Estimation ef Paraneters

In
statistics, estimation refers to the
a conclusion
about the method by which one make
obtained from a entire population, based on informatior
company sample. For example, suppose you work in
to manufacturing
test every single lightLED lights. It Would be too time consuming
that is made. Instead, the workers wil
randomly selectLED lights from each box to test. When a populatior
interested in is so large that it would be difficult to study, we
we are
rely on samples we
you will learn to selected from the population. In this chapter
apprOximate
We calculate a range
a value of a
of values within which population parameter
degree of confidence that the true we can have a certalr
population parameter lies.
Leerning Outcomes
1. Differentiate between point and interval estimations
2. Calculate the margin of error for the sample mean
3. Find confidence intervals for u
4. Use the t-distribution to find the confidence interval of the
mean

5. Compute the point estimate of the population

6. Construct a confidence interval for the proportion

Point and Interval Estimations

One of th
In statistics, population parameter is unknowable. parameter
population
major applications of statistics is to estimate the population of interest
from sample statistics. To find out about the example, a farmers
sample. For
it is acommon practice to take a of mangoes in a farm for
Cooperative wishes to know the size
period. They cannot measure all of the mangoes so they ge
specific
is only a selection of objects; it will never be
a sample. Asample from th
population. Different samples samplir
perfect representation of the
population will give different results. This is called estimate
same sampling. There are twO types of
error or variation due to
estimates and interval estimates.
point 7
 Point Estimation

A point estimation consists of a single value or point that estimates

the population parameter. It can be used to assess characterization
of apopulation by getting a sample from the population. It is also a
method to determine an appropriate statistic, called estimator. The
estimator will tell us how we can arrive to a single value called
point estimate. Point estimates are uSually supplemented by interval
estimates called confidence interval. The most unbiased point
estimateof the population mean, u, is the sample mean.

>Properties of Point Estimator

1. It is unbiased. The expected value of the estimator must be
equal to the mean of the parameter.

2. It is consistent. The value of the estimator will draw near the

value of the parameter as the sample size increases.
3. It is relatively efficient. The estimator has the smallest variance
of all the estimator.
 Example 5.2

Total Family Expenditure on Fducation by Re30

Education Expenditure
Region Total Tuition EducationAllowance Other
educational
Income Decile Expenditure not for
expenses
(in Peso) definable studying
family
members
NCR
35, 867 1, 120 3, 039
CAR 31, 332 376
4, 073 2, 858 39 949 227
-Ilocos Region 6, 898 4, 057 41 2, 211 590
I|-Cagayan Valley 3, 866 2, 376 47 780 663
I||-Central Luzon 19, 378 14, 424 97 2, 875 1, 982
IVA-CALABARZON 33, 978 28, 247 370 2, 736 2, 625
IVB-MIMAROPA 4, 179 2, 038 27 1, 676 437
V-Bicol Region 6, 364 4, 090 91 1,374 809
VI-Western 10, 848 7, 104 114 2, 641 988
Visayas
VII-Central 10, 554 8, 183 151 1, 510. 709
Visayas
VIlII-Eastern 5, 549 2, 904 83 2, 049 513
Visayas
IX-Zamboanga 3, 224 1, 743 55 1, 037 390
Peninsula
|X-Northern 6, 468 4, 473 46 1, 431 518
Mindanao
| XI-Davao Region 6, 422 4, 592 95 1, 171 564
XII-SOCCSKSARGEN 5, 690 3, 852 129 1, 103 606
ARMM 2, 090 895 11 934 251
|Caraga 3, 573 2, 069 60 1, 173 270.

Source: NSO, 2012 Family Income and Expenditure Survey

The table shows the expenditure of families on education

in different regions. Find a point estimate on the tuition for the
population mean .

Solution
125237
=
mean of the samples is X
= 7366.88.
The 17

The point estimate tor the population mean of the tuition in the
P7,366.88.
different parts of the country is

75
 Interval Estimation
Interval estimation is a method in finding two numbers forming
an interval, based on the information contained in a sample. An
interval estimate is a range of values used to estimate population
parameter.

point estimate

interval estimate

The question is, how confident are we that the interval estimate
contains the population mean u?

Level of Confidence

Alevel of confidence (c) is the probability that the estimated

interval will contain the population parameter. We construct
confidence intervals for parameters. The interpretation of the
confidence interval will always relate to a parameter.

1
2
(1- c)

Z = 0

Critical values (z - scores)

The remaining area in the tails is 1-c.

76
 If the
level of
confidentthat confidence is 99%,the population
the interval
means that
this
mean, u.
we are 99%

contains
0.99

0.005 0.005

Z = 0

-2.575 2.575

The
corresponding z-scores are t 2.575.
Margin of Error
The ditference between the point estimate and the
actual
population parameter value is called the sampling error. When s
estimated, the sampling error is 4 -X. Since uis usually unknoWn,
the maximum value for the error can be calculated using the
level oT
contidence. The margin of error (or the maximum error of estimate
or error tolerance) E is the largest possible distance between the
point estimate and the value of the parameter it is estimating. lo
compute for the margin of error, the formula is

E = zo, = Ze V

When n 2 30, the sample standard deviation o, can be used for

Þ.

Common Confidence Level

90% 1.645
95% 1.960

99% 2.576
77
Example 5.3
trom a grocery
A random sample of 32 candy prices is takenthe sample standard
store. The mean of the sample is 19.16, and and find the margin
deviation is 3.44. Use a 95% confidence level
grocery store.
of error for the mean price of all candies in the

Solution E = Ze =1.96 X3.44 = 1.19

J32
We are 95% confident that the margin of error for the population
mean (all the candies in the grocery store) is about P1.19.

Example 5.4
Using the same problem in Example 5.2, find the margin of error
for the tuition fee of all the regions if the standard deviation is 10.61
using a confidence level of 90%.

E=(1.645) 10.61= 4.23

Solution
W17

We are 90% confident that the margin of error for the tuition of
allthe regions is about P4.23.

Boost Your Mind

Solve each problem.

1. A sample of size n = 50 is drawn from a population

whose
standard deviation is g = 26. Find the margin of error for a
90% confidence interval for u.

78
B
t-Table
tTable
cUm,prob/ ts0
975
one-tail 0.50 0.25 0.20 0.15 0.10 0.05 0.025 0.01 0.005 0.001 0.0005
two-tails 1.00 0.50 0.40 0.30 0.20 0.10 0.05 0.02 0.01 0.002 0.001
df
1 0.000 1.000 1.376 1.963 3.078 6.314 12.71 31.82 63.66 318.31 636,62
2 0.000 0.816 1.061 1.386 1.886 2.920 4.303 6.965 9.925 22327 31.599
3 0.000 0.765 0.978 1.250 1.638 2.353 3.182 4.541 5.841 10.215 12.924
4 0.000 0.741 0.941 1.190 1.533 2.132 2.776 3.747 4.604 7.173 8.610
0.000 0.727 0.920 1.156 1.476 2.015 2.571 3.365 4.032 5.893 6.869
6 0.000 0718
0.906 1134 1440 A943 247 3.143 3.707 5.208
0.000 0.896 1119 1415 1895 2.365 2.983499 4785 5959
0711
8 0.00 0.706 0.8891108 1.397 1.860 2306 2.896 3.355 4.501 5408
9 0.000 0.703 0.883 1100 1.383 1.833 2.262 5.041
2821 3250 4.297 4.731
10 0.000 0.700 0.879 10931312 1812 2.228 2764 3169 4.144 4.587
11 0.000 0.697 0.876 1.088 1.363 1.796 2.201 2.718 3.106 4.025 4.437
12 0.000 0.695 0.873 1.083 1.356 1.782 2.179 2.681 3.055 3.930 4.318
13 0.000 0.694 0.870 1.079 1.350 1.771 2.160 2.650 3.012 3.852 4.221
14 0.000 0.692 0.868 1.076 1.345 1.761 2.145 2.624 2.977 3.787 4.140
15 0.000 0.691 0.866 1.074 1.341 1.753 2.131 2.602 2.947 3.733 4.073
0.000 0690 0.865 1071 1.337 1746 2120 2583 2921 3686 4.015
0.000 0.689 0.8631.069 1.33 1740 2.110 2567 2.898 3.646 3.965
18 0.000 0.686 0.862 1.067 1330 1734 2101 2.552 2.878 3.610 3922
0.000 0688 0.861 1066 1.328 1.7292.093 2.539 2861 3.579 3,883
000 D887 0860 164 13251725 206 2528 2.845 352 3850
21 0.000 0.686 0.859 1.063 1.323 1.721 2.080 2.518 2.831 3.527 3.819
22 0.000 0.686 0.858 1.061 1.321 1.717 2.074 2.508 2.819 3.505 3.792
23 0.000 0.685 0.858 1.060 1.319 1.714 2.069 2.500 2.807 3.485 3.768
0.000 0.685 0.857 1.059 1.318 1.711 2.064 2.492 2.797 3.467 3.745
25 0.000 0.684 0.856 1.058 1.316 1.708 2.060 2.485 2.787 3450 3.725
0.000 0.684 0856 1058 1315 1706 2.056 2.479 279 3435 3.707
0.000 0.684 0855 1.067 1703 2052 2473 2171 3421 3.690
1314
0.000 0683 0.865 1.056 1313 1701 2048 2467 27633408 3674
29 0000 0683 0864 1055 1311 1699 2045 2.462 2766 3396 3.659
30 0.000 0683 0.854 1:055 1310 1697 2.042 2.457 2.750 3385 3.646
40 0.000 0.681 0.851 1.050 1.303 1.684 2.021 2.423 2.704 3.307 3.551
60 0.000 0.679 0.848 1.045 1.296 1.671 2.000 2.390 2.660 3.232 3.460
80 0.000 0.678 0.846 1.043 1.292 1.664 1.990 2.374 2.639 3.195 3.416
10 0.000 0.677 0.845 1.042 1.290 1.660 1.984 2.364 2.626 3.174 3.390
1000 0,000 0.675 0.842 1.037 1.282 1.646 1.962 2.330 2.581 3.098 3.300

0.000 0.674 0842 1.0361.282 1.645 1.960 2.326 2576 3.090 3.291
0% 50% 60% 70% 80% 90% 95% 98% 99% 99,8% 99.9%
Confidence Level

t-table.xls 7/14/2007
123