ESTIMATION OF

PARAMETERS
 Statistics largely depends on making generalization from facts
that are at hand. These generalizations or statistical inferences has
two forms:
1. Estimation
2. Hypothesis Testing
An estimate is a value or a range of values that approximate
a parameter. It is based on sample statistics computed from
sample data.

• A pointestimate is a specific numerical value of a

population parameter. The sample mean 𝑥 is the best point
estimate of the population mean.

• Aninterval estimate is a range of values that may contain

the parameter of a population.
A good estimator has the following properties:
• When the mean of a sample statistic from a large number of different random
samples equals the true population parameter, then the sample statistic is an
unbiased estimate of the population parameter.
• Across the many repeated samples, the estimates are not very far from the true
parameter value.

The following figures illustrate bias where the vertical line represents the population
mean and the dots represent sample means from the 𝑥 sampling distribution.
 Estimation of the Mean
Consider the following sample data of the number of hours of free time Grade 11 students
have in between their classes:
2 3 4.5 2 3 2 1.5 2 1 1.5
1 2 3 3 2.5 2 1 2 1 1.5
2 3 1 4 2.5 5 3 2.5 2 1
1.5 2 3 1 4 1.4 2 4.5 2 2.5

The mean of this sample is 𝑥 = 2.285 with a standard deviation s=1.045.

*The mean and the standard deviation are referred to as point of estimates.
*A point estimate is a specific numerical estimate of a parameter.
*The most appropriate point estimate of the population mean 𝜇 is the sample mean 𝑥, and
for the population standard deviation 𝜎 is the sample standard deviation s.
*The credibility of a point estimate is determined by how close it is to the population
parameter.
Example
Mr. Santiago’s company sells bottled coconut juice. He claims that a bottle contains 500
ml of such juice. A consumer group wanted to know if his claim is true. They took six
random samples of 10 such bottles and obtained the capacity, in ml, of each bottle. The
result is shown as follows:

Assuming that the measurements were carefully obtained and that the only kind of
error present is the sampling error, what is the point estimate of the population
mean?
Exercises
1. Find the point estimate of the population parameter μ, for
each of the following sets of data.

1. Scores in a long test in Science

Exercises
2. Find the point estimate of the population parameter μ, for
each of the following sets of data.

2. Lengths of seedlings in a plant box in cm

 Interval Estimate
• An interval estimate, called a confidence interval, is a range of values
that is used to estimate a parameter. This estimate may or may not contain
the true parameter value.

• The confidence level of an interval estimate of a parameter is the

probability that the interval estimate contains the parameter. It describes
what percentage of intervals from many different samples contain the
unknown population parameter
Note that 𝑧𝛼 is the point that corresponds to area to the right of z under the
normal curve, that is the significance level 𝛼. If 𝛼 represents the probability of
NOT capturing the population means 𝜇, then 1 − 𝛼 is the level of confidence
that the interval contains the true population mean.

Significance Level 𝛼 (1-𝛼) 100% Confidence Level

0.01 (1-0.01)100%=99%
0.05 (1-0.05)100%=95%
0.10 (1-0.10)100%=90%
If we use 𝑧𝛼 instead of 𝑧𝛼 , this means
2
that 𝑧𝛼 is the z-score that places the
2
1
area 2 𝛼 in each tail of the normal
curve.

For example:

95% Confidence Level 99% Confidence Level

Below are the values of confidence levels that are commonly used.
Significance Level 𝛼 (1-𝛼) 100% 𝛼 𝑧𝛼
2 2
Confidence Level
0.01 99% 0.005 𝑧0.005 = 2.58
0.05 95% 0.025 𝑧0.025 = 1.96
0.10 90% 0.05 𝑧0.05 = 1.65
∗ 𝑧𝛼 𝑣𝑎𝑙𝑢𝑒𝑠 𝑎𝑟𝑒 𝑏𝑎𝑠𝑒𝑑 𝑜𝑛 𝑡ℎ𝑒 𝑧 − 𝑡𝑎𝑏𝑙𝑒 𝑇𝑎𝑏𝑙𝑒 1 𝑓𝑜𝑢𝑛𝑑 𝑖𝑛 𝐴𝑝𝑝𝑒𝑛𝑑𝑖𝑥.
2
*Confidence interval can be written as
𝑥 − 𝐸, 𝑥 + 𝐸, 𝑜𝑟𝑥 − 𝐸 < 𝜇 < 𝑥 + 𝐸
where:
𝜇 = 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑚𝑒𝑎𝑛
𝐸 = 𝑚𝑎𝑟𝑔𝑖𝑛 𝑜𝑓 𝑒𝑟𝑟𝑜𝑟
𝑥 − 𝐸 = 𝑙𝑜𝑤𝑒𝑟 𝑐𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 𝑙𝑖𝑚𝑖𝑡
𝑥 + 𝐸 = 𝑢𝑝𝑝𝑒𝑟 𝑐𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 𝑙𝑖𝑚𝑖𝑡

*To find the margin of error, use the formula

𝝈
𝑬 = 𝒛𝜶 ∙
𝟐 𝒏
(This formula is used to estimate a population mean with known variance.)
Example 1:
A group of statisticians wants to use the mean of a random sample size n =
200 to estimate the average sales of milk cartons of a salesman in a month. Based
on previous computations, 𝜎 = 7.8.What can they declare with 0.95 or 95%
confidence about the maximum error of their estimate?

Solution:
We identify the given information first
based on the formula
𝜎
𝐸 = 𝑧𝛼 ∙
2 𝑛 Significance (1-𝛼) 100% 𝛼 𝑧𝛼
2 2
n = 200 Level 𝛼 Confidence
Level
𝜎 =7.8 0.01 99% 0.005 𝑧0.005 = 2.58
Confidence level = 95% 0.05 95% 0.025 𝑧0.025 = 1.96
Significance Level 𝛼=0.05 0.10 90% 0.05 𝑧0.05 = 1.65
𝒛𝜶 = 𝒛𝟎.𝟎𝟐𝟓 = 𝟏. 𝟗𝟔
𝟐
Compute for E:
𝜎
𝐸 = 𝑧𝛼 ∙
2 𝑛

*This means that the statistician can declare with

7.8 95% confidence level that their error will be at most
𝐸 = (1.96) 200 1.08 milk cartons.
≈ 𝟏. 𝟎𝟖

*The constraint of the formula for E is that it requires the value of 𝜎.

The value of the sample standard deviation s can replace 𝜎 when n≥ 30.

𝑠
𝐸 = 𝑧𝛼 ∙
2 𝑛
Example 2:
using the data of the number of hours of free time of forty grade 11 students
where the sample mean is 2.285, what can be said with 99% confidence about the
maximum error of the sample mean with a standard deviation of 1.045 as an
estimate of the number of hours of free time of grade 11 students between
classes?

Solution:
Since n is small, use
𝑠
𝐸 = 𝑧𝛼 ∙
2 𝑛
Significance (1-𝛼) 100% 𝛼 𝑧𝛼
n = 40 2
Level 𝛼 Confidence 2
s =1.045 Level

Confidence level = 99% 0.01 99% 0.005 𝑧0.005 = 2.58

0.05 95% 0.025 𝑧0.025 = 1.96
Significance Level 𝛼=0.01
𝒛𝜶 = 𝒛𝟎.𝟎𝟎𝟓 = 𝟐. 𝟓𝟖 0.10 90% 0.05 𝑧0.05 = 1.65
𝟐
Compute for E:
𝑆
𝐸 = 𝑧𝛼 ∙
2 𝑛
*This shows that with 99% confidence level,
1.045
the error of the sample mean will be at most
𝐸 = (2.58) 0.43 hours.
40

≈ 𝟎. 𝟒𝟑
Example 3
The principal of a large senior high school wants to estimate the average age
of grade 11 students enrolled during summer. It is known from previous studies that
the standard deviation is 2 years. A sample of 50 students shows the mean to be
17.4 years. Find the 95% confidence interval of the population mean.
Solution:
Given: n=50
𝑥−𝐸 <𝜇 <𝑥+𝐸
𝑥=17.4 𝜎 𝜎
𝑥 − 𝑧𝛼 < 𝜇 < 𝑥 + 𝑧𝛼
2 𝑛 2 𝑛
𝜎=2
2 2
Confidence Level=95% 17.4 − (1.96)( ) < 𝜇 < 17.4 + (1.96)(
50 50
𝑧𝛼 = 𝑧0,05 = 𝑧0.025 = 1.96 16.85 < 𝜇 < 17.95
2 2

∗ 𝑇ℎ𝑒 𝑝𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙 𝑐𝑎𝑛 𝑠𝑎𝑦 𝑤𝑖𝑡ℎ 95% 𝑐𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 𝑡ℎ𝑎𝑡 𝑡ℎ𝑒

𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑎𝑔𝑒 𝑜𝑓 𝑔𝑟𝑎𝑑𝑒 11 𝑠𝑡𝑢𝑑𝑒𝑛𝑡𝑠 𝑒𝑛𝑟𝑜𝑙𝑙𝑒𝑑 𝑖𝑛 𝑠𝑢𝑚𝑚𝑒𝑟
𝑐𝑙𝑎𝑠𝑠𝑒𝑠 𝑖𝑠 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 16.85 𝑎𝑛𝑑 17.95 𝑦𝑒𝑎𝑟𝑠.
Determining the Minimum Sample Size for Finding a
Confidence Interval for the Mean
Formula:
2
𝑧𝛼 ∙ (𝜎)
2
𝑛=
𝐸2
* If the computed sample size is not a whole number, it should be rounded up to the next whole number.

Example 4: A researcher of a cardboard manufacturing company would like to know the estimated
thickness of the cardboard the machine produces. How many cardboards should he measure if he wants
to be 98% confident that the estimate is accurate to 1 mm. Study shows that the standard deviation is 3
mm.
2
𝑧𝛼 ∙ (𝜎)
Given: 𝜎 = 3 2
𝑛=
E=1 𝐸2
Confidence Level=98% 2.33 (3) 2
𝑧0.02 = 𝑧0,02 = 𝑧0.01 = 2.33 𝑛=
12
2 2
𝑛 = 48.8601

𝑛 ≈ 49 𝑐𝑎𝑟𝑑𝑏𝑜𝑎𝑟𝑑𝑠
Find the interval estimate of the population mean using
95% confidence level given the following information:
𝑥 = 75, n=110 and 𝜎 = 2