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**Chapter 8: Estimation of Mean & Proportion
**

Statistics is the science of learning from data

Collecting data

Summarizing and analyzing data

Making inference & drawing conclusion, Interpretation

Theoretical foundation – probability theory

Statistics has two big topics in this class

Summary statistics & Inferential statistics

Inferential statistics

Estimation of population parameters, including point and interval

estimate

Hypothesis testing of population parameters

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-1

8.1 Estimation: An Introduction

What is estimation of a parameter?

The assignment of value(s) to the parameter based on a value of the

corresponding sample statistic is called estimation.

Estimator – unobserved sample statistic, is a random variable

Estimate – observed sample statistic, a number.

The estimation procedure involves the following steps

Select a sample.

Collect the required information from the members of the sample.

Calculate the value of the sample statistic.

Assign value(s) to the corresponding population parameter

Examples

Average life time of certain type of light bulbs?

Random sample: 20 light bulbs

What is estimator?

What is estimate?

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-2

8.2 Point & Interval Estimates

Point estimate

The value of a sample statistic that is used to estimate a parameter is

called a point estimate

Why it is called “point” estimate?

How to obtain the point estimate?

Interval estimate

Instead of one single value, an interval (two ends), which is

constructed around the point estimate, is used

It is also stated that how likely (95%, say) the interval contains the

corresponding parameter

How to construct such an interval estimate? 2 values 1 probability

Why do we need two estimates?

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-3

Example of Estimation

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-4

Instead of a point estimate, we provide interval estimate,

i.e., point estimate ±a number.

How to find the “a number”?

2

8.3 Estimation of a Population Mean: o Known

Three possible cases with known σ

Case I: the population from which the sample is selected is normally

distributed. In this case, sample size is not matter.

Case II: the population is not normal, but the sample size is large (i.e.,

n ≥ 30)

Case III: the population is not normal AND the sample size is small

(i.e., n < 30)

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-5

Steps to Construct Confidence Interval on μ

Fundamental idea

Two end points and a probability (confidence)

Probability comes from a known distribution

Sample mean’s distribution

Steps to obtain confidence interval on μ

Point estimate -----------------

Critical value ------------------- z from standard normal distribution

Margin of error

Confidence interval ----------- ± E

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-6

2

~ ( , ) ~ (0,1)

/

Find such that ( ) 0.95 (or in general 1 )

Solve for from

/

X

X N N

n n

z P z Z z

X

z z

n

µ o

µ

o

o

µ

o

µ

÷

¬

÷ s s = ÷

÷

÷ s s

X

E z

n

o

= ×

X

Finding z for a 100(1 – α)% Confidence Level

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-7

Left tail of z = 1 – α/2

Table, Excel (normSinv),

or calculator (invNorm)

How to find z?

Example 8-1– Normal Population

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-8

A publishing company has just published a new college textbook. Before the

company decides the price at which to sell this textbook, it wants to know the

average price of all such textbooks in the market. The research department at

the company took a sample of 25 comparable textbooks and collected

information on their prices. This information produced a mean price of $145

for this sample. It is known that the standard deviation of the prices of all such

textbooks is $35 and the population of such prices is normal.

a). What is the point estimate of the mean price of all such college textbooks?

b). Construct a 90% confidence interval for the mean price of all such college

textbooks.

Solution: a). Point estimate of mean µ = sample mean = $145

b). 90% C.I. for mean µ:

Point estimate = $145

90% => z, i.e., P(Z < z) = 0.95. z = 1.65

E = z × = 1.65×35/5 = 1.65×7 = 11.55

90% C.I. for µ is 145 ± 11.55

x

x

3

Example 8.2 – Large Sample

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-9

In a 2009 survey by I-Pension LLC, adults with annual household

incomes of $50,000 to $125,000 were asked about the average

time they spend reviewing their 401(k) statements. Of the adults

surveyed, about 72% said that they spend less than 5 minutes, and

27% said that they spend 5 to 10 minutes to review their 401(k)

statements. Suppose a random sample of 400 adults of all income

levels, who have 401(k) statements, were asked. The sample

produced a mean of 8 minutes. Assume that the standard

deviation of such times for all 401(k) account holders is 2.20

minutes. Construct a 99% confidence interval for the mean time

spent by all 401(k) holders reviewing their 401(k) statements.

Solution: 99% C.I. for mean µ:

1. Point estimate: 8

2. 99% => z, i.e., P(Z < z) = 0.995. z = 2.58

3. E = z × = 2.58×2.2/20 = 2.58 × 0.11 = 0.284

4. 99% C.I. for µ is 8 ± 0.284

Sample Size for the Estimation of Mean

Width of a Confidence Interval

The width of a confidence interval depends on the size of the margin

of error, . Hence, the width of a confidence interval

can be controlled using

The value of z, which depends on the confidence interval

The sample size, n

Determining the Sample Size for the Estimation of μ

Given the confidence level and the standard deviation of the

population, the sample size that will produce a predetermined margin

of error E of the confidence interval estimate of μ is

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-10

E z

n

o

= ×

o

=

2 2

2

E

z

n

Example 8-3

An alumni association wants to estimate the mean debt of

this year’s college graduates. It is known that the population

standard deviation of the debts of this year’s college

graduates is $11,800. How large a sample should be

selected so that the estimate with a 99% confidence level is

within $800 of the population mean?

Solution

99% => z = 2.58

E = 800

Standard deviation σ = 11800

Therefore, n = z

2

σ

2

/ E

2

= 1448.18 ≈1449

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-11

8.4 Estimation of a Population Mean: σ unknown

Three possible cases with unknown σ

Case I: the population from which the sample is selected is normally

distributed. In this case, sample size is not matter.

Case II: the population is not normal, but the sample size is large

(i.e., n ≥ 30)

Case III: the population is not normal AND the sample size is small

(i.e., n < 30)

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-12

????

4

The t Distribution

The t distribution is a specific type of symmetric bell-shaped

distribution with a lower height and a wider spread than the

standard normal distribution. As the sample size becomes

larger, the t distribution approaches the standard normal

distribution. The t distribution has only one parameter, called

the degrees of freedom (df). The mean of the t distribution is

equal to 0 and its standard deviation is .

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-13

) 2 /( ÷ df df

Problems Involving the t Distribution

How to find probability given t values?

Table V, tdist(t,df,tails) in Excel, and tcdf(t

1

,t

2

,df) in TI-83

How to find t values given probability?

Table V, or tinv(prob-of-two-small-tails,df) in Excel.

Example 8-4

Find the value of t for 16 degrees of freedom and .05 area in the right

tail of a t distribution curve.

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-14

Table V only works on right tail

t Distribution Table V

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-15

Fundamental idea

Two end points and a probability (confidence)

Probability comes from a known distribution

Sample mean’s distribution

Steps to obtain confidence interval on μ

Point estimate -----------------

Critical value ------------------- t from the distribution of T

n-1

Margin of error

Confidence interval ----------- ± E

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-16

2

1

1

~ ( , ) ~ (0,1) ~

/ /

Find such that ( ) 0.95 (or in general 1 )

Solve for from

/

n

n

X X

X N N T

n n s n

z P t T t

X

t t

s n

µ o

µ

µ

o

µ

µ

o

÷

÷

÷ ÷

¬ ¬

÷ s s = ÷

÷

÷ s s

X

s

E t

n

= ×

X

Confidence Interval for μ Using the t Distribution

5

Example 8-5

Dr. Moore wanted to estimate the mean cholesterol level for

all adult men living in Hartford. He took a sample of 25

adult men from Hartford and found that the mean cholesterol

level for this sample is 186 mg/dL with a standard deviation

of 12 mg/dL. Assume that the cholesterol levels for all adult

men in Hartford are (approximately) normally distributed.

Construct a 95% confidence interval for the population mean

μ.

Solution

Summary statistics: n = 25, = 186, s = 12 & α = 0.05

Point estimate: 186

Critical value of 95%: 2.064 (from T

24

)

Margin of error: 2.064 x 12/5 = 4.95

95% C. I. on μ is 186 ± 4.95

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-17

X

Example 8-6

Sixty-four randomly selected adults who buy books for

general reading were asked how much they usually spend on

books per year. The sample produced a mean of $1450 and

a standard deviation of $300 for such annual expenses.

Determine a 99% confidence interval for the corresponding

population mean.

Solution

Summary statistics: n = 64, = 1450, s = 300 & α = 0.01

Point estimate: 1450

Critical value: z = 2.58 (or as book t = 2.656)

Margin or error: 2.58 x 300/8 = 96.75 (or 99.6 using t = 2.656)

99% C. I. on μ is 1450 ± 96.75 (99.60)

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-18

X

8.5 Estimation of Population Proportion p

Point estimate of population proportion p:

Sampling distribution of

Approximate normal distribution with

Mean = p

Standard deviation =

Estimate of the standard deviation

Idea of confidence interval

Steps for confidence interval on p

Point estimate

Critical value z from Z distribution

Margin of error E = z

C. I. interval on p

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-19

ˆ

x

p

n

=

ˆ

x

p

n

=

pq

n ˆ ˆ pq

n

ˆ ˆ ˆ

ˆ ( , ) (0,1)

ˆ ˆ

pq p p

p N p N

n pq

n

÷

~ ¬ ~

ˆ

x

p

n

=

ˆ ˆ pq

n

ˆ p E ±

Example 8-7

According to a survey by Pew Research Center in June 2009,

44% of people aged 18 to 29 years said that religion is very

important to them. Suppose this result is based on a sample

of 1000 people aged 18 to 29 years.

What is the point estimate of the population proportion?

Find, with a 99% confidence level, the percentage of all people aged

18 to 29 years who will say that religion is very important to them.

What is the margin of error of this estimate?

Solution

Summary statistics: n = 1000, = 0.44

Point estimate 0.44

Critical value of 99%: 2.58

Margin of error: 2.58 x √(0.44x0.56/1000) =0.04

99% C. I. on p: 0.44 ± 0.04

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-20

pˆ

6

Example 8-8

According to a Harris Interactive survey of 2401 adults

conducted in April 2009, 25% of adults do not drink alcohol.

Construct a 97% confidence interval for the corresponding

population proportion.

Solution

Summary statistics: n = 2401, = 0.25

Point estimate: 0.25

Critical value: 2.17

Margin of error: 2.17 x √(0.25x0.75/2401) = 0.019

97% C. I. on p: 0.25 ± 0.019

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-21

pˆ

Sample Size for Estimation of p

Given the confidence level and the values of , the sample

size that will produce a predetermined maximum of error E of

the confidence interval estimate of p is

In case the value of is not known, we often make the most

conservation estimate of the sample size n by using = 0.5

Or take a preliminary sample (of arbitrarily determined size) and

calculate from this sample. Then use this value to find n.

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-22

pˆ

=

2

2

ˆ ˆ

E

z p q

n

pˆ

pˆ

pˆ

Example 8-9

Lombard Electronics Company has just installed a new

machine that makes a part that is used in clocks. The

company wants to estimate the proportion of these parts

produced by this machine that are defective. The company

manager wants this estimate to be within .02 of the

population proportion for a 95% confidence level. What is

the most conservative estimate of the sample size that will

limit the maximum error to within .02 of the population

proportion?

Solution

95% => z = 1.96

Take = 0.5

Therefore, n = 1.96 x 0.5 x 0.5 / 0.02

2

= 2401

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-23

pˆ

Technology Instruction

TI – 83 plus / TI – 84

Data set

Summary statistics

Excel

Data set

Function Confidence

MATH 3038 - 01 Dr. Yingfu (Frank) Li 8-24

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