Chapter 7 Sampling and Sampling Distribution

Chapter 7
Sampling and Sampling Distributions
 Simple Random Sampling

 Point Estimation
 Introduction to Sampling Distributions
 Sampling Distribution of x
© 2008 Thomson South-Western. All Rights Reserved Slide

1
2
Statistical Inference
The
The purpose
purpose of
of statistical
statistical inference
inference is
is to
to obtain
obtain
information
information about
about aa population
population from
from information
information
contained
contained in
in aa sample.
sample.
A
A population
population is
is the
the set
set of
of all
all the
the elements
elements of
of interest.
interest.
A
A sample
sample is
is aa subset
subset of
of the
the population.
population.

3
Statistical Inference
The
The sample
sample results
results provide
provide only
only estimates
estimates of
of the
the
values
values of
of the
the population
population characteristics.
characteristics.
With
With proper
proper sampling
sampling methods
methods,, the
the sample
sample results
results
can
can provide
provide “good”
“good” estimates
estimates of
of the
the population
population
characteristics.
characteristics.
A
A parameter
parameter is
is aa numerical
numerical characteristic
characteristic of
of aa
population.
population.

4
Examples
Sampling error is expected

Sample need to be a good one
5
 Sampled population
 Frame – List of all the elements in the sample
 Registered voters-sampled population

 Frame- list
 Finite population

6
The Electronics Associates Sampling Problem
 The director of personnel for Electronics Associates,

Inc. (EAI), has been assigned the task of developing a
profile of the company’s 2500 managers. The
characteristics to be identified include the mean
annual salary for the managers and the proportion of
managers having completed the company’s
management training program.

7
Simple Random Sampling:
Finite Population
 Finite populations are often defined by lists such as:
• Organization membership roster
• Credit card account numbers
• Inventory product numbers
 A simple random sample of size n from a finite
population of size N is a sample selected such that
each possible sample of size n has the same
probability of being selected.

8
One procedure for selecting a simple random sample
from a finite population is to use a table of random
numbers to choose the elements for the sample one
at a time in such a way that, at each step, each of the
elements remaining in the population has the same
probability of being selected.

9
© 2008 Thomson South-Western. All Rights Reserved Equally likely
Slide
10
Finite Population
 Replacing each sampled element before selecting
subsequent elements is called sampling with
replacement.
 Sampling without replacement is the procedure
used most often.
 In large sampling projects, computer-generated
random numbers are often used to automate the
sample selection process.

11
Infinite Population
 Infinite populations are often defined by an ongoing
process whereby the elements of the population consist
of items generated as though the process would
operate indefinitely.
A random sample of size n from an infinite population is a
sample selected such that the following conditions are
satisfied.
• Each element selected comes from the same
population.
• Each element is selected independently.
Difficult to generate the frame in infinite population

12
Infinite Population
 In the case of infinite populations, it is impossible to
obtain a list of all elements in the population.
 The random number selection procedure cannot be
used for infinite populations.

13
 Example :
 Production Manager – breakfast cereals
• Weight =24 ounce
• Independent selection
• Same population
 Customer visiting fast food restaurants

• Independent selection
• Same population

14
Examples
Include parts being manufactured on a production
line,
repeated experimental trials in a laboratory,
transactions occurring at a bank,
Telephone calls arriving at a technical support center,
customers entering a retail store.

15
Point Estimation
In
In point
point estimation
estimation wewe use
use the
the data
data from
from the
the sample
sample
to
to compute
compute aa value
value ofof aa sample
sample statistic
statistic that
that serves
serves
as
as an
an estimate
estimate of
of aa population
population parameter.
parameter.
We
We refer to x as
refer to as the
the point
point estimator
estimator of
of the
the population
population
mean ..
mean
ss is
is the
the point
point estimator
estimator of
of the
the population
population standard
standard
deviation ..
deviation
p is
is the
the point
point estimator
estimator of
of the
the population
population proportion
proportion pp..

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 Target population and sampled population
• Park visits
• Time spent and age of the visitors

19
Introduction to Sampling Distributions

20
X=Random variable
has a mean or expected value, a
standard deviation, and a probability
distribution.
Sampling distribution of x

21
Introduction to Sampling Distributions
Point estimate is unbiased

23
Finite population correction factor
24
 good approximation to the standard deviation of even
though the population is finite.

25
Sampling Distribution of x
E( x ) = 
Finite Population Infinite Population
N n  
x  ( ) x 
N 1 n n
• A population is infinite when n/N < .05.
•  xx is referred to as the standard error of the

mean.

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27
CENTRAL LIMIT THEOREM
In selecting random samples of size n

from a population, the sampling
distribution of the sample mean x can
be approximated by a normal
distribution as the sample size
becomes large

28
Form of the Sampling Distribution of x
When the population has a normal distribution, the

sampling distribution of x is normally distributed
for any sample size.
In most applications, the sampling distribution of x

can be approximated by a normal distribution
whenever the sample is size 30 or more.
In cases where the population is highly skewed or

outliers are present, samples of size 50 may be
needed.

29
Sampling Error
 When the expected value of a point estimator is equal

to the population parameter, the point estimator is said
to be unbiased.
 The absolute value of the difference between an
unbiased point estimate and the corresponding
population parameter is called the sampling error.
 Sampling error is the result of using a subset of the
population (the sample), and not the entire
population.
 Statistical methods can be used to make probability
statements about the size of the sampling error.

30
Sampling Error
 The sampling errors are:

| x   | for sample mean
| s   | for sample standard deviation
| p  p | for sample proportion

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33
What is the probability that the sample
mean computed using a simple
random sample of 30 EAI managers
will be within $500 of the population
mean?

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Exercise:
The mean annual cost of automobile insurance
is $939. Assume that the standard deviation is
$245.
What is the probability that a sample of
automobile insurance policies will have a
sample mean within $25 of the population
mean for sample sizes: 30, 60 and 90?
What is your interpretation of different
sample size?
Example: St. Andrew’s
St. Andrew’s College receives

900 applications annually from
prospective students. The
application form contains
a variety of information
including the individual’s
scholastic aptitude test (SAT) score and whether or not
the individual desires on-campus housing.

39
The director of admissions

would like to know the
following information:
• the average SAT score for
the 900 applicants, and
• the proportion of
applicants that want to live on campus.

40
We will now look at two

alternatives for obtaining the
desired information.
 Conducting a census of the
entire 900 applicants

 Selecting a sample of 30
applicants, using Excel

41
Conducting a Census
 If the relevant data for the entire 900 applicants were

in the college’s database, the population parameters of
interest could be calculated
 We will assume for the moment that conducting a
census is practical in this example.

42
Conducting a Census
 Population Mean SAT Score

 xi
 990
900
 Population Standard Deviation for SAT Score
 
 i
( x   ) 2
 80
900
 Population Proportion Wanting On-Campus Housing
648
p  .72
900

43
Simple Random Sampling
 Now suppose that the necessary data on the

current year’s applicants were not yet entered in the
college’s database.
 Furthermore, the Director of Admissions must obtain
estimates of the population parameters of interest for
a meeting taking place in a few hours.
 She decides a sample of 30 applicants will be used.
 The applicants were numbered, from 1 to 900, as
their applications arrived.

44
Using a Random Number Table
 Taking a Sample of 30 Applicants
• Because the finite population has 900 elements, we
will need 3-digit random numbers to randomly
select applicants numbered from 1 to 900.
• We will use the last three digits of the 5-digit
random numbers in the third column of the
textbook’s random number table, and continue
into the fourth column as needed.

45
• The numbers we draw will be the numbers of the
applicants we will sample unless
• the random number is greater than 900 or
• the random number has already been used.
• We will continue to draw random numbers until
we have selected 30 applicants for our sample.
• (We will go through all of column 3 and part of
column 4 of the random number table, encountering
in the process five numbers greater than 900 and
one duplicate, 835.)

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 Use of Random Numbers for Sampling
3-Digit Applicant
Random Number Included in Sample
744 No. 744
436 No. 436
865 No. 865
790 No. 790
835 No. 835
902 Number exceeds 900
190 No. 190
836 No. 836
. . . and so on

47
 Sample Data
Random SAT Live On-

No. Number Applicant Score Campus
1 744 Conrad Harris 1025 Yes
2 436 Enrique Romero 950 Yes
3 865 Fabian Avante 1090 No
4 790 Lucila Cruz 1120 Yes
5 835 Chan Chiang 930 No
. . . . .
. . . . .
30 498 Emily Morse 1010 No

48
Using a Computer
• Computers can be used to generate random
numbers for selecting random samples.
• For example, Excel’s function
= RANDBETWEEN(1,900)
can be used to generate random numbers between
1 and 900.
• Then we choose the 30 applicants corresponding
to the 30 smallest random numbers as our sample.

49
Point Estimation
 x as Point Estimator of 
x
 x i

29 , 910
 997
n 30
 s as Point Estimator of 
s
 (x i  x )2

163, 996
 75.2
n1 29
 pas Point Estimator of p
p  2 0 3 0  .6 8
Note: Different random numbers would have

identified a different sample which would have
resulted in different point estimates.

50
Summary of Point Estimates
Obtained from a Simple Random Sample
Population Parameter Point Point

Parameter Value Estimator Estimate
 = Population mean 990 x = Sample mean 997
SAT score SAT score
 = Population std. 80 s = Sample std. 75.2

deviation for deviation for
SAT score SAT score
p = Population pro- .72 p = Sample pro- .68

portion wanting portion wanting
campus housing campus housing

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 Process of Statistical Inference
Population A simple random sample

with mean of n elements is selected
=? from the population.
The value of x is used to The sample data

make inferences about provide a value for
the value of . the sample mean x.

52
Sampling Distribution of x for SAT Scores
Sampling
Distribution
 80
of x x    14.6
n 30
x
E ( x )  990

53
What is the probability that a simple random sample

of 30 applicants will provide an estimate of the
population mean SAT score that is within +/10 of
the actual population mean ?
In other words, what is the probability that x will be
between 980 and 1000?

54
Step 1: Calculate the z-value at the upper endpoint of

the interval.
z = (1000  990)/14.6= .68
Step 2: Find the area under the curve to the left of the
upper endpoint.
P(z < .68) = .7517

55
Cumulative Probabilities for

the Standard Normal Distribution
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
. . . . . . . . . . .
.5 .6915 .6950 .6985 .7019 .7054 .7088 .7123 .7157 .7190 .7224
.6 .7257 .7291 .7324 .7357 .7389 .7422 .7454 .7486 .7517 .7549
.7 .7580 .7611 .7642 .7673 .7704 .7734 .7764 .7794 .7823 .7852
.8 .7881 .7910 .7939 .7967 .7995 .8023 .8051 .8078 .8106 .8133
.9 .8159 .8186 .8212 .8238 .8264 .8289 .8315 .8340 .8365 .8389
. . . . . . . . . . .

56
Sampling
Distribution  x  1 4 .6
of x
Area = .7517
x
990 1000

57
Step 3: Calculate the z-value at the lower endpoint of

the interval.
z = (980  990)/14.6= - .68
Step 4: Find the area under the curve to the left of the
lower endpoint.
P(z < -.68) = .2483

58
Sampling
of x
Area = .2483
x
980 990

59
Step 5: Calculate the area under the curve between

the lower and upper endpoints of the interval.
P(-.68 < z < .68) = P(z < .68)  P(z < -.68)
= .7517  .2483
= .5034
The probability that the sample mean SAT score will
be between 980 and 1000 is:
P(980 < x < 1000) = .5034

60
Sampling
of x
Area = .5034
x
980 990 1000

61
Relationship Between the Sample Size
and the Sampling Distribution of x
 Suppose we select a simple random sample of 100

applicants instead of the 30 originally considered.
 E(x) =  regardless of the sample size. In our
example, E( x) remains at 990.
 Whenever the sample size is increased, the standard
error of the mean  x is decreased. With the increase
in the sample size to n = 100, the standard error of the
mean is decreased to:
 80
x    8.0
n 100

62
With n = 100,
x  8
With n = 30,
 x  1 4 .6
x
E ( x )  990

63
 Recall that when n = 30, P(980 <x < 1000) = .5034.

 We follow the same steps to solve for P(980 < x < 1000)
when n = 100 as we showed earlier when n = 30.
 Now, with n = 100, P(980 < x < 1000) = .7888.
 Because the sampling distribution with n = 100 has a
smaller standard error, the values of x have less
variability and tend to be closer to the population
mean than the values of x with n = 30.

64
Sampling
Distribution x 8
of x
Area = .7888
x
980 990 1000

65
Sampling Distribution of
p
E ( p)  p
N  n p(1  p) p (1  p )
p  p 
N 1 n n
•  p is referred to as the standard error of

the proportion.
• ( N  n) /( N  1) is the finite population
correction factor.

66
67
Sampling Distribution of p
E ( p)  p
N  n p(1  p) p (1  p )
p  p 
N 1 n n
Approximation to Normal Distribution
np > 5 n(1 – p) > 5

68
Sampling
.72(1  .72)
Distribution p   .082
of p 30
p
E( p )  .72
Find the probability that a sample proportion will be

within + / - 0.05 of the actual population proportion
69
Sampling .72(1  .72)
p   .082
Distribution 30
of p
Area = .4582
p
.67 .72 .77
45.82 %
70
Sampling
Distribution .72(1  .72)
p   .082
0.045
of p 100
30
Area = ???
p
0.67 0.72 0.77

71
Properties of Point Estimators
 Unbiased
 Efficiency
 Consistency

72
Unbiased

73
74
75
Statistics for Business and Economics
(13e)
Other Sampling Methods
• Stratified Random Sampling
• Cluster Sampling
• Systematic Sampling
• Convenience Sampling
• Judgment Sampling
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76
use.
(13e)
Stratified Random Sampling
• The population is first divided into groups of elements called strata.
• Each element in the population belongs to one and only one stratum
• Best results are obtained when the elements within
each stratum are as much alike as possible (i.e. a
homogeneous group).
77
use.
(13e)
Stratified Random Sampling
• A simple random sample is taken from each stratum.
• Formulas are available for combining the stratum
sample results into one population parameter estimate.
• Advantage: If strata are homogeneous, this method is
as “precise” as simple random sampling but with a
smaller total sample size.
• Example: The basis for forming the strata might be

department, location, age, industry type, and so on.
78
use.
(13e)
Cluster Sampling
• The population is first divided into separate groups of
elements called clusters.
• Ideally, each cluster is a representative small-scale
version of the population (i.e. heterogeneous group).
• A simple random sample of the clusters is then taken.
• All elements within each sampled (chosen) cluster form

the sample.
79
use.
(13e)
Cluster Sampling
• Example: A primary application is area sampling, where
clusters are city blocks or other well-defined areas.
• Advantage: The close proximity of elements can be cost
effective (i.e. many sample observations can be
obtained in a short time).
• Disadvantage: This method generally requires a larger
total sample size than simple or stratified random
sampling.
80
use.
(13e)
Systematic Sampling
• If a sample size of n is desired from a population
containing N elements, we might sample one element
for every n/N elements in the population.
• We randomly select one of the first n/N elements from
the population list.
• We then select every n/Nth element that follows in the
population list.
81
use.
(13e)
Systematic Sampling
• This method has the properties of a simple random
sample, especially if the list of the population elements
is a random ordering.
• Advantage: The sample usually will be easier to identify
than it would be if simple random sampling were used.
• Example: Selecting every 100th listing in a telephone
book after the first randomly selected listing
82
use.
(13e)
Convenience Sampling
• It is a nonprobability sampling technique. Items are
included in the sample without known probabilities of
being selected.
• The sample is identified primarily by convenience.
• Example: A professor conducting research might use
student volunteers to constitute a sample.
83
use.
(13e)
Convenience Sampling
• Advantage: Sample selection and data collection are
relatively easy.
• Disadvantage: It is impossible to determine how
representative of the population the sample is.
84
use.
(13e)
Judgment Sampling
• The person most knowledgeable on the subject of the
study selects elements of the population that he or she
feels are most representative of the population.
• It is a nonprobability sampling technique.
• Example: A reporter might sample three or four
senators, judging them as reflecting the general opinion
of the senate.
85
use.
(13e)
Judgment Sampling
• Advantage: It is a relatively easy way of selecting a
• sample.
Disadvantage: The quality of the sample results
depends on the judgment of the person selecting the
sample.
86
use.
(13e)
Recommendation
• It is recommended that probability sampling methods
(simple random, stratified, cluster, or systematic) be
• used.
For these methods, formulas are available for evaluating
the “goodness” of the sample results in terms of the
closeness of the results to the population parameters
being estimated.
• An evaluation of the goodness cannot be made with
non-probability (convenience or judgment) sampling
methods.
87
use.

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Chapter 7

Sampling and Sampling Distributions

 Simple Random Sampling

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

Sampling error is expected

 Registered voters-sampled population

© 2008 Thomson South-Western. All Rights Reserved Slide

 The director of personnel for Electronics Associates,

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

Difficult to generate the frame in infinite population

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

 Customer visiting fast food restaurants

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

Point estimate is unbiased

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

Finite Population Infinite Population

•  xx is referred to as the standard error of the

© 2008 Thomson South-Western. All Rights Reserved Slide

CENTRAL LIMIT THEOREM

In selecting random samples of size n

© 2008 Thomson South-Western. All Rights Reserved Slide

When the population has a normal distribution, the

In most applications, the sampling distribution of x

In cases where the population is highly skewed or

© 2008 Thomson South-Western. All Rights Reserved Slide

 When the expected value of a point estimator is equal

© 2008 Thomson South-Western. All Rights Reserved Slide

 The sampling errors are:

| s   | for sample standard deviation

| p  p | for sample proportion

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

St. Andrew’s College receives

© 2008 Thomson South-Western. All Rights Reserved Slide

The director of admissions

© 2008 Thomson South-Western. All Rights Reserved Slide

We will now look at two

entire 900 applicants

© 2008 Thomson South-Western. All Rights Reserved Slide

 If the relevant data for the entire 900 applicants were

© 2008 Thomson South-Western. All Rights Reserved Slide

 Population Mean SAT Score

© 2008 Thomson South-Western. All Rights Reserved Slide

 Now suppose that the necessary data on the

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

Random SAT Live On-

© 2008 Thomson South-Western. All Rights Reserved Slide

© 2008 Thomson South-Western. All Rights Reserved Slide

Note: Different random numbers would have