120MP Lecture 20 FURTHER CONFIDENCE INTERVALS

In a previous lecture we saw that a confidence interval for a mean had the form:
sample estimate ± critical value x standard error

Confidence interval for a difference between two population means

Consider two populations, e.g. incomes of males (1) and incomes of females (2).
The populations may have different mean values, so we denote them by 1 and 2, and different
standard deviations 1 and 2. In many situations we are interested in 1 - 2.

A (point) estimate for 1 - 2 is

X̄ 1 - X̄ 2 .

A) If 1 and 2 are known;

then a Confidence Interval for the difference between the two population means, 1 - 2, is:

X̄ 1 X̄ 2

This is exact if the original measurements have a Normal distribution.

√ σ 12 σ 22
n1
+
n2

Otherwise it is an approximation, due to the Central Limit Theorem.

B) If 1 and 2 are unknown;

then we need to use the t distribution, and estimate by s so the standard error is
√ s21 s22
+
n 1 n2
Then a Confidence Interval for the difference between the two population means, 1 - 2, is:

However, we would only use the above formula if the population standard deviations, 1 and 2,
are assumed not to be equal.
In this case, for the critical t value,

( )
2
s21 s 22
+
n1 n2
2 2

( ) ( )
s 21
n1
+
s 22
n2

the degrees of freedom,  = ( n1 −1 ) ( n2 −1 )

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Round  down if result is not an integer.
This is called Satterthwaite’s method

If the population standard deviations, 1 and 2, are assumed to be equal,

then we calculate the pooled estimate of the standard deviation,

(pooled) s = √ ( n1−1 ) s 21 + ( n 2−1 ) s22

n1 +n 2−2
And let s1 = s2 = s ,
Thus the CI becomes

and use a t-value with degrees of freedom  = n1+n2-2

Example 1
A random sample of 250 male employees at a large company had a mean salary of £17236 and a
s.d. of £3109. A random sample of 100 female employees at the same company had mean salary
£16610 and s.d. £4318.
Calculate a 90% confidence interval for the difference in mean salary between males and females in
the company as a whole.
Is it safe to conclude that males earn more than females on average at this company?

Confidence interval for a proportion

In an opinion poll it is usually the proportion, p, of people who have a certain opinion that is of
interest. Suppose n people are sampled and X of them hold a certain opinion, e.g. vote Labour.
Then the point estimate of p is the sample proportion (or fraction) f = X/n.
In a previous lecture we saw that, provided n is sufficiently large, f ~ N(p, pq/n), approximately.
So, an approximate 95% confidence interval for the population proportion is:

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 √ f (1−f )
n
We cannot use a t-value here because the t-distribution assumes that the original measurements
(i.e. opinions) are Normally distributed and they clearly are not.

Example 2
Calculate a 90% confidence interval for the percentage of the population that eats Kollege’s cereals
if 20 out of 50 people surveyed said they ate them.

Confidence interval for the difference between two proportions

Suppose now we are considering two populations, e.g. (1) opinions of males and (2) opinions of
females. The populations may have different proportions so we denote them by p1 and p2 .In
many situations we are interested in p1 – p2, the difference between the population proportions.
We estimate p1-p2, by the difference between the sample proportions f1 – f2.
In a previous lecture we saw that, provided n1 and n2 are sufficiently large, approximately
f1 – f2 ~ N(p1 – p2, p1q1/n1+p2q2/n2).
An approximate 95% confidence interval for the difference is then:

√ f 1 (1−f 1 ) f 2 (1−f 2 )
n1
+
n2

Example 3
Among a random sample of 100 people in Newmoor 62 said they would consider using the Internet
when buying a new car. In a random sample of 200 people in Hadmoor, 68 said they would
consider using the Internet when buying a new car.
Find a 95% confidence interval for the percentage difference in opinion between Newmoor and
Hadmoor.
Is it safe to conclude that Internet car sales would be higher in Newmoor than Hadmoor?

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