Chapter 15

Thinking about Inference

Conditions for inference in practice Any confidence interval or significance test can be trusted only under specific conditions. Previously in Chapter 14, when making inferences about the population mean, , we were assuming: (1) (2) Our data (observations) are a simple random sample (SRS) of size n from the population. Observations come from a normal distribution with parameters and . The population mean is unknown, but the population standard deviation is known.

(3)

Then we were constructing confidence interval for the population mean based on __normal___ distribution. Lets look at each assumption closely: Assumption (3): This assumption is rarely satisfied in practice, i.e., the standard deviation is unknown. Chapter 17 will discuss how to handle this situation. Assumption (2): The inference for the population mean based on normal distribution holds approximately for large samples even if the assumption (2) is not satisfied. Why? Central Limit Theorem When n is large, the sampling distribution of the sample mean is approximately normal Assumption (1): The most important for any inference procedure is that the data come from a process to which the laws of probability apply. When you use statistical inference, you are acting as if your data are random samples or come from a randomized comparative experiment. Caution: If your data dont come from a random sample or a randomized comparative experiment, your conclusion may be challenged.
1

Behavior of Confidence Intervals Recall: A level C confidence interval for when population standard deviation is

estimate margin of error =

+ Z*

Margin of error increases as the confidence level C increases What happens to the margin of error if we increase the confidence level C? Does it increase, decrease or stay the same? (Hint: what happens to the value of z*?) How does this affect the width of the resulting confidence interval? Note the tradeoff: We would like to have a smaller margin of error (narrower interval) as well as high confidence but There is a tradeoff between the margin of error and the confidence level To obtain a smaller margin of error from the same data, you must be willing to accept lower confidence level Q: What could we do to get a narrower interval (smaller margin of error) without lowering confidence? Increasing the sample size n E.g. Refer to the Beetle cars example in Chapter 14, the 99% confidence interval for was found to be _(1.19, 1.81)_ with a sample of size 49. If instead we had taken a sample of size 100 cars and suppose their mean CO2 emission was 1.5 grams, then

(1.5 2.5(

0.84 0.84 ),1.5 + 2.5( ) 100 100

How does the size of affect the margin of error? Margin of error decreases as decreases

Thus we have 3 ways of reducing the width of the confidence interval: 1) 2) Confidence level C ( ) Sample Size n ( )

3) Standard Deviation (sigma) ( ) (Note that sigma is a fixed value, it cannot be changed in practice) Planning studies: sample size for confidence intervals We saw that we can have high degree of confidence as well as small margin of error by increasing the sample size n Usually researchers will have a desired confidence level and margin of error they want to attain. So one aspect of designing any study is to decide the number of observations needed. Let m represent the desired margin of error. Recall the formula of margin of error: Margin of error: M= N=

Z*
m = z* n z*

Solving for n we get: ( z * )2

n

*****Always round up to the next higher whole number!!*****

Ex: Suppose PGSA (Poor Graduate Students Association) at the Texas state wants to estimate the mean monthly income of SMU graduate students within $100 with 95% confidence. How many students should PGSA sample? Assume that the standard deviation of incomes of SMU graduate students is $421.
m = 100 = 421 421 2 N = 1.96 = 68.09= 69 100 C = 95% Z* = 1.9 The required sample size is 69