Economics Dr.

Sauer
Ch 9: Inference From Small Samples

I. Normal Population, is known
For n < 30:
When the population is Normal and the population standard deviation is known, then the sampling
distribution for sample means is


The confidence interval is


The Test Statistic is


________________________________
Example: The temperature (degrees C) of a cooled storage unit is taken on 8 consecutive days.
4.5 4.8 5.2 4.7 3.8 3.7 4.1 3.9
Temperatures for this type of storage unit are known to be Normally distributed with a standard
deviation of =0.35.

Construct a 90% confidence interval for the true mean temperature.

Calculate the sample mean:

For = 0.10, Z
/2
=

Calculate the standard error:





Test the hypothesis that the mean temperature is 4 degrees.

















______________________________
|
.
|

\
|
n
N x
o
u, ~
x
Z x o
o 2 /

x
H
x
Z
o
u
0

=


Often, we dont know the population standard deviation.
We can no longer use the Z table.

II. The t-distribution (aka Students t-distribution)
Fun origin: A chemist at the Guinness brewery in Dublin invented the t-distribution in order to monitor
quality in brewing, using small samples from Normal populations with unknown.

If random samples of size n are selected from a Normal population with mean and unknown, then
the distribution of sample means is a t-distribution.


(n-1) refers to the degrees of freedom

The t-distribution is similar to the Normal distribution in several ways:
it is bell shaped
it is symmetrical about the mean

is the number of standard errors between the sample mean and population mean




Ex: find the tail area equal to 5% when the sample size is 10.




____________________________
In large samples, when is unknown, we often use Z instead of t.

When samples are large, Z and t are close.



Statistical software always uses t when is unknown, even for large samples.
( )
x n
s t x , ~
1
u

n
s
s
x
=
x
s
x
t
u
=


The confidence interval for a small sample from a Normal population with unknown is


The test statistic for a small sample from a Normal population with unknown is



_____________________________
Example: The waiting time at an airline check in counter is known to be Normally distributed. A
random sample of 5 passengers were interviewed. They reported the following wait times: 15.5 21.2
12.6 18.4 22.9 minutes.

Construct a 90% confidence interval for the average wait time.

Calculate the sample average wait time:


Calculate the standard error:





Find the critical value for t:

Construct the interval:








_______________________________________
Example: From the scenario above, test the hypothesis that the average weight time is at most 20
minutes.

State the null and alternative hypotheses:


Sketch the graph and identify the critical region








x n
s t x
2 / , 1 o

x
s
x
t
u
=


Calculate t:












_______________________________
Example: The temperature (degrees C) of a cooled storage unit is taken on 8 consecutive days.
4.5 4.8 5.2 4.7 3.8 3.7 4.1 3.9

At the 90% level, test the hypothesis that the mean temperature is 4 degrees.



Lets verify the output:












_________________________________________________________________________________
III. Difference Between Means from Small, Independent Samples
Example: Promoters of e-learning software design a test for effectiveness of an online course based on
typing tutor software. Two groups are randomly selected. Group 1 consists of 10 subjects who have
completed a course that did not use supporting software. Group 2 consists of 8 subjects who used the
online software.

The typing speeds (wpm) are as follows.
Group 1: 23, 35, 37, 12, 26, 60, 13, 24, 27, 53
Group 2: 56, 30, 55, 48, 35, 40, 33, 23

Construct a 90% confidence interval for the difference in mean typing speed between the two groups.
Can you conclude that those who used the online software can type faster?











Well need to construct a pooled estimate of variance.


Use the pooled estimate of variance to find the standard error.


Find the critical t value:


Construct the interval:









At the 95% level, test the hypotheses that the mean typing speed is faster for those who used the
software.







The test statistic is








Assumptions made in solving this problem:
1. independent samples
2. random samples from Normal populations
3. the variance is the same for both populations
2
) 1 ( ) 1 (
2 1
2
2 2
2
1 1 2
+
+
=
n n
s n s n
s
p
|
|
.
|

\
|
+ =

2 1
2
1 1
2 1
n n
s s
p x x
|
|
.
|

\
|
+

=
2 1
2
2 1 2 1
1 1
) ( ) (
n n
s
x x
t
p
u u


IV. The F-test for equality of two variances
To figure out if two populations have similar variances, we will look at the sample variances.

If the ratio of the sample variances is close to 1, then the hypothesis that the populations have equal
variance is plausible.

The sampling distribution of is an F-distribution, when the samples are independent and selected
from Normal populations with equal variances.

The F-distribution is not symmetrical and depends on the degrees of freedom in each sample.


_______________________________________________
Ex: Suppose sample 1 has 10 observations and sample 2 has 8 observations. Find the critical F-value
for the 5% level.



If we wanted the 2.5% level, wed need a different table.

____________________________
Example: Using the data from the typing example, test whether the sample variances are equal at the
95% level.










Instead, test the hypothesis that the variance of population 1 exceeds the variance of population 2.











2
2
2
1
s
s


V. Difference between Means, Paired Samples
Paired t-tests are used when data consists of pairs of measurements on the same subjects.
ex: before and after
_________________________
Example: The typing speeds for 7 people are recorded before and after completing a course using
typing tutor software.


Construct a 90% confidence interval for the difference between average typing speed before and after
the course.

Calculate the mean of the differences:


Calculate the sample standard deviation:


Calculate the sample standard error:


Construct the interval:



Now at the 2.5% level, test the hypothesis that typing speeds have increased after taking the course.
















Person Before After Difference
JM 32 46 14
AC 10 18 8
TB 65 58 -7
AF 39 50 11
AO 24 36 12
PD 10 24 14
FF 24 21 -3