Chapter 8

Confidence Interval Estimation

 Learning Objectives

In this chapter, you learn:

 To construct and interpret confidence interval
estimates for the mean and the proportion
 Confidence Intervals

Content of this chapter

 Confidence Intervals for the Population
Mean, μ
 when Population Standard Deviation σ is Known
 when Population Standard Deviation σ is Unknown
 Confidence Intervals for the Population
Proportion, π
 Determining the Required Sample Size
 Point and Interval Estimates

 A point estimate is a single number,

 a confidence interval provides additional
information about variability

Lower Upper
Confidence Confidence
Point Estimate
Limit Limit

Width of
confidence interval
 Point Estimates

We can estimate a with a Sample

Population Parameter … Statistic
(a Point Estimate)

Mean μ X
Proportion π p
 Confidence Intervals

 How much uncertainty is associated with a

point estimate of a population parameter?

 An interval estimate provides more

information about a population characteristic
than does a point estimate

 Such interval estimates are called confidence

intervals
 Confidence Interval Estimate
 An interval gives a range of values:
 Takes into consideration variation in sample
statistics from sample to sample
 Based on observations from 1 sample
 Gives information about closeness to
unknown population parameters
 Stated in terms of level of confidence
 Can never be 100% confident
 Estimation Process

Random Sample I am 95%

confident that
Population μ is between
Mean 40 & 60.
(mean, μ, is X = 50
unknown)

Sample
 General Formula

 The general formula for all

confidence intervals is:

Point Estimate ± (Critical Value)(Standard Error)

 Confidence Level

 Confidence Level
 Confidence for which the interval
will contain the unknown
population parameter
 A percentage (less than 100%)
 Confidence Intervals

Confidence
Intervals

Population Population
Mean Proportion

σ Known σ Unknown
 Confidence Interval for μ
(σ Known)
 Assumptions
 Population standard deviation σ is known
 Population is normally distributed
 If population is not normal, use large sample

 Confidence interval estimate:

σ
XZ
n
where X is the point estimate
Z is the normal distribution critical value for a probability of /2 in each tail
σ/ n is the standard error
 Finding the Critical Value, Z
Z  1.96
 Consider a 95% confidence interval:
1   0.95

α α
 0.025  0.025
2 2

Z units: Z= -1.96 0 Z= 1.96

Lower Upper
X units: Confidence Point Estimate Confidence
Limit Limit
 Common Levels of Confidence
 Commonly used confidence levels are 90%,
95%, and 99%
Confidence
Confidence
Coefficient, Z value
Level
1 
80% 0.80 1.28
90% 0.90 1.645
95% 0.95 1.96
98% 0.98 2.33
99% 0.99 2.58
99.8% 0.998 3.08
99.9% 0.999 3.27
 Example

 A sample of 11 circuits from a large normal

population has a mean resistance of 2.20
ohms. We know from past testing that the
population standard deviation is 0.35 ohms.

 Determine a 95% confidence interval for the

true mean resistance of the population.
 Example
(continued)

 A sample of 11 circuits from a large normal

population has a mean resistance of 2.20
ohms. We know from past testing that the
population standard deviation is 0.35 ohms.

 Solution: σ
X Z
n
 2.20  1.96 (0.35/ 11 )
 2.20  0.2068
1.9932    2.4068
 Interpretation

 We are 95% confident that the true mean

resistance is between 1.9932 and 2.4068
ohms
 Although the true mean may or may not be
in this interval, 95% of intervals formed in
this manner will contain the true mean
 Confidence Intervals

Confidence
Intervals

Population Population
Mean Proportion

σ Known σ Unknown
 Confidence Interval for μ
(σ Unknown)

 If the population standard deviation σ is

unknown, we can substitute the sample
standard deviation, S
 This introduces extra uncertainty, since
S is variable from sample to sample
 So we use the t distribution instead of the
normal distribution
 Confidence Interval for μ
(σ Unknown)
(continued)
 Assumptions
 Population standard deviation is unknown
 Population is normally distributed
 If population is not normal, use large sample
 Use Student’s t Distribution
 Confidence Interval Estimate:

S
X  t n-1
nn -1 degrees of
(where t is the critical value of the t distribution with
freedom and an area of α/2 in each tail)
 Student’s t Distribution

 The t is a family of distributions

 The t value depends on degrees of
freedom (d.f.)
 Number of observations that are free to vary after
sample mean has been calculated

d.f. = n - 1
 Degrees of Freedom (df)
Idea: Number of observations that are free to vary
after sample mean has been calculated

Example: Suppose the mean of 3 numbers is 8.0

Let X1 = 7 If the mean of these three

Let X2 = 8 values is 8.0,
What is X3? then X3 must be 9
(i.e., X3 is not free to vary)
Here, n = 3, so degrees of freedom = n – 1 = 3 – 1 = 2
(2 values can be any numbers, but the third is not free to vary
for a given mean)
 Student’s t Distribution
Note: t Z as n increases

Standard
Normal
(t with df = ∞)

t (df = 13)
t-distributions are bell-
shaped and symmetric, but
have ‘fatter’ tails than the t (df = 5)
normal

0 t
 Student’s t Table

Upper Tail Area

Let: n = 3
df .25 .10 .05 df = n - 1 = 2
 = 0.10
1 1.000 3.078 6.314 /2 = 0.05

2 0.817 1.886 2.920

3 0.765 1.638 2.353 /2 = 0.05

The body of the table

contains t values, not 0 2.920 t
probabilities
 Example
A random sample of n = 25 taken from a normal population
has X = 50 and S = 8. Form a 95% confidence interval for μ

 d.f. = n – 1 = 24, so

The confidence interval is t/2 , n1  t 0.025,24  2.0639

S 8
X  t /2, n-1  50  (2.0639)
n 25
46.698 ≤ μ ≤ 53.302
 Confidence Intervals

Confidence
Intervals

Population Population
Mean Proportion

σ Known σ Unknown
 Confidence Intervals for the
Population Proportion, π

 An interval estimate for the

population proportion ( π ) can be
calculated by adding and subtracting
an allowance for uncertainty to the
sample proportion ( p )
 Confidence Intervals for the
Population Proportion, π
(continued)

 Recall that the distribution of the sample

proportion is approximately normal if the
sample size is large, with standard deviation

 (1  )
σp 
n
 We will estimate this with sample data:

p(1 p)
n
 Confidence Interval Endpoints
 Upper and lower confidence limits for the population
proportion are calculated with the formula

p(1 p)
pZ
n
 where
 Z is the standard normal value for the level of confidence desired
 p is the sample proportion
 n is the sample size
 Example

 A random sample of 100 people

shows that 25 are left-handed.
 Form a 95% confidence interval for
the true proportion of left-handers
 Example
(continued)
 A random sample of 100 people shows
that 25 are left-handed. Form a 95%
confidence interval for the true proportion
of left-handers.

p  Z p(1 p)/n
 25/100  1.96 0.25(0.75)/100

 0.25  1.96 (0.0433)

0.1651    0.3349
 Interpretation

 We are 95% confident that the true

percentage of left-handers in the population
is between
16.51% and 33.49%.

 Although the interval from 0.1651 to 0.3349

may or may not contain the true proportion,
95% of intervals formed from samples of size
100 in this manner will contain the true
proportion.