ ?
5–45. What are the expected value and the standard deviation of the sample
proportion P$ if the true population proportion is 0.2 and the sample size is n
90?
5–46. For a fixed sample size, what is the value of the true population proportion p
that maximizes the variance of the sample proportion P$ ? (Hint: Try several values of
p on a grid between 0 and 1.)
5–47. The average value of $1.00 in euros in early 2007 was 0.76.13 If 
0.02 and
n
30, find P(0.72  X  0.82).
5–48. In problem 5–41, what is the probability that the sample mean will be at least
1,000? Do you need to use the central limit theorem to answer this question? Explain.
5–49. In problem 5–43, what is the probability that the sample mean will be between
52 and 54?
5–50. In problem 5–44, what is the probability that the sample proportion will be
at least 0.45?

13
From “Foreign Exchange,” The New York Times, May 2, 2007, p. C16.
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214 Chapter 5

5–51. Searches at Switzerland’s 406 commercial banks turned up only $3.3 million in
accounts belonging to Zaire’s deposed president, Mobutu Sese Seko. The Swiss banks
had been asked to look a little harder after finding nothing at all the first time round.
a. If President Mobutu’s money was distributed in all 406 banks, how much
was found, on average, per bank?
b. If a random sample of 16 banks was first selected in a preliminary effort to
estimate how much money was in all banks, then assuming that amounts
were normally distributed with standard deviation of $2,000, what was
the probability that the mean of this sample would have been less than
$7,000?
5–52. The proportion of defective microcomputer disks of a certain kind is
believed to be anywhere from 0.06 to 0.10. The manufacturer wants to draw a ran-
dom sample and estimate the proportion of all defective disks. How large should the
sample be to ensure that the standard deviation of the estimator is at most 0.03?
5–53. Explain why we need to draw random samples and how such samples are
drawn. What are the properties of a (simple) random sample?
5–54. Explain the idea of a bias and its ramifications.
5–55. Is the sample median a biased estimator of the population mean? Why do we
usually prefer the sample mean to the sample median as an estimator for the popu-
lation mean? If we use the sample median, what must we assume about the popula-
tion? Compare the two estimators.
5–56. Explain why the sample variance is defined as the sum of squared deviations
from the sample mean, divided by n  1 and not by n.
5–57. Residential real estate in New York rents for an average of $44 per square
foot, for a certain segment of the market.14 If the population standard deviation is $7,
and a random sample of 50 properties is chosen, what is the probability that the sam-
ple average will be below $35?
5–58. In problem 5–57, give 0.95 probability bounds on the value of the sample
mean that would be obtained. Also give 0.90 probability bounds on the value of the
sample mean.
5–59. According to Money, the average U.S. government bond fund earned 3.9%
over the 12 months ending in February 2007.15 Assume a standard deviation of 0.5%.
What is the probability that the average earning in a random sample of 25 bonds
exceeded 3.0%?
5–60. You need to fill in a table of five rows and three columns with numbers. All
the row totals and column totals are given to you, and the numbers you fill in must
add to these given totals. How many degrees of freedom do you have?
5–61. Thirty-eight percent of all shoppers at a large department store are holders
of the store’s charge card. If a random sample of 100 shoppers is taken, what is the
probability that at least 30 of them will be found to be holders of the card?
5–62. When sampling is from a normal population with an unknown variance,
is the sampling distribution of the sample mean normal? Explain.
5–63. When sampling is from a normal population with a known variance, what
is the smallest sample size required for applying a normal distribution for the
sample mean?
5–64. Which of the following estimators are unbiased estimators of the appropriate
population parameters: X , P$, S2, S? Explain.

14
“Square Feet,” The New York Times, May 2, 2007, p. C7.
15
“Money Benchmarks,” Money, March 2007, p. 130.
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5–65. Suppose a new estimator for the population mean is discovered. The new
estimator is unbiased and has variance equal to 2
n 2. Discuss the merits of the new
estimator compared with the sample mean.
5–66. Three independent random samples are collected, and three sample means
are computed. The total size of the combined sample is 124. How many degrees of
freedom are associated with the deviations from the sample means in the combined
data set? Explain.
5–67. Discuss, in relative terms, the sample size needed for an application of a nor-
mal distribution for the sample mean when sampling is from each of the following
populations. (Assume the population standard deviation is known in each case.)
a. A normal population
b. A mound-shaped population, close to normal
c. A discrete population consisting of the values 1,006, 47, and 0, with equal
frequencies
d. A slightly skewed population
e. A highly skewed population
5–68. When sampling is from a normally distributed population, is there an advan-
tage to taking a large sample? Explain.
5–69. Suppose that you are given a new sample statistic to serve as an estimator of
some population parameter. You are unable to assume any theoretical results such
as the central limit theorem. Discuss how you would empirically determine the
sampling distribution of the new statistic.
5–70. Recently, the federal government claimed that the state of Alaska had over-
paid 20% of the Medicare recipients in the state. The director of the Alaska Department
of Health and Social Services planned to check this claim by selecting a random
sample of 250 recipients of Medicare checks in the state and determining the number
of overpaid cases in the sample. Assuming the federal government’s claim is correct,
what is the probability that less than 15% of the people in the sample will be found to
have been overpaid?
5–71. A new kind of alkaline battery is believed to last an average of 25 hours of
continuous use (in a given kind of flashlight). Assume that the population standard
deviation is 2 hours. If a random sample of 100 batteries is selected and tested, is it
likely that the average battery in the sample will last less than 24 hours of continuous
use? Explain.
5–72. Häagen-Dazs ice cream produces a frozen yogurt aimed at health-conscious
ice cream lovers. Before marketing the product in 2007, the company wanted to esti-
mate the proportion of grocery stores currently selling Häagen-Dazs ice cream that
would sell the new product. If 60% of the grocery stores would sell the product and a
random sample of 200 stores is selected, what is the probability that the percentage in
the sample will deviate from the population percentage by no more than 7 percentage
points?
5–73. Japan’s birthrate is believed to be 1.57 per woman. Assume that the popula-
tion standard deviation is 0.4. If a random sample of 200 women is selected, what is
the probability that the sample mean will fall between 1.52 and 1.62?
5–74. The Toyota Prius uses both gasoline and electric power. Toyota claims its
mileage per gallon is 52. A random sample of 40 cars is taken and each sampled car
is tested for its fuel efficiency. Assuming that 52 miles per gallon is the population
mean and 2.4 miles per gallon is the population standard deviation, calculate the
probability that the sample mean will be between 52 and 53.
5–75. A bank that employs many part-time tellers is concerned about the increas-
ing number of errors made by the tellers. To estimate the proportion of errors made
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216 Chapter 5

in a day, a random sample of 400 transactions on a particular day was checked. The
proportion of the transactions with errors was computed. If the true proportion of
transactions that had errors was 6% that day, what is the probability that the estimat-
ed proportion is less than 5%?
5–76. The daily number of visitors to a Web site follows a normal distribution with
mean 15,830 and standard deviation 458. The average number of visitors on 10 ran-
domly chosen days is computed. What is the probability that the estimated average
exceeds 16,000?
5–77. According to BusinessWeek, profits in the energy sector have been rising, with
one company averaging $3.42 monthly per share.16 Assume this is an average from a
population with standard deviation of $1.5. If a random sample of 30 months is
selected, what is the probability that its average will exceed $4.00?

16
Gene G. Marcial, “Tremendous Demand for Superior Energy Services,” BusinessWeek, March 26, 2007, p. 132.

Acceptance Sampling
CASE
6 of Pins

A
company supplies pins in bulk to a customer. the consumer? (Assume the mean continues to be
The company uses an automatic lathe to pro- 1.008 inches.)
duce the pins. Factors such as vibration, temper- 4. Repeat part 3 with 95% and 99% of the pins
ature, and wear and tear affect the pins, so that the acceptable.
lengths of the pins made by the machine are normally 5. In practice, which one do you think is easier
distributed with a mean of 1.008 inches and a standard to adjust, the mean or the standard deviation?
deviation of 0.045 inch. The company supplies the pins Why?
in large batches to a customer. The customer will take a
random sample of 50 pins from the batch and compute
The production manager then considers the costs
the sample mean. If the sample mean is within the
involved. The cost of resetting the machine to adjust
interval 1.000 inch  0.010 inch, then the customer will
the population mean involves the engineers’ time and
buy the whole batch.
the cost of production time lost. The cost of reducing the
1. What is the probability that a batch will be population standard deviation involves, in addition to
acceptable to the consumer? Is the probability these costs, the cost of overhauling the machine and
large enough to be an acceptable level of reengineering the process.
performance?
6. Assume it costs $150x2 to decrease the standard
To improve the probability of acceptance, the pro- deviation by (x
1,000) inch. Find the cost of
duction manager and the engineers discuss adjusting reducing the standard deviation to the values
the population mean and standard deviation of the found in parts 3 and 4.
lengths of the pins. 7. Now assume that the mean has been adjusted to
the best value found in part 2 at a cost of $80.
2. If the lathe can be adjusted to have the mean of Calculate the reduction in standard deviation
the lengths at any desired value, what should it necessary to have 90%, 95%, and 99% of the
be adjusted to? Why? parts acceptable. Calculate the respective costs,
3. Suppose the mean cannot be adjusted, but as in part 6.
the standard deviation can be reduced. What 8. Based on your answers to parts 6 and 7, what are
maximum value of the standard deviation your recommended mean and standard deviation
would make 90% of the parts acceptable to to which the machine should be adjusted?
Notes 219