WHAT IS THE DIFFERENCE BETWEEN

CENTRAL LIMIT
THEOREM
&

LAW OF LARGE
NUMBERS?

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 MEANING OF
CENTRAL LIMIT
THEOREM

Central Limit Theorem states that

for multiple samples taken from a
population, if the sample size is
large, then the distribution of the
sample mean, or sum, will
converge to a normal distribution
even though the random variable
x may be non-normal.

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This proves to be a key concept in
probability theory as it implies
that probabilistic and statistical
methods that work for normal
distributions can apply to many
problems involving other types of
distributions.

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 Inferences from
Central Limit Theorem

1. Sample means always follow

normal distribution irrespective of
the distribution of individual data
in the population.

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2. Mean of sample means tends to
be the population mean as the
number of samples tends to
infinitely.

3. Variance of sample means it is

'n' times less than the variance of
a population, where 'n' is the
sample size.

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E.g. Consider the roll of 2 dice. If
this is done multiple times and
the average or the sum of the rolls
is plotted, then this plot will get
closer to a normal distribution..
Increasing the number of dies
makes the curve progressively
closer to the Bell Curve.

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 MEANING OF
LAW OF LARGE
NUMBERS

The Law of Large Numbers states

that as the sample size grows, the
sample mean gets closer to the
population mean, irrespective of
whether the data set is normal or
non-normal.

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E.g. Consider the roll of a single
die. If you roll the die sufficiently
large a number of times, the
average will tend to be close to
3.5.

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The Law of Large numbers states
that the frequencies of events
with the same likelihood of
occurrence even out when we see
over many trials. i.e. as the sample
grows larger, the outcomes will
tend towards the Expected value.

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