ESTIMATION OF

PARAMETERS
CHAPTER 4
 RECALL

• Inferential statistics is concerned with drawing

conclusions and/or making decisions concerning a
population based only on sample data.
Main functions of inferential statistics
1. estimate population parameters
2. test statistical hypotheses
 RECALL

• A parameter is a descriptive measure that describes a

population.
• A statistic is a descriptive measure that describes a
sample.
 ESTIMATION

• The process of determining parameter values

• The value or range of values that approximate a
parameter is called an estimate. It is based on sample
statistics computed from the sample data.
POINT ESTIMATION
POINT ESTIMATE
 POINT ESTIMATE

• Is a specific numerical value of a population parameter

• The sample mean is the best point estimate of the
population mean μ.
 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 bottles and obtained the
capacity, in ml, of each bottle. The results is shown as
follows:
To find the :

To find
 NOTE
The problem can be solve applying the concept of sampling
distribution since several samples are involved. Sample means can be
determined by a) row and b) by column. After getting the means of
each sample, get the mean of sample means. By one of the properties
of sampling distribution, its mean is equal to the mean of the
population.

.....if any problem involves only 1 sample, sampling distribution may

not be applied.
 SOLUTION
a) By row
a) By row
Sample 1 Sample 2 Sample 3

Sample 4 Sample 5 Sample 6

 SOLUTION
b) By column

1 2 3 4 5 6 7 8 9 10
b) By column
Column 1 Column 2 Column 3 Column 4

Column 5 Column 6 Column 7 Column 8

Column 9 Column 10
 CONCLUSION
Mr. Santiago’s claim that average of the bottles contain 500 ml. is false
since the mean ml.
Based on the solution, the best point estimate of the problem is the
mean results by row since it has smaller standard deviation compared
to the mean results by column
 INTERVAL ESTIMATION
(CONFIDENCE INTERVALS)
 INTERVAL ESTIMATE

• Is a range of values that may contain the parameter of a

population.
• It’s also called a confidence interval when probability
is included.
 INTERVAL ESTIMATION

• An interval estimate is a range of values used to

approximate a population parameter.
• This estimate may or may not contain the actual value
of the parameter being estimated.
• An interval estimate has two components:
1. a range or interval of values
2. an associated level of confidence
 WHY USE AN INTERVAL ESTIMATE
INSTEAD?

• Using a point estimate, while unbiased, poses a degree

of uncertainty. There is no way of expressing the
degree of accuracy of a point estimate.
• An interval estimate provides more information about
a population characteristic than does a point estimate.
 CONFIDENCE LEVELS (c = 1 - α)

• The confidence level c of an interval estimate is the

probability that the parameter is contained in the
interval estimate.
 LEVEL OF SIGNIFICANCE ()

• Indicates the long-run percentage of confidence

intervals which would include the parameter being
estimated.
 THE SIGNIFICANCE OF THE LEVEL OF
SIGNIFICANCE

• The level of significance α represents a probability of lack of

confidence; that is, the probability of NOT capturing the value
of a population parameter in the interval estimate.
• The confidence level c = 1 - α , meanwhile represents the
probability of confidence that the population parameter lies
within the interval estimate.
 NOTE:

• For a parameter θ, if P(a < θ < b) = 1 – c , then the

interval a < θ < b is called a 100(1 - c)% confidence
interval of θ.
• In repeated samples of the population, the true value of
the parameter θ would be contained in 100(1 - c)% of
intervals calculated this way.
CONFIDENCE INTERVALS FOR THE
MEAN
WHEN σ IS KNOWN
 CONFIDENCE INTERVALS FOR THE MEAN
WHEN σ IS KNOWN

Or

𝑷𝒐𝒊𝒏𝒕 𝑬𝒔𝒕𝒊𝒎𝒂𝒕𝒆 ± 𝑴𝒂𝒓𝒈𝒊𝒏 𝒐𝒇 𝑬𝒓𝒓𝒐𝒓

Where:
= point estimate
= level of significance
=sample size
=population standard deviation
=z-score
=population mean
Note:

For a 90% confidence interval, = 1.65; for a 95%

confidence interval, = 1.96;
a 98% confidence interval, = 2.33; and for a 99%
confidence interval, = 2.58.
 MARGIN OF ERROR (E)

• Also called the maximum error of the estimate is the

maximum likely difference between the point estimate
of a parameter and the actual value of the parameter.
 CONFIDENCE INTERVALS FOR THE MEAN
WHEN σ IS KNOWN

Lower confidence
Upper confidence
boundary or limit
boundary or limit

Point Estimate
/Sample Mean Standard error
z-score/critical value/
confidence coefficient
CONFIDENCE INTERVALS FOR THE MEAN
WHEN σ IS KNOWN

Margin of Error
However, when is not known (as is often the case),
the sample standard deviation is used to
approximate . (note )

𝑠
𝜇= 𝑋 ± 𝑧 𝛼
 EXAMPLE
• A researcher wishes to estimate the number of days it takes an
automobile dealer to sell a Chevrolet Aveo. A sample of 50
cars had a mean time on the dealer’s lot of 54 days. Assume
the population standard deviation to be 6.0 days. Find the best
point estimate of the population mean and the 95% confidence
interval of the population mean.
 EXAMPLE
Therefore, with 95% confidence, the average number of
days it takes an automobile dealer to sell a Chevrolet
aveo is between 52 and 56 days based on a sample of 50
cars.
We can say with 95% confidence that the interval
between 52 and 56 days contains the population mean
based on a sample size of 50.
 EXERCISE 1

• A survey of 30 emergency room patients found that the

average waiting time for treatment was 174.3 minutes.
Assuming that the population standard deviation is 46.5
minutes, find the best point estimate of the population
mean and the 99% confidence of the population mean.
 EXERCISE 1

• Therefore, with 99% confidence, the average waiting time for treatment
is between 152.4 and 196.2 minutes based on a sample of 30 patients.
• Hence, one can be 99% confident that the average waiting time for
treatment is between 152.4 and 196.2 minutes based on a sample of 30
patients.
• We can say with 99% confidence that the interval between 152.4 and
196.2 minutes contains the population mean based on a sample of 30
patients.
 EXERCISE 2
A researcher wants to estimate the number of hours that 5-year
old children spend watching television. A sample of 50 5-year
old children was observed to have a mean viewing time of 3
hours. The population is normally distributed with a population
standard deviation σ=0.5 hours, find:
a. The best point estimate of the population mean
b. The 95% confidence interval of the population mean
 EXERCISE 3

• Therefore, with 95% confidence, the mean viewing time of 5-year old children
is between 2.86 hours and 3.14 hours based on a sample of 50 five-year old
children.
• Hence, one can be 95% confident that the mean viewing time of 5-year old
children is between 2.86 hours and 3.14 hours based on a sample of 50 five-year
old children.
• We can say with 95% confidence that the interval between 2.86 hours and 3.14
hours contains the population mean based on a sample of 50 five-year old
children.
 QUIZ

• A sample of 60 Grade 11 students’ ages was obtained to

estimate the mean age of all Grade 11 students. years and the
population variance is 16.
a. What is the point estimate for .
b. Find the 95% confidence interval for .
c. Find the 99% confidence interval for .
 SAMPLE SIZE

• Closely related to statistical estimation

• How large a sample is necessary to make an
accurate estimate?
 FORMULA FOR THE MINIMUM SAMPLE SIZE
NEEDED FOR AN INTERVAL ESTIMATE OF THE
POPULATION MEAN

( )
2
𝑧𝛼 𝜎
• where E is the margin of error. If
necessary, round the answer up to obtain
a whole number. That is, if there is any
2
𝑛= fraction or decimal portion in the answer,

𝐸 use the next whole number for sample

size n.
 EXAMPLE

• A scientist wishes to estimate the average depth of a

river. He wants to be 99% confident that the estimate
is accurate within 2 feet. From a previous study, the
standard deviation of the depths measured was 4.33
feet. How large the sample should be?
2
𝑧𝛼 𝜎 2
2 2.58 ( 4 .33 )
CONFIDENCE INTERVALS FOR
THE MEAN
WHEN σ IS UNKNOWN
 CONFIDENCE INTERVALS FOR THE MEAN
WHEN σ IS UNKNOWN
• Most of the time, the value of σ is not known, so it must be
estimated by using s, namely, the standard deviation of the
sample
• When s is used, especially when the sample size is small, critical
values greater than the values for are used in confidence intervals
in order to keep the interval at a given level
• These values are taken from the Student t distribution, most often
called the t distribution.
 CONFIDENCE INTERVALS FOR THE MEAN
WHEN σ IS UNKNOWN

or

The degrees of freedom are n - 1.

 CHARACTERISTICS OF THE t DISTRIBUTION

A. The t distribution shares some characteristics of the normal

distribution and differs from it in others. The t distribution is
similar to the standard normal distribution in these ways:
1. It is bell-shaped.
2. It is symmetric about the mean.
3. The mean, median, and mode are equal to 0 and are located at
the center of the distribution.
4. The curve never touches the x axis.
 CHARACTERISTICS OF THE t DISTRIBUTION

B. The t distribution differs from the standard normal

distribution in the following ways:
1. The variance is greater than 1.
2. The t distribution is actually a family of curves based on
the concept of degrees of freedom, which is related to
sample size.
3. As the sample size increases, the t distribution approaches
the standard normal distribution.
 DEGREES OF FREEDOM (n-1)

• The degrees of freedom are the number of values that

are free to vary after a sample statistic has been
computed, and they tell the researcher which specific
curve to use when a distribution consists of a family
of curves.
 EXAMPLE

• Find the value for a 95% confidence interval

when the sample size is 22.
 EXAMPLE
Ten randomly selected people were asked how long they slept at night.
The mean time was 7.1 hours, and the standard deviation was 0.78
hour. Find the 95% confidence interval of the mean time. Assume the
variable is normally distributed.
One can be 95% confident that the population mean is between 6.5
hours and 7.7 hours based on a sample size of 10.
 EXERCISE 1

• The data represent a sample of the number of home fires

started by candles for the past several years. (Data are from
the National Fire Protection Association.) Find the 99%
confidence interval for the mean number of home fires
started by candles each year.
5460 5900 6090
6310 7160 8440
9930
 EXERCISE 2

Costs for a 30-Second Spot on Cable Television. The

approximate costs for a 30-second spot for various cable
networks in a random selection of cities are shown below.
Estimate the true population mean cost for a 30- second
advertisement on cable network with 90% confidence. Assume
normal distribution.
14 55 165 9 15 66 23 30 150
22 12 13 54 73 55 41 78
 EXERCISE 3

• Digital Camera Prices. The prices (in dollars) for a

particular model of digital camera with 6.0 megapixels and
an optical 3X zoom lens are shown below for 10 online
retailers. Estimate the true mean price for this particular
model with 95% confidence. Assume the variable is normally
distributed.
225 240 215 206 211
210 193 250 225 202
LET’S CHECK
 EXERCISE 1

• The data represent a sample of the number of home fires started by

candles for the past several years. (Data are from the National Fire
Protection Association.) Find the 99% confidence interval for the
mean number of home fires started by candles each year.
5460 5900 6090
6310 7160 8440 9930
One can be 99% confident that the population mean number of home
fires started by candles each year is between 4785.3 and 9297.6,
based on a sample of home fire occurring over a period of 7 years.
 EXERCISE 2

Costs for a 30-Second Spot on Cable Television. The approximate costs for a 30-
second spot for various cable networks in a random selection of cities are shown
below. Estimate the true population mean cost for a 30- second advertisement on
cable network with 90% confidence. Assume normal distribution.
14 55 165 9 15 66 23 30
150 22 12 13 54 73 55 41 78
One can be 90% confident that the true population mean cost for a 30-second
advertisement on cable network is between 32.0 and 70.9 based on a sample size of
17.
 EXERCISE 3
• Digital Camera Prices. The prices (in dollars) for a particular model of digital
camera with 6.0 megapixels and an optical 3X zoom lens are shown below for
10 online retailers. Estimate the true mean price for this particular model with
95% confidence. Assume the variable is normally distributed.
225 240 215 206 211
210 193 250 225 202
One can be 95% confident that the true mean price of a particular model of
digital camera is between $205.2 and $230.2 based on a sample of 10 online
retailers.
 JOURNAL/ESSAY (1 WHOLE SHEET OF
PAPER)

1. What have you learned today?

2. What is confidence intervals of population mean
when σ is unknown?
3. How do you determine the confidence interval of
population mean when σ is unknown?
CONFIDENCE INTERVALS AND
SAMPLE SIZE
FOR PROPORTIONS
 CONFIDENCE INTERVALS AND SAMPLE SIZE
FOR PROPORTIONS
Proportion
-Represents a part of a whole.
-It can be expressed as a fraction, decimal, or
percentage.
-Can also represent probabilities.
Example:
12% 0.12
CONFIDENCE INTERVALS AND SAMPLE SIZE
FOR PROPORTIONS

Proportions can be obtained from samples or

populations. The following symbols will be used.
 CONFIDENCE INTERVALS AND SAMPLE SIZE
FOR PROPORTIONS
= population proportion
(read “p hat”) = sample proportion
For a sample proportion,
or
where number of sample units that possess the characteristics
of interest and sample size.
 EXAMPLE

In a recent survey of 150 households, 54 had central air

conditioning. Find and , where is the proportion of households
that have central air conditioning.
 CONFIDENCE INTERVALS

^ −𝒛 𝜶
𝒑
Where:
𝟐 √ ^𝒒
𝒑
𝒏
^
^ +𝒛 𝜶
<𝒑< 𝒑
𝟐 √
^𝒒
𝒑
𝒏
^
 EXAMPLE

Covering College Costs. A survey conducted by Sallie Mae and Gallup of

1404 respondents found that 323 students paid for their education by
student loans. Find the 90% confidence of the true proportion of students
who paid for their education by student loans.

You can be 90% confident that the percentage of students who pay for
their college education by student loans is between 21.2% and 24.9%.
 EXAMPLE

Religious Books. A survey of 1721 people found that 15.9% of

individuals purchase religious books at a Christian bookstore. Find
the 95% confidence interval of the true proportion of people who
purchase their religious books at a Christian bookstore.
You can say with 95% that the true percentage is between
14.2% and 17.6%.
 SAMPLE SIZE

( )
2
𝑧𝛼
^ 𝒒
𝑛= 𝒑 ^ 2
𝐸
 EXAMPLE

• Home Computers. A researcher wishes to estimate, with

95% confidence, the proportion of people who own a home
computer. A previous study shows that 40% of those
interviewed had a computer at home. The researcher wishes
to be accurate within 2% of the true proportion. Find the
minimum sample size necessary.