Confidence Interval Estimation: Single

Population-II
Dr. A. Ramesh
Department of Management Studies
IIT ROORKEE

1
 Student’s t Distribution
• Consider a random sample of n observations
– with mean x and standard deviation s
– from a normally distributed population with mean μ

• Then the variable x μ

t
s/ n

follows the Student’s t distribution with (n - 1) degrees of freedom

2
 Confidence Interval for μ (σ2 Unknown)

• If the population standard deviation σ is unknown, we can substitute

the sample standard deviation, s
• This introduces extra uncertainty, since s is variable from sample to
sample
• So we use the t distribution instead of the normal distribution

3
 Confidence Interval for μ (σ Unknown)
(continued)
• Assumptions
– Population standard deviation is unknown
– Population is normally distributed
– If population is not normal, use large sample
• Use Student’s t Distribution
• Confidence Interval Estimate:
S S
x  t n-1,α/2  μ  x  t n-1,α/2
n n

where tn-1,α/2 is the critical value of the t distribution with n-1 d.f. and an area of α/2 in each tail

4
 Margin of Error
• The confidence interval,
S S
x  t n-1,α/2  μ  x  t n-1,α/2
n n

• Can also be written as

x  ME
where ME is called the margin of error:

σ
ME  t n-1,α/2
n

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 Student’s t Distribution

• The t is a family of distributions

• The t value depends on degrees of freedom (d.f.)
– Number of observations that are free to vary after sample mean has
been calculated
d.f. = n - 1

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 Student’s t Distribution
Note: t Z as n increases

Standard
Normal
(t with df = ∞)

t (df = 13)
t-distributions are bell-
shaped and symmetric, but
have ‘fatter’ tails than the t (df = 5)
normal

0 t
7
 Student’s t Table

Upper Tail Area

Let: n = 3
df .10 .05 .025 df = n - 1 = 2
 = .10
1 3.078 6.314 12.706 /2 =.05
2 1.886 2.920 4.303
3 1.638 2.353 3.182 /2 = .05

The body of the table

contains t values, not
probabilities
0 2.920 t
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 t distribution values
With comparison to the Z value

Confidence t t t Z
Level (10 d.f.) (20 d.f.) (30 d.f.) ____

.80 1.372 1.325 1.310 1.282

.90 1.812 1.725 1.697 1.645
.95 2.228 2.086 2.042 1.960
.99 3.169 2.845 2.750 2.576

Note: t Z as n increases
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 Example

A random sample of n = 25 has x = 50 and s = 8. Form a 95%

confidence interval for μ
t n1,α/2  t 24,.025  2.0639
– d.f. = n – 1 = 24, so

The confidence interval is

S S
x  t n-1,α/2  μ  x  t n-1,α/2
n n
8 8
50  (2.0639)  μ  50  (2.0639)
25 25
46.698  μ  53.302
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 Confidence Intervals

Confidence
Intervals

Population Population Population

Mean Proportion Variance

σ2 Known σ2 Unknown

11
 Confidence Intervals for the
Population Proportion

• An interval estimate for the population proportion ( P ) can

be calculated by adding an allowance for uncertainty to the
sample proportion ( p̂ )

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 Confidence Intervals for the Population
Proportion, p
(continued)

• Recall that the distribution of the sample proportion is approximately

normal if the sample size is large, with standard deviation

P(1 P)
σP 
n
• We will estimate this with sample data:
pˆ (1 pˆ )
n

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 Confidence Interval Endpoints

• Upper and lower confidence limits for the population proportion are
calculated with the formula

pˆ (1 pˆ ) ˆ (1 pˆ )
p
pˆ  z α/2  P  pˆ  z α/2
n n
• where
– z/2 is the standard normal value for the level of confidence desired
– p̂ is the sample proportion
– n is the sample size
– nP(1−P) > 5

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 Example

• A random sample of 100 people shows that 25 are left-

handed.
• Form a 95% confidence interval for the true proportion of
left-handers

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 Example (continued)

• A random sample of 100 people shows that 25 are left-handed. Form a

95% confidence interval for the true proportion of left-handers.

ˆ ˆ ˆ ˆ
ˆp  z α/2 p(1 p)  P  pˆ  z α/2 p(1 p)
n n
25 .25(.75) 25 .25(.75)
 1.96  P   1.96
100 100 100 100
0.1651  P  0.3349

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 Interpretation

• We are 95% confident that the true percentage of left-handers in the

population is between
16.51% and 33.49%.

• Although the interval from 0.1651 to 0.3349 may or may not contain the true
proportion, 95% of intervals formed from samples of size 100 in this manner
will contain the true proportion.

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 Confidence Intervals

Confidence
Intervals

Population Population Population

Mean Proportion Variance

σ2 Known σ2 Unknown

18
 Confidence Intervals for the Population
Variance

 Goal: Form a confidence interval for the population variance, σ2

• The confidence interval is based on the sample variance, s2

• Assumed: the population is normally distributed

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Confidence Intervals for the Population Variance
(continued)

The random variable

(n  1)s2
 n21 
σ2
follows a chi-square distribution with (n – 1)
degrees of freedom

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 Confidence Intervals for the Population Variance

The (1 - )% confidence interval for the population variance is

(n  1)s2 (n  1)s 2
 σ 2
 2
χn1, α/2
2
χn1, 1 - α/2

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 Example

You are testing the speed of a batch of computer processors. You

collect the following data (in Mhz):

Sample size 17
Sample mean 3004
Sample std dev 74

Assume the population is normal. Determine the 95%

confidence interval for σx2

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 Finding the Chi-square Values

• n = 17 so the chi-square distribution has (n – 1) = 16 degrees of

freedom
•  = 0.05, so use the the chi-square values with area 0.025 in each tail:
χn21, α/2  χ16
2
, 0.025  28.85

probability probability
χ 2
n 1, 1 - α/2 χ 2
16 , 0.975  6.91 α/2 = .025 α/2 = .025

216
216 = 6.91 216 = 28.85

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 Calculating the Confidence Limits

• The 95% confidence interval is

(n  1)s2 (n  1)s 2
 σ 2
 2
χn1, α/2
2
χn1, 1 - α/2

(17  1)(74)2 (17  1)(74)2

σ 
2

28.85 6.91
3037  σ 2  12683
Converting to standard deviation, we are 95% confident that the population standard
deviation of CPU speed is between 55.1 and 112.6 Mhz

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 Finite Populations

• If the sample size is more than 5% of the population size (and

sampling is without replacement) then a finite population correction
factor must be used when calculating the standard error

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 Finite Population Correction Factor

• Suppose sampling is without replacement and the sample size is large

relative to the population size
• Assume the population size is large enough to apply the central limit
theorem
• Apply the finite population correction factor when estimating the
population variance

Nn
finite population correction factor 
N 1

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 Estimating the Population Mean

• Let a simple random sample of size n be taken from a population

of N members with mean μ
• The sample mean is an unbiased estimator of the population mean
μ
• 1 n
x   xi
The point estimate is:
n i1

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 Finite Populations: Mean

• If the sample size is more than 5% of the population size, an unbiased

estimator for the variance of the sample mean is

Nn
2
ˆ  s
σ  
2

 N 1 
x
n
• So the 100(1-α)% confidence interval for the population mean is

ˆ x  μ  x  t n-1,α/2σ
x - t n-1,α/2σ ˆx

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 Estimating the Population Proportion

• Let the true population proportion be P

• Let p̂ be the sample proportion from n observations from a simple
random sample
• The sample proportion, p̂ , is an unbiased estimator of the population
proportion, P

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 Finite Populations: Proportion

• If the sample size is more than 5% of the population size, an unbiased

estimator for the variance of the population proportion is
ˆ (1- pˆ )  N  n 
p
ˆ 
σ 2
pˆ  
n  N 1 
• So the 100(1-α)% confidence interval for the population proportion is

pˆ - zα/2σ
ˆ pˆ  P  pˆ  zα/2σ
ˆ pˆ

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 Lecture Summary
• Introduced the concept of confidence intervals
• Discussed point estimates
• Developed confidence interval estimates
• Created confidence interval estimates for the mean (σ2
known)
• Introduced the Student’s t distribution
• Determined confidence interval estimates for the mean (σ2
unknown)

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 Lecture Summary
(continued)
• Created confidence interval estimates for the proportion
• Created confidence interval estimates for the variance of a normal
population
• Applied the finite population correction factor to form confidence
intervals when the sample size is not small relative to the population size

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 Summary
• Introduced sampling distributions
• Described the sampling distribution of sample means
– For normal populations
– Using the Central Limit Theorem
• Described the sampling distribution of sample proportions
• Introduced the chi-square distribution
• Examined sampling distributions for sample variances
• Calculated probabilities using sampling distributions
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Thank You

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