ESTIMATION AND CONFIDENCE

INTERVALS

ESTIMATION
THE ACT OF PROVIDING THE
MOST LIKELY LOCATION OF A
POPULATION PARAMETER WITH
CALCULATED DEGREE OF ERROR.

 ESTIMATION
• CONSTRUCTION OF A
GOOD ESTIMATOR FROM
THE SAMPLE VALUES
 TYPES OF
ESTIMATION
 POINTESTIMATION
A SINGLE SAMPLE
STATISTIC IS CALCULATED
FROM THE SAMPLE TO
PROVIDE A BEST ESTIMATE
OF THE TRUE VALUE OF
THE CORRESPONDING
POPULATION PARAMETER
 TYPES OF ESTIMATION
CONT.
INTERVAL ESTIMATION
AN INTERVAL ESTIMATE OF A
POPULATION PARAMETER IS A
CONFIDENCE INTERVAL WITH A
STATEMENT OF CONFIDENCE
THAT THE INTERVAL
CONTAINS THE PARAMETER
VALUE.
 PROPERTIES OF A GOOD
ESTIMATOR
UNBIASEDNESS
AN ESTIMATOR IS SAID
TO BE
UNBIASED IF ITS
EXPECTATION IS
EQUAL TO THE
POPULATION VALUE
(PARAMETER).
 MINIMUM VARIANCE
A GOOD ESTIMATOR
MUST HAVE MINIMUM
VARIANCE IN THE CLASS
OF ESTIMATORS.
THE ESTIMATOR THAT
MINIMIZES THE MSE IS
SIMPLY A GOOD
ESTIMATOR.
CONSISTENCY
AN ESTIMATOR IS CONSISTENT
IF, AS SAMPLE SIZE GETS
LARGE, THE PROBABILITY
THAT THE ESTIMATOR LIES
ARBITRARILY CLOSE TO THE
PARAMETER , BEING
ESTIMATED BECOMES
ARBITRARILY CLOSE TO 1.
EFFICIENCY
AN ESTIMATOR IS
EFFICIENT IF IN THE
CLASS OF OTHER
UNBIASED ESTIMATORS
IS HAVING MINIMUM
VARIANCE
 UNIFORMLY MINIMUM VARIANCE
UNBIASED ESTIMATOR (UMVUE)
 AN ESTIMATOR IS SAID TO BE
UMVUE, IF
IT IS UNBIASED AND

FOR ANY OTHER UNBIASED

ESTIMATOR THE VARIANCE OF IS
LESS THAN THE VARIANCE OF
ALL OTHER ESTIMATORS
INTERVAL ESTIMATION OF
POPULATION MEAN (σ
KNOWN)
THE CONFIDENCE INTERVAL
ESTIMATE OF A POPULATION
PARAMETER IS OBTAINED BY
APPLYING THE FORMULA:
POINT ESTIMATE ± MARGIN OF
ERROR

MARGIN OF ERROR = Z X STANDARD

C

ERROR OF A PARTICULAR STATISTIC

Z = PROBABILITY OF BEING CORRECT
C
•  
 EXAMPLE
THE AVERAGE MONTHLY ELECTRICITY
CONSUMPTION FOR A SAMPLE OF 100
FAMILIES IS 1250 UNITS. ASSUMING THE
STANDARD DEVIATION OF ELECTRIC
CONSUMPTION OF ALL FAMILIES IS 150
UNITS, CONSTRUCT A 95 PER CENT
CONFIDENCE INTERVAL ESTIMATE OF
THE ACTUAL MEAN ELECTRIC
CONSUMPTION.
 SOLUTION
SAMPLE MEAN = 1250,
σ = 150,
n = 100
Z1-α = 1.96.
1220.60 ≤ Μ ≤ 1274.40.
 INTERVAL ESTIMATION OF
POPULATION MEAN (σ
UNKNOWN)
A RANDOM SAMPLE OF 10
EMPLOYEES REVEALS THE
FOLLOWING FAMILY DENTAL
EXPENSES (IN THOUSANDS OF
NAIRA) IN THE PREVIOUS YEAR:
11, 37, 25, 62, 51, 21, 18, 43, 32, 20.
SET UP A 99 PER CENT
CONFIDENCE INTERVAL OF THE
AVERAGE FAMILY DENTAL
EXPENSES FOR THE EMPLOYEES
OF THIS ORGANIZATION.
 SOLUTION
THE SAMPLE MEAN = 32
SAMPLE STANDARD DEVIATION =
5.11

T TABLE VALUE = 1.833 AT

DEGREE OF FREEDOM (DF) = 9,

C.I FOR THE MEAN EXPENSES

PER FAMILY IS, 29.038 ≤ Μ ≤ 34.962.
 SAMPLE SIZE
DETERMINATION
THE STANDARD ERROR OF SAMPLING
DISTRIBUTION OF SAMPLE MEAN AND
PROPORTION ARE BOTH INVERSELY
PROPORTIONAL TO THE SAMPLE
SIZE n,

THE WIDTH OR RANGE OF THE

CONFIDENCE INTERVAL CAN BE
DECREASED BY INCREASING THE
SAMPLE SIZE N.
• THE QUESTION THEN
IS: ‘HOW DO WE
DETERMINE THE
SAMPLE SIZE THAT
IS REQUIRED TO
ATTAIN A DESIRED
DEGREE OF
PRECISION?’
FACTORS DETERMINING
THE SIZE OF A SAMPLE
THE PURPOSE FOR
WHICH THE SAMPLE IS
DRAWN.
THE
HETEROGENEITY OF
THE SAMPLING UNITS
IN THE POPULATION.
RESOURCES AVAILABLE
FOR THE STUDY IN
TERMS OF TIME AND
MONEY.
NUMBER OF TECHNICAL
PERSONS AND/OR
EQUIPMEN
PRECISION OF ESTIMATE
REQUIRED.
 SAMPLE SIZE FOR
ESTIMATING POPULATION
MEAN
TO ESTIMATE THE
POPULATION MEAN WITH A
CONDITION THAT THE ERROR
IN ITS ESTIMATION SHOULD
NOT EXCEED A FIXED VALUE,
SAY E, WE REQUIRE THAT
THE SAMPLE MEAN SHOULD
FALL WITHIN RANGE
IF THE POPULATION
STANDARD
DEVIATION σ IS NOT
KNOWN, THEN
SAMPLE STANDARD
DEVIATION S CAN BE
USED
 EXAMPLE
GIVEN A POPULATION

WITH A STANDARD
DEVIATION OF 8.6, WHAT
SAMPLE SIZE IS NEEDED TO
ESTIMATE THE MEAN OF
POPULATION WITHIN ±0.5
WITH 99 PER CENT
CONFIDENCE?
 SOLUTION
• SOLUTION
• GIVEN σ = 8.6, E =±0.5
• = 2.576 AT 99
PER CENT CONFIDENCE
LEVEL.
•
 =
1964