What is confidence

interval
A range of values so defined that there is a
specified probability that the value of a
parameter lies within it.
Statisticians use aconfidence interval to describe
the amount of uncertainty associated with a
sample estimate of a populationparameter.
An interval estimate provides more information
about a population characteristic than does a
point estimate. It provides a confidence level for
the estimate. Such interval estimates are called
confidence intervals

Term used in confidence

interval

Mean:- Themeanis the average of the

numbers , To calculate: Just add up all the
numbers, then divide by how many numbers
there are.
Standard Deviation:- A quantity expressing
by how much the members of a group differ
from the mean value for the group.
Normal Distribution:- A function that
represents the distribution of many random
variables as a symmetrical bell-shaped graph

Point estimation:- A point estimate is a

single number
Point estimationrefers to the process
ofestimatinga parameter from a probability
distribution, based on observed data from the
distribution.
An interval estimate provides more
information about a population characteristic
than does a point estimate
Lower
Confidence
Limit

Upper

Point Estimate
Width of
confidence interval

Confidence
Limit

An interval gives a range of values:

Takes into consideration variation in sample

statistics from sample to sample

Gives information about closeness to

unknown population parameters

Stated in terms of level of confidence. (Can

never be 100% confident)

The general formula for all confidence
intervals is equal to:
Point Estimate (Critical Value)(Standard
Error)

Suppose confidence level = 95%

Also written (1 - ) = .95
is the proportion of the distribution in the two

tails areas outside the confidence interval

A relative frequency interpretation:

If all possible samples of size n are taken

and their means and intervals are estimated,

95% of all the intervals will include the true
value of that the unknown parameter
A specific interval either will contain or will not
contain the true parameter (due to the 5% risk)

Confidence Interval Estimation of

Population Mean,

when

is known

Assumptions
Population standard deviation is known
Population is normally distributed
If population is not normal, use large sample

Confidence interval estimate:

x X Z
n
(where Z is the normal distributions critical value for a
probability of /2 in each tail)

Consider a 95% confidence interval:

1 .95

.05

.475

.025
2

Z= -1.96
Lower
Confidence
Limit

/ 2 .025

.475

0
Point
Point Estimate
Estimate

.025
2

Z= 1.96

Upper
Confidence
Limit

Example :-

A manufacturer of computer paper has a production process that

operates continuously throughout an entire production shift. The paper is

expected to have a mean length of 11 inches and the standard deviation
of the length is known to be 0.02 inch. At periodic intervals, samples are
selected to determine whether the mean paper length is still equal to 11
inches or whether something has gone wrong in the production process
to change the length of the paper produced. If such a situation has
occurred, corrective action is needed. Suppose the random of 100 sheets
is selected, and the mean paper length is found to be 10.998. Set up a
95% interval estimate of the population mean paper length.

Confidence Interval Estimation of

Population Mean, , when is Unknown
If the population standard deviation is

unknown, we can substitute the sample

standard deviation, S
This introduces extra uncertainty, since S

varies from sample to sample

So we use the students t distribution instead

of the normal Z distribution

Confidence Interval Estimate Use Students

t Distribution :

X t n -1

S
n

(where t is the critical value of the t distribution with n-1

d.f. and an area of /2 in each tail)
t distribution is symmetrical around its mean of zero, like

Z dist.
Compare to Z dist., a larger portion of the probability
areas are in the tails.
As n increases, the t dist. approached the Z dist.
t values depends on the degree of freedom.

Students t distribution

Note: t

Z as n increases

Standard
Normal
t (df = 13)
t-distributions are bell-shaped
and symmetric, but have
fatter tails than the normal

t (df = 5)

Example :In a particular test there were 16

independent observations of a certain

magnitude with a mean of 100 and SD of 24.
Find out (at both 0.05 and 0.01 levels of
confidence) the limits of the confidence
interval for the population (or true) mean.

Definition of proportion
The point estimate for p, the population
proportion of successes, is given by the proportion
of successes in a sample and is denoted by:

x
p
n

where x is the number of successes in the sample

and n is the number in the sample. The point
estimate for the number
q 1 ofpfailures is p
q .
The symbols
and are read as p hat and q
hat

Ex.1: Finding a point

estimate for proportion

In a survey of 883 American adults, 380

said that their favorite sport is football. Find
a point estimate for the population
proportion of adults who say their favorite
sport is football.
SOLUTION: Using n =883 and x = 380

x 380
p
0.43 43%
n 883

Confidence Intervals for a

Population Proportion
Constructing a confidence interval for a

population proportion p is similar to

constructing a confidence interval for a
population mean. You start with a point
estimate and calculate a maximum error of
estimate.

p E p p E

Definition
A c-confidence interval for the population

proportion p is

p E p p E
where

E zc

p q
n

The probability that the confidence interval

contains p is c.

Ex. 2: Constructing a Confidence

interval for Proportion
Construct a 95% confidence interval for the

proportion of American adults who say that

their favorite sport is football.
SOLUTION: Form examplep1,
, So,
0.43
q 1 0.43 0.57
p n = 883, you can
. Using
verify that the sampling distribution of
can
be
np approximated
883 0.43 380by
5the normal distribution.
and
nq 883 0.57 503 5

Cont.
Using zc = 1.96, the maximum error of estimate

is:

E zc

p q
(0.43)(0.57)
1.96
0.033
n
883

The 95% confidence interval is as follows

Left endpoint
Right endpoint
p E 0.43 0.033 0.397
p E 0.43 0.033 0.463

0.397 p 0.463
So, with 95% confidence, you can say that the proportion of

adults who say that football is their favorite sport is between

39.7% and 46.3%.