Area under the Normal Curve [1]

Point Estimate vs. Confidence Interval

Definition
A point estimate is a single value (or point) used to
approximate a population parameter.

Definition
A confidence interval (or interval estimate) is a range
(or an interval) of values used to estimate the true
value of a population parameter. A confidence interval
is sometimes abbreviated as CI.
Confidence level
Definition
The confidence level is the probability 1 - 𝜶 (often
expressed as the equivalent percentage value) that is
the proportion of times that the confidence interval
actually does contain the population parameter,
assuming that the estimation process is repeated a
large number of times. (The confidence level is also
called the degree of confidence, or the confidence
coefficient.)
Area under the Normal Curve [2]
z =z = 1.96 ∵ 𝟏 − α/2 = 1 - 0.250 = 0.9750
α/2 0.0250

z =z = 2.575 ∵ 𝟏 − α/2 = 1 – 0.005 = 0.9950

α/2 0.005

zα/2 = z0.05 = 1.645 ∵ 𝟏 − α/2 = 1 – 0.05 = 0.9500

The Case of σ Unknown [1]
Frequently, we must attempt to estimate the mean of a
population when the variance is unknown. If we have a
random sample from a normal distribution, then the
random variable

𝐗−μ
t=
s/ 𝐧

has a Student t-distribution with n − 1 degrees of

freedom. Here s is the sample standard deviation. In
this situation, with σ unknown, T can be used to
construct a confidence interval on μ.
The Case of σ Unknown [2]
X−μ
P(−t < T < t ) = 1 − α, where T =
α/2 α/2 s/ n
X−μ
⟹ P(−tα/2 < < tα/2) = 1 − α
s/ n
s s
⟹ P(x - tα/2 < μ < x + tα/2 )=1−α
n n
The Case of σ Unknown [3]
If x and s are the mean and standard deviation of a
random sample from a normal population with
unknown variance σ2, a 100(1−α)% confidence interval
for μ is
𝐬 𝐬
𝐱 - 𝐭 (α/2,n−1) < μ < 𝐱 + 𝐭
𝐧 𝐧
(α/2, n−1)

𝟐
σ(𝒙−𝒙)
where 𝐬𝟐= 𝒏−𝟏
𝟏
2
or s = {𝐧 σ𝐧 x2 − (σ𝐧 x )2}
𝐧−𝟏 𝐢=𝟏 𝐢=𝟏

where t is the t-value with n − 1 degrees of freedom,

leaving aα/n2area of α/2 to the right.
The Case of σ Unknown [4]
We have made a distinction between the cases of σ
known and σ unknown in computing confidence
interval estimates. We should emphasize that for σ
known we exploited the Central Limit Theorem,
whereas for σ unknown we made use of the sampling
distribution of the random variable T.

However, the use of the t distribution is based on the

premise that the sampling is from a normal
distribution. As long as the distribution is
approximately bell shaped, confidence intervals can be
computed when 𝝈𝟐 is unknown by using the t-
distribution and we may expect very good results.
One-Sided Confidence Bounds
on μ, 𝛔𝟐unknown [1]
If X is the mean of a random sample of size n from a
population with unknown variance σ2, the one-sided
100(1 − α)% confidence bounds for μ are given by
𝐬
upper one-sided bound: 𝐱 + 𝐭 (α, n−1) 𝐧
𝐬
lower one-sided bound: 𝐱 - 𝐭
(α, n−1) 𝐧
Critical Values of the t-Distribution
Critical Values of the t-Distribution
EXAMPLE: The contents of seven similar containers of
sulfuric acid are 9.8, 10.2, 10.4, 9.8, 10.0, 10.2, and 9.6
liters. Find a 95% confidence interval for the mean
contents of all such containers, assuming an
approximately normal distribution.
SOLUTION: n = 7, σ x = 70, x = σ x / n = 70 / 7 = 10
𝟐
σ(𝐱−𝒙)
σ(x − x)2 = 0.4800, 𝒔𝟐= = .48 / 6 = 0.0800, and
𝐧−𝟏
s = 0.28
Using Table A.4, we find t0.025 = 2.447 for v = n – 1 = 6
degrees of freedom.
95% confidence interval for μ is
𝐬 𝐬
𝐱-𝐭 < μ < 𝐱 + 𝐭
(α/2, n−1) 𝐧 (α/2, n−1) 𝐧
(2.447)(0.283) (2.447)(0.283)
⟹ 10.0 − < μ < 10.0 +
7 7
⟹ 9.74 < μ < 10.26.
Single Sample: Estimating a
Proportion [1]
Point estimate of the parameter p: A point estimator
of the proportion p in a binomial experiment is given by
the statistic 𝐏 = X/n, where X represents the number
of successes in n trials. Therefore, the sample
proportion 𝐩 = x/n will be used as the point estimate of
the parameter p.

Confidence Intervals for Proportions p:

100(1 – α)% confidence interval for p is
𝐩
ෝ𝐪ෝ 𝐩
ෝ𝐪ෝ
ෝ-𝐳
𝐩 ෝ + 𝐳α/2
<p<𝐩
α/2 𝐧 𝐧
Single Sample: Estimating a
Proportion [2]
EXAMPLE: In a random sample of n = 500 families
owning television sets in the city of Hamilton, Canada,
it is found that x = 340 subscribe to HBO. Find a 95%
confidence interval for the actual proportion of
families with television sets in this city that subscribe to
HBO.
SOLUTION: The point estimate of p is pෝ = 340 / 500 =
0.68. Using Table A.3, we find that z0.025 = 1.96. The
95% confidence interval for p is
ෝq
p ෝn ෝq
p ෝn
pෝ - zα/2 < + zα/2

0.68 - 1.96 p
(0.68)(0.32)
< p < 0.68 + 1.96
(0.68)(0.32)
500 500
0.6391 < p < 0.7209
<
ෝ
 ෝ
Calculating sample size using 𝐩
If pෝ is used as an estimate of p, we can be 100(1 − α)%
confident that the error will be less than a specified
amount e when the sample size is approximately
𝐩
ෝ𝐪ෝ z2
n = 𝐞𝟐α/2
EXAMPLE: How large a sample is required if we want to
be 95% confident that our estimate of p in the previous
example is within 0.02 of the true value?
SOLUTION:
ෝq
p ෝ z2
n = e2α/2
0.68 0.32 1.96 2
n= (0.02)2

n = 2089.8 ≈ 2090
Calculating sample size without prior
knowledge about 𝐩ෝ [1]
ෝ is used as an estimate of p, we can be at least
If 𝐩
100(1 − α)% confident that the error will not exceed a
specified amount e when the sample size is
z2α/2
n = 𝟒𝐞𝟐
Calculating sample size without prior
knowledge about 𝐩ෝ [2]
EXAMPLE: How large a sample is required if we want to
be at least 95% confident that our estimate of p in the
previous example within 0.02 of the true value?
SOLUTION: We shall now assume that no preliminary
sample has been taken to provide an estimate of p.
Consequently, we can be at least 95% confident that
our sample proportion will not differ from the true
proportion by more than 0.02 if we choose a sample of
size
2
1.96
n = 4(0.02)2 = 2401
Two Samples: Estimating the
Difference between Two Proportions
100(1 – α)% confidence interval for p1-p2 is
(pෝ -pෝ )-z ෝ1q
p ෝ1
+
ෝ2q
p ෝ2 <p -p
1 2 α/2 n1 n2 1 2

ෝ1q
p ෝ1 ෝ2q
p ෝ2
<(pෝ1-pෝ2) + zα/2 +
n1 n2
Example: A certain change in a process for
manufacturing component parts is being considered.
Samples are taken under both the existing and the new
process so as to determine if the new process results in
an improvement. If 75 of 1500 items from the existing
process are found to be defective and 80 of 2000 items
from the new process are found to be defective, find a
90% confidence interval for the true difference in the
proportion of defectives between the existing and the
new process.
Solution
Let p1 and p2 be the true proportions of defectives for
the existing and new processes, respectively.
ෝ = 75/1500 = 0.05 and 𝒑
𝒑 ෝ 𝟐 = 80/2000 = 0.04
The point estimate of p1 − p2 is pෝ1 - pෝ2 = 0.05 – 0.04 =
0.01
Using Table A.3, we find z0.05 = 1.645.

ෝ1q
p ෝ1 ෝ2q
p ෝ2 (0.05)(0.95) (0.04)(0.96)
zα/2 + = 1.645 + =
n1 n2 1500 2000
0.0117
Substitute values in the formula, we get
−0.0017 < p1 − p2 < 0.0217
Two Samples: Estimating the
Difference between Two Means [1]
Confidence Interval for μ1 − μ2, when σ 12 and σ 22 known

(x1 - x2) - zα/2 σ1 2 + σ2 2 < μ − μ <

n n 1 2
1 2

(x1 -x2) + z σ1 2 + σ2 2
α/2 n 1 n 2

or

C.I = (𝒙1 - ) 2± 𝒛 σ12 + σ22

α/2 𝒏 𝒏
𝟏 𝟐
Two Samples: Estimating the
Difference between Two Means [2]
EXAMPLE: A study was conducted in which two types
of engines, A and B, were compared. Gas mileage, in
miles per gallon, was measured. Fifty experiments were
conducted using engine type A and 75 experiments
were done with engine type B. The gasoline used and
other conditions were held constant. The average gas
mileage was 36 miles per gallon for engine A and 42
miles per gallon for engine B. Find a 96% confidence
interval on μB − μA, where μA and μB are population
mean gas mileages for engines A and B, respectively.
Assume that the population standard deviations are 6
and 8 for engines A and B, respectively.
SOLUTION: The point estimate of μB − μA is x1 - x2 = 42−
36 = 6. Using α = 0.04, we find z0.02 = 2.05 from Table
A.3. Hence, with substitution in the formula above, the
96% confidence interval is
2 2
(x -x ) - z σ σ
1 + 2 < μ − μ < (x -x ) +
1 2 1 2 1 2
α/2 n1 n2
σ1 2 σ22
z +
α/2 n1 n2
or
C.I = (𝒙1 - ) 2± 𝒛 σ12 + σ22
α/2 𝒏 𝟏 𝒏 𝟐
64 36 64 36
6 - 2.05 + < μ1 − μ2 < 6 + 2.05 +
75 50 75 50

3.43 < μB − μA < 8.57.

Two Samples: Estimating the
Difference between Two Means [4]
or
C.I = (3.43, 8.57)
Two Samples: Estimating the
Difference between Two Means [3]
Assumption: Population Variances Unknown but Equal

Pooled Estimate of Variance

(n1 − 1)s2 + (n2 − 1)s2
1 2
S2
p= n1 + n2 − 2
Confidence Interval for μ1 − μ2, σ 12 and σ22 unknown
but equal
1 1
(x1 - x2) - t(α/2, n1 + n2 − 2)𝑠𝑝 + < μ1 − μ2<
n1 n2
1 1
(x1 - x2) + t(α/2, n1 + n2 − 2) 𝑠𝑝 +
n1 n2
Assumption: Population Variances Unknown
but Equal
𝟏 𝟏
C.I = (𝒙1 - 𝒙2) ± (α/2, n1 + n2 − 2) 𝒔𝒑 +
𝐧𝟏 𝐧𝟐
EXAMPLE: The article “Macro invertebrate Community
Structure as an Indicator of Acid Mine Pollution,”
published in the Journal of Environmental Pollution,
reports on an investigation undertaken in Cane Creek,
Alabama, to determine the relationship between
selected physiochemical parameters and different
measures of macro invertebrate community structure.
One facet of the investigation was an evaluation of the
effectiveness of a numerical species diversity index to
indicate aquatic degradation due to acid mine drainage.
Conceptually, a high index of macro invertebrate
species diversity should indicate an unstressed aquatic
system, while a low diversity index should indicate a
stressed aquatic system.
Example (cont.)
Two independent sampling stations were chosen for
this study, one located downstream from the acid mine
discharge point and the other located upstream. For 12
monthly samples collected at the downstream station,
the species diversity index had a mean value 𝐱1 = 3.11
and a standard deviation s1 = 0.771, while 10 monthly
samples collected at the upstream station had a mean
index value 𝐱2 = 2.04 and a standard deviation s2 =
0.448. Find a 90% confidence interval for the difference
between the population means for the two locations,
assuming that the populations are approximately
normally distributed with equal variances
SOLUTION:
Our point estimate of μ1 − μ2 is
x1− x2 = 3.11 − 2.04 = 1.07

(12−1)(0.7712) + (10−1)(0.4482)
s2p = 12+10−2 = 0.417, sp =
0.646
95 % for Confidence Interval for μ1 − μ2 is
1 1
(x1-x2) - t(α/2, n1+n2−2 sp + < μ1 − μ2 <
) n1 n2
1 1
(x1-x2) + t(α/2, n1+n2−2 sp +
) n1 n2
t(α/2, n1+n2−2 = t(0.05,20) = 1.725
)

0.593 < μ1 − μ2 < 1.5D4r. F7aisa.l Bukhari, PUCIT, PU, Lahore

Two Samples: Estimating the
Difference between Two Means [3]
Assumption: Population Variances Unknown but
Unequal (σ12 ≠ σ 22)
100(1- α)% for Confidence Interval for μ1 − μ2 is
s1 2 s 22
(𝐱1 - 𝐱2) - 𝐭 (α/2, v) 𝐧𝟏
+ < μ1 − μ2 < (𝐱1 - 𝐱2) +
𝐧𝟐

(α/2, v) s1 2 + s2 2
𝐧 𝟏 𝐧 𝟐
Where
(s 2/n + s 2/n )2
v= 2 2 1 1 2 2 2 2
[(s1 /n1) /(n1−1) + (s2 /n2) /(n2−1)]
Dr. Faisal Bukhari, PUCIT, PU, Lahore
Two Samples: Estimating the
Difference between Two Means [4]
Assumption: Population Variances Unknown
but Unequal (σ12 ≠ σ 22)

C.I = (𝒙1 - 𝒙2) ± (α/2, v) s 1 2 + s2 2

𝒏 𝟏 𝒏 𝟐

Where
(s 2/n + s 2/n )2
v= 2 2 1 1 2 2 2 2
[(s1 /n1) /(n1−1) + (s2 /n2) /(n2−1)]

Dr. Faisal Bukhari, PUCIT, PU, Lahore

Unknown and Unequal Variances [2]
EXAMPLE: A study was conducted by the Department
of Zoology at the Virginia Tech to estimate the
difference in the amounts of the chemical
orthophosphorus measured at two different stations on
the James River. Orthophosphorus was measured in
milligrams per liter. Fifteen samples were collected
from station 1, and 12 samples were obtained from
station 2. The 15 samples from station 1 had an
average orthophosphorus content of 3.84 milligrams
per liter and a standard deviation of 3.07 milligrams per
liter, while the 12 samples from station 2 had an
average content of 1.49 milligrams per liter and a
standard deviation of 0.80 milligram per liter.

Dr. Faisal Bukhari, PUCIT, PU, Lahore

Find a 95% confidence interval for the
difference in the true average orthophosphorus
contents at these two stations, assuming that
the observations came from normal populations
with different variances.

Dr. Faisal Bukhari, PUCIT, PU, Lahore

 Unknown and Unequal Variances [3]
Solution:
Given
For station 1: x𝟏= 3.84, s1 = 3.07, and n1 = 15.
For station 2, x𝟐 = 1.49, s2 = 0.80, and n2 = 12.
We wish to find a 95% confidence interval for μ1 − μ2. v
= 16.3 ≈ 16. Our point estimate of μ1 − μ2 is x1− x2 =
3.84 − 1.49 = 2.35.

Using α = 0.05, we find in Table A.4 that t0.025 = 2.120

for v = 16 degrees of freedom. Therefore, the 95%
confidence interval for μ1 − μ2 is
0.60 < μ1 − μ2 < 4.10.
Dr. Faisal Bukhari, PUCIT, PU, Lahore