Session 3

Sampling Distributions
Sampling
Distributions
Sampling
Distribution of
the Mean
Sampling
Distribution of
the Proportion
A sampling distribution is a
distribution of all of the possible
values of a statistic for a given size
sample selected from a population
Developing a
Sampling Distribution
Assume there is a population
Population size N=4
Random variable, X,
is age of individuals
Values of X: 18, 20,
22, 24 (years)
A
B
C
D
.3
.2
.1
0
18 20 22 24
A B C D
Uniform Distribution
P(x)
x
(continued)
Summary Measures for the Population Distribution:
Developing a
21
4
24 22 20 18
N
X
i
=
+ + +
=
=

2.236
N
) (X
2
i
=
=

16 possible samples
(sampling with
replacement)
Now consider all possible samples of size n=2
1st 2nd Observation
Obs 18 20 22 24
18 18 19 20 21
20 19 20 21 22
22 20 21 22 23
24 21 22 23 24

(continued)
Developing a
16 Sample
Means
1
st

Obs
2
nd
Observation
18 20 22 24
18 18,18 18,20 18,22 18,24
20 20,18 20,20 20,22 20,24
22 22,18 22,20 22,22 22,24
24 24,18 24,20 24,22 24,24
1st 2nd Observation
Obs 18 20 22 24
18 18 19 20 21
20 19 20 21 22
22 20 21 22 23
24 21 22 23 24

Sampling Distribution of All Sample Means
18 19 20 21 22 23 24
0
.1
.2
.3
P(X)
X
Sample Means
Distribution
16 Sample Means
_
Developing a
(continued)
(no longer uniform)
_
Summary Measures of this Sampling Distribution:
Developing a
(continued)
21
16
24 21 19 18
N
X
i
X
=
+ + + +
= =

1.58
16
21) - (24 21) - (19 21) - (18
N
) X (
2 2 2
2
X
i
X
=
+ + +
=
Comparing the Population with its

18 19 20 21 22 23 24
0
.1
.2
.3
P(X)
X
18 20 22 24
A B C D
0
.1
.2
.3
Population
N = 4
P(X)
X
_
1.58 21
X X
= =
2.236 21 = =
Sample Means Distribution
n = 2
_
of the Mean
Sampling
Distributions
Sampling
Distribution of
the Mean
Sampling
Distribution of
the Proportion
Standard Error of the Mean
Different samples of the same size from the same
population will yield different sample means
A measure of the variability in the mean from sample to
sample is given by the Standard Error of the Mean:
(This assumes that sampling is with replacement or
sampling is without replacement from an infinite population)

Note that the standard error of the mean decreases as
the sample size increases
n
X
=
If the Population is Normal
If a population is normal with mean and
standard deviation , the sampling distribution
of is also normally distributed with

and

X

X
=
n
X
=
Z-value for Sampling Distribution
of the Mean
Z-value for the sampling distribution of :
where: = sample mean
= population mean
= population standard deviation
n = sample size
X
) X (
) X (
Z
X
X

=
=
X
Normal Population
Distribution
Normal Sampling
Distribution
(has the same mean)
Sampling Distribution Properties

(i.e. is unbiased )

x
x
x

x
=
Sampling Distribution Properties

As n increases,
decreases
Larger
sample size
Smaller
sample size
x
(continued)
x
If the Population is not Normal

We can apply the Central Limit Theorem:
Even if the population is not normal,
sample means from the population will be
approximately normal as long as the sample size is
large enough.

Properties of the sampling distribution:

and

x
=
n
x
=
n
Central Limit Theorem
As the
sample
size gets
large
enough
the sampling
distribution
becomes
almost normal
regardless of
shape of
population
x
Population Distribution
(becomes normal as n increases)
Central Tendency
Variation
x
x
Larger
sample
size
Smaller
sample size
If the Population is not Normal
(continued)
Sampling distribution
properties:

x
=
n
x
=
x
How Large is Large Enough?

For most distributions, n > 30 will give a
sampling distribution that is nearly normal
For fairly symmetric distributions, n > 15
For normal population distributions, the
sampling distribution of the mean is always
normally distributed
Example
Suppose a population has mean = 8 and
standard deviation = 3. Suppose a random
sample of size n = 36 is selected.

What is the probability that the sample mean is
between 7.8 and 8.2?
Example
Solution:
Even if the population is not normally
distributed, the central limit theorem can be
used (n > 30)
so the sampling distribution of is
approximately normal
with mean = 8
and standard deviation

(continued)
x
x
0.5
36
3
n
x
= = =
Example
Solution (continued):

(continued)
0.3108 0.4) Z P(-0.4
36
3
8 - 8.2
n
- X
36
3
8 - 7.8
P 8.2) X P(7.8
= < < =
|
|
|
.
|
\
|
< < = < <
Z
7.8 8.2
-0.4 0.4
Sampling
Distribution
Standard Normal
Distribution
.1554
+.1554
Population
Distribution
?
?
?
?
?
?
? ?
?
?
?
?
Sample Standardize
8 =
8
X
=
0
z
=
x
X
of the Proportion
Sampling
Distributions
Sampling
Distribution of
the Mean
Sampling
Distribution of
the Proportion
Population Proportions
= the proportion of the population having
some characteristic
Sample proportion ( p ) provides an estimate
of :

0 p 1
p has a binomial distribution
(assuming sampling with replacement from a finite population or
without replacement from an infinite population)
size sample
interest of stic characteri the having sample the in items of number
n
X
p = =
Sampling Distribution of p
Approximated by a
normal distribution if:

where
and
(where = population proportion)
P( p
s
)
.3
.2
.1
0
0 . 2 .4 .6 8 1 p

=
p
n
) (1
p

=
5 p) n(1
5 np
and
>
>
Z-Value for Proportions
n
) (1
p
p
Z
p
t t
t t
=
Standardize p to a Z value with the formula:
Example
If the true proportion of voters who support
Proposition A is = 0.4, what is the probability
that a sample of size 200 yields a sample
proportion between 0.40 and 0.45?
i.e.: if = 0.4 and n = 200, what is
P(0.40 p 0.45) ?
Example
if = 0.4 and n = 200, what is
P(0.40 p 0.45) ?
(continued)
0.03464
200
0.4) 0.4(1
n
) (1
p
=
=
t t
1.44) Z P(0
0.03464
0.40 0.45
Z
0.03464
0.40 0.40
P 0.45) p P(0.40
s s =
|
.
|
\
|

s s
= s s
Find :
Convert to
standard
normal:
p
Example
Z
0.45 1.44
0.4251
Standardize
Standardized
Normal Distribution
if = 0.4 and n = 200, what is
P(0.40 p 0.45) ?
(continued)
Use standard normal table: P(0 Z 1.44) = 0.4251
0.40 0
p

Reasons for Drawing a Sample
Less time consuming than a census
Less costly to administer than a census
Less cumbersome and more practical to
administer than a census of the targeted
population
Nonprobability Sample
Items included are chosen without regard to
their probability of occurrence

Probability Sample
Items in the sample are chosen on the basis
of known probabilities
Types of Samples Used
Types of Samples Used
Quota
Samples
Non-Probability
Samples
Judgement Chunk
Probability Samples
Simple
Random
Systematic
Stratified
Cluster
Convenience
(continued)
Probability Sampling
Items in the sample are chosen based on
known probabilities
Probability Samples
Simple
Random
Systematic Stratified Cluster
Simple Random Samples
Every individual or item from the frame has an
equal chance of being selected
Selection may be with replacement or without
replacement
Samples obtained from table of random
numbers or computer random number
generators
Decide on sample size: n
Divide frame of N individuals into groups of k
individuals: k=N/n
Randomly select one individual from the 1
st

group
Select every k
th
individual thereafter
Systematic Samples
N = 64
n = 8
k = 8
First Group
Stratified Samples
Divide population into two or more subgroups (called
strata) according to some common characteristic
A simple random sample is selected from each subgroup,
with sample sizes proportional to strata sizes
Samples from subgroups are combined into one
Population
Divided
into 4
strata
Sample
Cluster Samples
Population is divided into several clusters,
each representative of the population
A simple random sample of clusters is selected
All items in the selected clusters can be used, or items can be
chosen from a cluster using another probability sampling
technique
Population
divided into
16 clusters.
Randomly selected
clusters for sample
Advantages and Disadvantages
Simple random sample and systematic sample
Simple to use
May not be a good representation of the populations
underlying characteristics
Stratified sample
Ensures representation of individuals across the
entire population
Cluster sample
More cost effective
Less efficient (need larger sample to acquire the
same level of precision)
Evaluating Survey Worthiness
What is the purpose of the survey?
Is the survey based on a probability sample?
Coverage error appropriate frame?
Nonresponse error follow up
Measurement error good questions elicit good
responses
Sampling error always exists
Types of Survey Errors
Coverage error or selection bias
Exists if some groups are excluded from the frame and
have no chance of being selected
Nonresponse error or bias
People who do not respond may be different from those
who do respond
Sampling error
Variation from sample to sample will always exist
Measurement error
Due to weaknesses in question design, respondent
error, and interviewers effects on the respondent
Types of Survey Errors
Coverage error
Non response error
Sampling error
Measurement error
Excluded from
frame
Follow up on
nonresponses
Random
differences from
sample to sample
Bad or leading
question
(continued)
Confidence Interval Estimation
Confidence Intervals
Content of this chapter
Confidence Intervals for the Population
Mean,
when Population Standard Deviation is Known
when Population Standard Deviation is Unknown
Confidence Intervals for the Population
Proportion, p
Determining the Required Sample Size

Point and Interval Estimates
A point estimate is a single number,
a confidence interval provides additional
information about variability
Point Estimate
Lower
Confidence
Limit
Upper
Confidence
Limit
Width of
confidence interval
We can estimate a
Population Parameter

Point Estimates
with a Sample
Statistic
(a Point Estimate)
Mean
Proportion
p

X
How much uncertainty is associated with a
point estimate of a population parameter?

An interval estimate provides more
information about a population characteristic
than does a point estimate

Such interval estimates are called confidence
intervals
Confidence Interval Estimate
An interval gives a range of values:
Takes into consideration variation in sample
statistics from sample to sample
Based on observations from 1 sample
Gives information about closeness to
unknown population parameters
Stated in terms of level of confidence
Can never be 100% confident
Estimation Process
(mean, , is
unknown)
Population
Random Sample
Mean
X = 50
Sample
I am 95%
confident that
is between
40 & 60.
General Formula
The general formula for all
confidence intervals is:
Point Estimate (Critical Value)(Standard Error)
Confidence Level
Confidence Level
Confidence for which the interval
will contain the unknown
population parameter
A percentage (less than 100%)

Confidence Level, (1-o)
Suppose confidence level = 95%
Also written (1 - o) = 0.95
A relative frequency interpretation:
In the long run, 95% of all the confidence
intervals that can be constructed will contain the
unknown true parameter
A specific interval either will contain or will
not contain the true parameter
No probability involved in a specific interval
(continued)
Population
Mean
Unknown
Confidence
Intervals
Population
Proportion
Known
Confidence Interval for
( Known)
Assumptions
Population standard deviation is known
Population is normally distributed
If population is not normal, use large sample
Confidence interval estimate:

where is the point estimate
Z is the normal distribution critical value for a probability of o/2 in each tail
is the standard error

n
Z X
X
n /
Finding the Critical Value, Z
Consider a 95% confidence interval:
Z= -1.96 Z= 1.96
0.95 1 = o
0.025
2
=
0.025
2
=
Point Estimate
Lower
Confidence
Limit
Upper
Confidence
Limit
Z units:
X units:
Point Estimate
0
1.96 Z =
Common Levels of Confidence
Commonly used confidence levels are 90%,
95%, and 99%
Confidence
Level
Confidence
Coefficient,

Z value
1.28
1.645
1.96
2.33
2.58
3.08
3.27
0.80
0.90
0.95
0.98
0.99
0.998
0.999
80%
90%
95%
98%
99%
99.8%
99.9%
o 1

x
=
Intervals and Level of Confidence
Intervals
extend from

to

(1-o)x100%
of intervals
constructed
contain ;
(o)x100% do
not.
Sampling Distribution of the Mean
n
Z X+
n
Z X
x
x
1
x
2
/2 o /2 o
o 1
Example
A sample of 11 circuits from a large normal
population has a mean resistance of 2.20
ohms. We know from past testing that the
population standard deviation is 0.35 ohms.

Determine a 95% confidence interval for the
true mean resistance of the population.
2.4068 1.9932
0.2068 2.20
) 11 (0.35/ 1.96 2.20
n
Z X
s s
=
=
Example
A sample of 11 circuits from a large normal
population has a mean resistance of 2.20
ohms. We know from past testing that the
population standard deviation is 0.35 ohms.
Solution:
(continued)
Interpretation
We are 95% confident that the true mean
resistance is between 1.9932 and 2.4068
ohms
Although the true mean may or may not be
in this interval, 95% of intervals formed in
this manner will contain the true mean
Population
Mean
Unknown
Confidence
Intervals
Population
Proportion
Known
If the population standard deviation is
unknown, we can substitute the sample
standard deviation, S
This introduces extra uncertainty, since
S is variable from sample to sample
So we use the t distribution instead of the
normal distribution
( Unknown)
Assumptions
Population standard deviation is unknown
Population is normally distributed
If population is not normal, use large sample
Use Students t Distribution
Confidence Interval Estimate:

(where t is the critical value of the t distribution with n -1 degrees of
freedom and an area of /2 in each tail)
( Unknown)
n
S
t X
1 - n
(continued)
Students t Distribution
The t is a family of distributions
The t value depends on degrees of
freedom (d.f.)
Number of observations that are free to vary after
sample mean has been calculated
d.f. = n - 1
If the mean of these three
values is 8.0,
then X
3
must be 9
(i.e., X
3
is not free to vary)
Degrees of Freedom (df)
Here, n = 3, so degrees of freedom = n 1 = 3 1 = 2
(2 values can be any numbers, but the third is not free to vary
for a given mean)
Idea: Number of observations that are free to vary
after sample mean has been calculated
Example: Suppose the mean of 3 numbers is 8.0

Let X
1
= 7
Let X
2
= 8
What is X
3
?

Students t Distribution
t
0
t (df = 5)
t (df = 13)
t-distributions are bell-
shaped and symmetric, but
have fatter tails than the
normal
Standard
Normal
(t with df = )
Note: t Z as n increases
Students t Table
Upper Tail Area
df

.25 .10
.05
1 1.000 3.078 6.314
2
0.817 1.886 2.920
3 0.765 1.638 2.353
t
0
2.920
The body of the table
contains t values, not
probabilities
Let: n = 3
df = n - 1 = 2
o = 0.10
o/2 = 0.05
o/2 = 0.05
t distribution values
With comparison to the Z value
Confidence t t t Z
Level (10 d.f.) (20 d.f.) (30 d.f.) ____

0.80 1.372 1.325 1.310 1.28
0.90 1.812 1.725 1.697 1.645
0.95 2.228 2.086 2.042 1.96
0.99 3.169 2.845 2.750 2.58
Note: t Z as n increases
Example
A random sample of n = 25 has X = 50 and
S = 8. Form a 95% confidence interval for

d.f. = n 1 = 24, so

The confidence interval is
2.0639 t
0.025,24 1 n , /2
= =
o
t
25
8
(2.0639) 50
n
S
t X
1 - n /2,
=
o
46.698 53.302
Population
Mean
Unknown
Confidence
Intervals
Population
Proportion
Known
Confidence Intervals for the
Population Proportion,
An interval estimate for the population
proportion ( ) can be calculated by
adding an allowance for uncertainty to
the sample proportion ( p )

Confidence Intervals for the
Population Proportion,
Recall that the distribution of the sample
proportion is approximately normal if the
sample size is large, with standard deviation

We will estimate this with sample data:
(continued)
n
p) p(1
n
) (1
p
t t
=
Confidence Interval Endpoints
Upper and lower confidence limits for the
population proportion are calculated with the
formula

where
Z is the standard normal value for the level of confidence desired
p is the sample proportion
n is the sample size
n
p) p(1
Z p

Example
A random sample of 100 people
shows that 25 are left-handed.
Form a 95% confidence interval for
the true proportion of left-handers
Example
A random sample of 100 people shows
that 25 are left-handed. Form a 95%
confidence interval for the true proportion
of left-handers.
/100 0.25(0.75) 1.96 25/100
p)/n p(1 Z p
=

0.3349 0.1651
(0.0433) 1.96 0.25
s s
=
t
(continued)
Interpretation
We are 95% confident that the true
percentage of left-handers in the population
is between
16.51% and 33.49%.

Although the interval from 0.1651 to 0.3349
may or may not contain the true proportion,
95% of intervals formed from samples of
size 100 in this manner will contain the true
proportion.
Determining Sample Size
For the
Mean
Determining
Sample Size
For the
Proportion
Sampling Error
The required sample size can be found to reach
a desired margin of error (e) with a specified
level of confidence (1 - o)

The margin of error is also called sampling error
the amount of imprecision in the estimate of the
population parameter
the amount added and subtracted to the point
estimate to form the confidence interval

For the
Mean
Determining
Sample Size
n
Z X
n
Z e =
Sampling error
(margin of error)
For the
Mean
Determining
Sample Size
n
Z e =
(continued)
2
2 2
e
Z
n =
Now solve
for n to get
To determine the required sample size for the
mean, you must know:

The desired level of confidence (1 - o), which
determines the critical Z value
The acceptable sampling error, e
The standard deviation,
(continued)
Required Sample Size Example
If o = 45, what sample size is needed to
estimate the mean within 5 with 90%
confidence?
(Always round up)
219.19
5
(45) (1.645)
e
Z
n
2
2 2
2
2 2
= = =
So the required sample size is n = 220
If is unknown
If unknown, can be estimated when
using the required sample size formula
Use a value for that is expected to be
at least as large as the true
Select a pilot sample and estimate with
the sample standard deviation, S
Determining
Sample Size
For the
Proportion
2
2
e
) (1 Z
n

=
Now solve
for n to get
n
) (1
Z e

=
(continued)
To determine the required sample size for the
proportion, you must know:

The desired level of confidence (1 - o), which
determines the critical Z value
The acceptable sampling error, e
The true proportion of successes,
can be estimated with a pilot sample, if
necessary (or conservatively use = 0.5)
(continued)
How large a sample would be necessary
to estimate the true proportion defective in
a large population within 3%, with 95%
confidence?
(Assume a pilot sample yields p = 0.12)
Solution:
For 95% confidence, use Z = 1.96
e = 0.03
p = 0.12, so use this to estimate
So use n = 451
450.74
(0.03)
0.12) (0.12)(1 (1.96)
e
) (1 Z
n
2
2
2
2
=
=

(continued)
Population Total Amount
Point estimate:

X N total Population =
1 N
n N
n
S
) t ( N X N
1 n

(This is sampling without replacement, so use the finite population
correction in the confidence interval formula)
Population Total: Example
A firm has a population of 1000 accounts and wishes
to estimate the total population value.

A sample of 80 accounts is selected with average
balance of $87.6 and standard deviation of $22.3.

Find the 95% confidence interval estimate of the total
balance.
Example Solution
The 95% confidence interval for the population total
balance is $82,837.52 to $92,362.48
48 . 762 , 4 600 , 87
1 1000
80 1000
80
22.3
) 9905 . 1 )( 1000 ( ) 6 . 87 )( 1000 (
1 N
n N
n
S
) t ( N X N
1 n
=

22.3 S , 6 . 87 X 80, n , 1000 N = = = =
Point estimate:

Where the average difference, D, is:
D N Difference Total =
Total Difference
value original - value audited D where
n
D
D
i
n
1 i
i
=
=

=

where
1 N
n N
n
S
) t ( N D N
D
1 n

Total Difference
(continued)
1 n
) D D (
S
n
1 i
2
i
D
=

=
One-Sided Confidence Intervals
Application: find the upper bound for the
proportion of items that do not conform with
internal controls

where
Z is the standard normal value for the level of confidence desired
p is the sample proportion of items that do not conform
n is the sample size
N is the population size
1 N
n N
n
p) p(1
Z p bound Upper

+ =

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Session 3

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Sampling Distributions

Comparing the Population with its

Sampling Distribution Properties

If the Population is not Normal

How Large is Large Enough?

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