ESTIMATION OF

PARAMETERS

ALFREDO M. GRINO
SUBJECT TEACHER
INTRODUCTI
ON
Statistical inference– is the process by which conclusion
about the parameters in the population are made based
on sample data.

There are two area of statistical inference:

Estimation Hypothesis Testing

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DEFINITIO
Estimate– is a
N: value or a range of values that approximate a
parameter. Note: it is based on sample statistics computed from
sample data.
Estimation– is the process of determining the parameter values.
Parameter Estimation – the process of making inferences about a
population based on the information/ value obtained from a sample
describing a characteristic of the population.

Point estimate– is a specific numerical value of a

population parameter. The sample mean 𝒙̅ is the best
point estimate of the population mean.
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Example:
Estimate the mean consumption of 8 families in one month
if their expenses are Php13,300; Php14,800; Php18,800;
Php17,900; Php23,500; Php24,700; Php22,000 and
Php29,000.
Solution:

𝜇= =

= = 20, 500
𝜇 = 𝒙̅ = 20, 500 is the point estimator

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DEFINITIO
N:
Interval Estimate (confidence interval) – is a range of
value that may contain the parameter of a population.
The following are examples of interval estimation:
The average family expense in Region X is Php250- 400 a
day.
The average life span of stage 4 breast cancer patients is 3
to 5 years.
 The average scores of students in General Mathematics
exam is 75 < μ <84
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DEFINITIO
N:
Biased estimate– a
sample statistics departs
from the true population
value.

Unbiased estimate– when

the mean of a sample
statistics from large number of
different random samples
equals the true population
parameter.
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DEFINITIO
N:
Confidence level– expressed as percentage or a
probability that a specified interval will contain the
population parameter. Note: three common: 90%, 95%,
99%.
Confidence Interval – The width +/-2.9% stated as plus
or minus 2.9. When the interval and confidence level are
put together, you get a spread of percentage. In this
case, you would expect the results to be 35.1% (38% -
2.9) to 40.9% (38% + 2.9), 95% of the time.
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Illustration:
The graph shows that 95% of the population
distribution is contained in the confidence interval.

𝛼 = 5%, which means that there is a probability of at least 95%

that the result is reliable. Each tail of curve has a value of 2.50%
and the areas to the middle have 47.5% each
From the table of normal curve, the value of Zα/2
𝑎t 𝐴 = 0.475 𝑖s ± 1.96

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Illustration:
Using the same method to derive the z-score at confidence level
of 99%, we get that Zα/2 = ±2.576

= 0.495

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Illustration:

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 General Formula for The short form of the formula:
CONFIDENCE INTERVALS
for large samples:

Margin of Error Formula:

E=
Therefore:

𝒙̅ - E < μ < 𝒙̅ + E
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Illustration:

1-α

Reject Ho Reject Ho

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Example 1:
An operations manager plans to select 300 female employees from a group of tenure
workers (where height was considered due the nature of their task). The selected group
has an average height of 170 cm and a sample standard deviation of 25 cm. What is the
95% confidence interval of all the employees’ heights?

Solution: We substitute the given values into formula for

Given:
Sample size, n = 300
Sample mean = 170 cm
𝜎= 25 cm
Confidence Level = 95%;
α = 5% and Zα/2 = 𝟏. 𝟗6
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the confidence interval.
𝒙̅ - Zα/2 ( )< μ < 𝒙̅ + Zα/2 ( )
170 - 1.96 ( )< μ < 170 + 1.96 (
170 - 1.96 (1.4434)< μ < 170 + 1.96 (1.4434
170 – 2.829< μ < 170 + 2.829 167.171< μ < 172.829
Hence the operations manager is 95% confident that the
employees have a mean height of 167.171 to 172.829 cm.
Example 2:
A random sample of 40 residents of Quezon City has an average of electrical
consumption of 29 kWh/mo. with a sample standard deviation of 8 kWh. Give
the 90% confidence interval for the mean usage of electricity per month.

Solution: We substitute the given values into formula for

the confidence interval.
Given:
Sample size, n = 40 𝒙̅ - Zα/2 ( )< μ < 𝒙̅ + Zα/2 ( )
𝒙̅ = 29 29 - 1.645 ( )< μ < 29 + 1.645 (
𝜎= 8 29 - 1.645 (1.265)< μ < 29 + 1.645 (1.265
Confidence Level = 90%; 29-2.081< μ < 29 + 2.081 26.919< μ < 31.081
α = 10% and Zα/2 = 𝟏. 645
Thus, the confidence interval is 26.919 to 31.081 kWh per
month.
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Example 3:
Estimate the mean value of the distribution resulting from the throw of a
fair die. It is known that 𝜎=1.71. Use 90% confidence level and 100
repeated throws of the die.
We substitute the given values into formula for
Solution: the confidence interval.
Given:
Sample size, n = 100
𝒙̅ ± Zα/2 ( )
𝒙̅ = ? 𝒙̅ ± 1.645 ( )
𝜎= 1.71 𝒙̅ ± 1.645 (0.171)
Confidence Level = 90%;
𝒙̅ ± 0.281
α = 10% and Zα/2 = 𝟏. 645
Thus, the estimated mean is 𝒙̅ ± 0.281
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Quiz : ½ CROSSWISE
_______1. is the process by which conclusion about the
parameters in the population are made based on sample data..
_______2. It states that the sample mean 𝑥̅ approximately follows the
normal distribution with mean μ and standard deviation .
_______3. is a range of value that may contain the parameter of a
population.
______4. expressed as percentage or a probability that a
specified interval will contain the population parameter.
_____5. When the mean of a sample statistics from large number
of different random samples equals the true population parameter.
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Quiz:

A sample size of n = 100 produced the sample mean of

𝑥̅= 16. Assuming the population standard deviation 𝜎 =
3, compute a 95% confidence interval for the
population mean μ.

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 - NEIL ARMSTRONG

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