Basic Concepts on

Estimation
 An estimate is a value or a range
of values that approximate a
parameter. It is based on sample
statistics computed from sample
data.
 Estimation is the process of
determining parameter values.
 Two Types of Parameter Estimates
1. Point Estimate – A sample
statistic used to estimate the
exact value of a population
parameter. The sample mean is
the point estimate of the
population mean.
 Two Types of Parameter Estimates
2. Interval Estimate – gives a range
of values within which the
parameter value possibly falls. It is a
range of values that may contain the
parameter of a population.
Suppose you work for a manufacturer of light
bulbs and you want to predict the average life
expectancy of all the light bulbs you
produced. Using a sample of 100 light bulbs,
you claim that the light bulbs last for an
average of 5 months. However, you state that
the true life expectancy of the light bulbs is
between 4 and 6 months. Identify the point
estimate of the population parameter and
interval estimate of the parameter.
 Using a sample of 100
light bulbs, you claim that
the light bulbs last for an
average of 5 months.
However, you state that
the true life expectancy of
the light bulbs is between
4 and 6 months. Identify
the point estimate of the
population parameter and
interval estimate of the
parameter.
 Interval Estimation
• Confidence interval (interval
estimate) – A range of values
defined by the confidence level
within which the population
parameter is estimated to fall.
Chapter 11 – 7
 Confidence Level
• Confidence Level – The likelihood, expressed as a
percentage or a probability, that a specified interval will
contain the population parameter.
– 95% confidence level – there is a .95 probability that a
specified interval DOES contain the population mean. In
other words, there are 5 chances out of 100 (or 1 chance
out of 20) that the interval DOES NOT contain the
population mean.
– 99% confidence level – there is 1 chance out of 100 that
the interval DOES NOT contain the population mean.
Chapter 11 – 8
 What We are Wanting to Do?
We want to construct an estimate of The actual
where the population mean falls based
population
on our sample statistics
parameter
falls
somewhere
on this line

This is our Confidence Interval

Chapter 11 – 9
 .475 .475

Z
Z= -1.96 Z= 1.96
0

Lower Upper
Confidence Confidence
Limit Limit

Chapter 11 – 10
 Find the interval of values
for Z using the standard
normal distribution,
corresponding to an area of
95%.
Chapter 11 – 11
The interval of values for Z

.475 .475

Z
Z= -1.96 Z= 1.96
0

Lower Upper
Confidence Confidence
Limit Limit

Chapter 11 – 13
Confidence Interval Z Values

Chapter 11 – 14
 Find the interval of values
for Z using the standard
normal distribution,
corresponding to an area of
90.1%.
Chapter 11 – 15
• Find the interval of values for Z using the
standard normal distribution, corresponding
to an area of 90.1%.
• Given: C = 0.901, C/2 = 0.4505
Thus, the 90.1% confidence interval is
-1.65 < Z < 1.65. Using the interval
notation, this may be written as (-1.65, 1.65)

Chapter 11 – 16
Determining the Interval Estimates
In the general formula
(Confidence Intervalfor
-CI)a
confidence interval, the term
is called  
z  
2  n 
margin of error, denoted by E,
which is defined as the
maximum likely difference
between the observed sample
mean and the true value ofthe
Determining the Interval Estimates
(Confidence Interval -CI)
EXAMPLE: From a normally
distributed population, we took
an SRS of 500 students with a
mean score of 461 on the Math
section of the SAT. Suppose the
standard deviation of the
population is 100, what is the
estimated population mean for
95% confidence level.
 Confidence Interval (CI):
Population mean
-estimated range of values
which likely to include the
unknown population parameter.
• x = sample mean
• Z = critical value   
• = population standard x z   
deviation
2  n 
• n = sample size
 Confidence Interval (CI):
Population mean
-estimated range of values
which likely to include the
unknown population parameter.
• x = 461

• = 100   
• n = 500 x z   
• Confidence level = 95%
2  n 
•z = ?
• CI =?
 Confidence Interval (CI):
Population mean
-estimated range of values
which likely to include the
unknown population parameter.
  1  CL  1  0.95  0.05
• x = 461

• = 100
Z  ( CL / 100 )  2  .95  2  0.475  1.960 ( ztable )

• n = 500
• Confidence level (CL) = 95%
•z = ?
• CI =?
Determining the Interval Estimates
(Confidence Interval -CI)

𝜎
()
4618.765

x ± z𝛼
461 8.765 452.23
461 8.765 469.77

2 √ 𝑛 CI (452.23,469.77)
Determining the Interval Estimates
(Confidence Interval -CI)

4618.765 We are 95%

confident that the
461 8.765 452.23 population mean
461 8.765 469.77 score on the Math
CI (452.23,469.77) section of the SAT
lies between 452.23
points and 469.77
points.
 Properties of Student’s t
distribution
• Similar to Standard normal distribution
• Symmetric
• unimodal
• Centered at zero
• Larger spread about zero.
• As the sample size increases (degrees of freedom
increases) the t distribution approaches the standard
normal distribution
Discovered by William S. Gosset
in 1908 and published under pen
name “Student”
Best for estimation of population
mean when sample size is small
and population standard deviation
is unknown.
 t distribution
standard normal distribution
 Look up a

Look up df
Note: the values
tabled for df = ∞
are the same
values for the
standard normal
distribution, za

…
Assumptions in Computing for the Population Mean
When σ is Unknown

When n ≥ 30, and σ is unknown, the sample

standard deviation s can be substituted for σ.
However, the following assumptions should be
met.
• The sample is a random sample.
• Either n ≥ 30 or the population is normally
distributed when n < 30.
 General expression for the confidence
interval when σ is unknown

The distribution of values is called t-distribution

Degrees of Freedom (df)
•The degrees of freedom, denoted by df,
are the number of values that are free to
vary after a sample statistic has been
computed
• Indicate the specific curve to use when a
distribution consists of a family of curves.
Formula for computing the confidence
interval using the t-distribution
•
Using the t-table, give the
confidence coefficients for each of
the following:
1. n = 12, 95% confidence (2.201)
2. n = 15, 95% confidence (2.145)
3. n = 21, 99% confidence
4. n = 23, 95% confidence
5. n = 25, 99% confidence
Using the t-table, give the
confidence coefficients for each of
the following:
1. n = 12, 95% confidence (2.201)
2. n = 15, 95% confidence (2.145)
3. n = 21, 99% confidence (2.845)
4. n = 23, 95% confidence (2.074)
5. n = 25, 99% confidence (2.797)
Example:

• An admission officer of an educational institution

wants to know the mean age of all entering
mathematics majors. He computed a mean age of
18 years and a standard deviation of 1.2 years on
a random sample of 25 entering mathematics
majors purportedly coming from a normally
distributed population.
• With 99% confidence, find the point estimate and
the interval estimate of the population mean.
An admission officer of an educational institution wants to know the mean age of all
entering mathematics majors. He computed a mean age of 18 years and a standard
deviation of 1.2 years on a random sample of 25 entering mathematics majors purportedly
coming from a normally distributed population. With 99% confidence, find the point
estimate and the interval estimate of the population mean.
An admission officer of an educational institution wants to know the mean age of all entering mathematics
majors. He computed a mean age of 18 years and a standard deviation of 1.2 years on a random sample of
25 entering mathematics majors purportedly coming from a normally distributed population. With 99%
confidence, find the point estimate and the interval estimate of the population mean.

18
99% Confidence Interval

2.797
An admission officer of an educational
institution wants to know the mean age of all
entering mathematics majors. He computed a
mean age of 18 years and a standard deviation
2.797 of 1.2 years on a random sample of 25
entering mathematics majors purportedly
coming from a normally distributed
2.797 population. With 99% confidence, find the
point estimate and the interval estimate of the
population mean.
99% Confidence Interval

2.797 2.797

18 0.67 18 0.67
ACTIVITY
a) The mean scores of a random sample of 17 students
who took a special test is 83.5. If the standard deviation
of the scores is 4.1, and the sample comes from an
approximately normal population, find the point and
the interval estimates of the population mean adopting
a confidence level of 95%.
b) The mean age of 20 youth volunteers in a community
project is 17.5 years with a standard deviation of 2
years. If the sample comes from an approximately
normal distribution, what are the point and the interval
estimates of the population mean? Use 99% confidence
ACTIVITY
a) The mean scores of a random sample of
17 students who took a special test is
83.5. If the standard deviation of the
scores is 4.1, and the sample comes from
an approximately normal population, find
the point and the interval estimates of
the population mean adopting a
confidence level of 95%.
ACTIVITY
a) The mean scores of a random sample of 17 students who took a special test is 83.5. If the
standard deviation of the scores is 4.1, and the sample comes from an approximately normal
population, find the point and the interval estimates of the population mean adopting a
confidence level of 95%.

STEP 1: Describe the population parameter of interest. -

The parameter of interest is the mean scores of students
who took a special test.
STEP 2: a) Check the assumption –The sample size of 17
students come from a normally distributed population.
b) Determine the test statistic and standard deviation
–The test statistic is t and s = 4.1
c) State the level of confidence –For a 95%
confidence,
ACTIVITY
a) The mean scores of a random sample of 17 students who took a special test is 83.5. If the
standard deviation of the scores is 4.1, and the sample comes from an approximately normal
population, find the point and the interval estimates of the population mean adopting a
confidence level of 95%.

STEP 3: a) Collect the sample information –The sample

information consists of 17 observations with sample mean
= 83.5 and s = 4.1
b) Find the point estimate –The point estimate for
the population mean is 83.5
STEP 4: a) Determine the confidence coefficient from the t
-table – From the t –table, for n = 17, df = 16. The 95%
confidence coefficient for this value from the table is t =
2.120
ACTIVITY
a) The mean scores of a random sample of 17 students who took a special test is
83.5. If the standard deviation of the scores is 4.1, and the sample comes from an
approximately normal population, find the point and the interval estimates of the
population mean adopting a confidence level of 95%.

STEP 4: b) Find the maximum error

E = t(
= 2.120 (4.1 /
= 2.1081
= 2.11
ACTIVITY
a) The mean scores of a random sample of 17 students who took a special test is 83.5. If
the standard deviation of the scores is 4.1, and the sample comes from an
approximately normal population, find the point and the interval estimates of the
population mean adopting a confidence level of 95%.

STEP 4: c) Find the lower and upper confidence limits.

83.5 – 2.11 < 83.5 < 83.5 + 2.11

81.39 < 83.5 < 85.61
ACTIVITY
a) The mean scores of a random sample of 17 students who took a special test is
83.5. If the standard deviation of the scores is 4.1, and the sample comes from an
approximately normal population, find the point and the interval estimates of the
population mean adopting a confidence level of 95%.

STEP 4: d) Describe the results.

Thus, we can say that with 95% confidence the
interval between 81.39 and 85.61 contains the true
mean scores of the students who took the test
based on the sample of 17 students.
ACTIVITY
b) The mean age of 20 youth
volunteers in a community project is
17.5 years with a standard deviation of
2 years. If the sample comes from an
approximately normal distribution,
what are the point and the interval
estimates of the population mean? Use
99% confidence level.
ACTIVITY
b) The mean age of 20 youth volunteers in a community project is 17.5 years with a standard
deviation of 2 years. If the sample comes from an approximately normal distribution, what are
the point and the interval estimates of the population mean? Use 99% confidence level.
STEP 1: Describe the population parameter of interest. -
The parameter of interest is the mean age of youth
volunteers in a community project.
STEP 2: a) Check the assumption –The sample size of 20
youth volunteers come from a normally distributed
population.
b) Determine the test statistic and standard deviation –
The test statistic is t and s = 2
c) State the level of confidence –For a 99% confidence,
ACTIVITY
b) The mean age of 20 youth volunteers in a community project is 17.5 years with a standard
deviation of 2 years. If the sample comes from an approximately normal distribution, what are the
point and the interval estimates of the population mean? Use 99% confidence level.

STEP 3: a) Collect the sample information –The sample

information consists of 20 observations with sample
mean = 17.5 and s = 2
b) Find the point estimate –The point estimate
for the population mean is 17.5
STEP 4: a) Determine the confidence coefficient from
the t -table – From the t –table, for n = 20, df = 19. The
99% confidence coefficient for this value from the table
is t = 2.861
ACTIVITY
b) The mean age of 20 youth volunteers in a community project is 17.5 years with a standard
deviation of 2 years. If the sample comes from an approximately normal distribution, what are
the point and the interval estimates of the population mean? Use 99% confidence level.

STEP 4: b) Find the maximum error

E = t(
= 2.861 (2 /
= 1.2794
= 1.28
ACTIVITY
b) The mean age of 20 youth volunteers in a community project is 17.5 years with a
standard deviation of 2 years. If the sample comes from an approximately normal
distribution, what are the point and the interval estimates of the population mean?
Use 99% confidence level.
STEP 4: c) Find the lower and upper confidence limits.

17.5 – 1.28 < 17.5 < 17.5 + 1.28

16.22 < 17.5 < 18.78
ACTIVITY
b) The mean age of 20 youth volunteers in a community project is 17.5 years with a standard
deviation of 2 years. If the sample comes from an approximately normal distribution, what are
the point and the interval estimates of the population mean? Use 99% confidence level.

STEP 4: d) Describe the results.

Thus, we can say that with 99% confidence
interval between 16.22 and 18.78 contains the true
mean age of the population of youth volunteers.