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INFERENTIAL STATISTICS
Inferential Statistics
A type of statistics that takes data from a sample and makes inferences about the larger population from which
the sample was drawn.
Laws of Probability
Tells us about the probability of specific events occurring.
Laws of Probability
Inferential statistics is based on these
Random Sampling
What type of sampling should be used when using Inferential Statistics?
Sampling Error
Is a statistical error that occurs when an analyst does not select a sample that represents the entire population
of data and the results found in the sample do not represent the results that would be obtained from the entire
population.
Interval Estimation
Is the use of sample data to calculate an interval of possible (or probable) values of an unknown population
parameter
Confidence Interval
Is a range of values that's likely to include a population value with a certain degree of confidence.
Hypothesis Testing
Is an act in statistics whereby an analyst tests an assumption regarding a population parameter
Null Hypothesis
Is a type of hypothesis used in statistics that proposes that there is no difference/relationship between certain
characteristics of a population
Alternative Hypothesis
Is a type of hypothesis used in statistics that proposes that there is a difference/relationship between certain
characteristics of a population
Type I error
What type of error occurs when there is rejection of a null hypothesis that is true?
Type II error
What type of error occurs when there is failure to reject a false null hypothesis?
Significance Level
Is the probability of rejecting the null hypothesis when it is true.
0.05 and 0.01
What are the two most frequently used significance levels?
Pick a smaller significance level
How to reduce committing a Type I error?
Increase sample size
How to reduce committing a Type II error?
Statistical Tests
Provide a method for making quantitative decisions about a particular sample
Parametric Tests
Is a type of statistical test that assumes sample data follow a probability distribution based on a fixed set of
parameters.
Nonparametric Tests
A type of statistical test that does not assume anything about the underlying distribution
Normality
Happens when the data roughly follows a bell-shaped curve