Business Statistics, A First Course

4th Edition

Chapter 7

Sampling Distributions

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-1
 Learning Objectives

In this chapter, you learn:

 The concept of the sampling distribution
 To compute probabilities related to the sample mean
and the sample proportion
 The importance of the Central Limit Theorem
 To distinguish between different survey sampling
methods
 To evaluate survey worthiness and survey errors

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-2
 Sampling Distributions

Sampling
Distributions

Sampling Sampling
Distribution of Distribution of
the Mean the Proportion

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-3
 Sampling Distributions

 A sampling distribution is a
distribution of all of the possible
values of a statistic for a given size
sample selected from a population

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-4
 Developing a
Sampling Distribution

 Assume there is a population …

A C D
 Population size N=4 B

 Random variable, X,
is age of individuals
 Values of X: 18, 20,
22, 24 (years)

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-5
 Developing a
Sampling Distribution
(continued)

Summary Measures for the Population Distribution:

μ
 X i P(x)
N .3
18  20  22  24 .2
  21
4 .1
0
σ
 i
(X  μ) 2

 2.236
18 19 20 21 22 23 24 x
N A B C D
Uniform Distribution

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-6
 Developing a
Sampling Distribution
(continued)
Now consider all possible samples of size n=2

16 Sample
1st 2nd Observation
Obs Means
18 20 22 24
1st 2nd Observation
18 18,18 18,20 18,22 18,24 Obs 18 20 22 24
20 20,18 20,20 20,22 20,24 18 18 19 20 21
22 22,18 22,20 22,22 22,24
20 19 20 21 22
24 24,18 24,20 24,22 24,24
16 possible samples 22 20 21 22 23
(sampling with
replacement)
24 21 22 23 24

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-7
 Developing a
Sampling Distribution
(continued)

Sampling Distribution of All Sample Means

16 Sample Means Sample Means

Distribution
1st 2nd Observation _
Obs 18 20 22 24 P(X)
.3
18 18 19 20 21
.2
20 19 20 21 22
.1
22 20 21 22 23
0 _
24 21 22 23 24 18 19 20 21 22 23 24 X
(no longer uniform)
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-8
 Developing a
Sampling Distribution
(continued)

Summary Measures of this Sampling Distribution:

μX 
 X i

18  19  21    24
 21
N 16

σX 
 ( X i  μ X
) 2

(18 - 21)2  (19 - 21)2    (24 - 21)2

  1.58
16

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-9
 Comparing the Population with its
Sampling Distribution
Population Sample Means Distribution
N=4 n=2
μ  21 σ  2.236 μX  21 σ X  1.58
_
P(X) P(X)
.3 .3

.2 .2
.1 .1
0
X
0
18 19 20 21 22 23 24
_
18 19 20 21 22 23 24 X
A B C D
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-10
 Sampling Distribution
of the Mean

Sampling
Distributions

Sampling Sampling
Distribution of Distribution of
the Mean the Proportion

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-11
 Standard Error of the Mean
 Different samples of the same size from the same
population will yield different sample means
 A measure of the variability in the mean from sample to
sample is given by the Standard Error of the Mean:
(This assumes that sampling is with replacement or
sampling is without replacement from an infinite population)

σ
σX 
n
 Note that the standard error of the mean decreases as the
sample size increases
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-12
 If the Population is Normal
 If a population is normal with mean μ and
standard deviation σ, the sampling distribution
of X is also normally distributed with

σ
μX  μ and σX 
n

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-13
 Z-value for Sampling Distribution
of the Mean
 Z-value for the sampling distribution of X :

( X  μX ) ( X  μ)
Z 
σX σ
n
where: X = sample mean
μ = population mean
σ = population standard deviation
n = sample size

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-14
 Sampling Distribution Properties

Normal Population


μx  μ Distribution

μ x
(i.e. x is unbiased ) Sampling Distribution
is also normal
(and has the same
mean)

μx
x
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-15
 Sampling Distribution Properties
(continued)

As n increases, Larger
σ decreases
x
sample size

Smaller
sample size

μ x
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-16
 If the Population is not Normal
 We can apply the Central Limit Theorem:
 Even if the population is not normal,
 …sample means from the population will be
approximately normal as long as the sample size is
large enough.

Properties of the sampling distribution:

σ
μx  μ and σx 
n
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-17
 Central Limit Theorem

the sampling
As the n↑
distribution
sample
becomes
size gets
almost normal
large
regardless of
enough…
shape of
population

x
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-18
 If the Population is not Normal
(continued)

Population Distribution
Sampling distribution
properties:
Central Tendency
μx  μ
μ x
Variation Sampling Distribution
σ (becomes normal as n increases)
σx  Larger
n Smaller
sample size
sample
size

μx x
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-19
 How Large is Large Enough?

 For most distributions, n > 30 will give a

sampling distribution that is nearly normal
 For fairly symmetric distributions, n > 15
 For normal population distributions, the
sampling distribution of the mean is always
normally distributed

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-20
 Example

 Suppose a population has mean μ = 8 and

standard deviation σ = 3. Suppose a random
sample of size n = 36 is selected.

 What is the probability that the sample mean is

between 7.8 and 8.2?

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-21
 Example
(continued)

Solution:
 Even if the population is not normally distributed,
the central limit theorem can be used (n > 30)
 … so the sampling distribution of is
approximately normal x
 … with mean = 8
μx
 …and standard deviation
σ 3
σx    0.5
n 36
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-22
 Example
(continued)
Solution (continued):
 
 7.8 - 8 X -μ 8.2 - 8 
P(7.8  X  8.2)  P   
 3 σ 3 
 36 n 36 
 P(-0.4  Z  0.4)  0.3108

Population Sampling Standard Normal

Distribution Distribution Distribution .1554
??? +.1554
? ??
? ? Sample Standardize
? ? ?
?
7.8 8.2 -0.4 0.4
μ8 X μX  8 x μz  0 Z

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-23
 Sampling Distribution
of the Proportion

Sampling
Distributions

Sampling Sampling
Distribution of Distribution of
the Mean the Proportion

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-24
 Population Proportions
π = the proportion of the population having
some characteristic
 Sample proportion ( p ) provides an estimate
of π:
X number of items in the sample having the characteristic of interest
p 
n sample size

 0≤ p≤1
 p has a binomial distribution
(assuming sampling with replacement from a finite population or
without replacement from an infinite population)

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-25
 Sampling Distribution of p
 Approximated by a
Sampling Distribution
normal distribution if: P( p)
.3

np  5 .2
.1
and 0
0 .2 .4 .6 8 1 p
n(1 p)  5

where π(1 π )
μp  π and σp 
n
(where π = population proportion)
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-26
 Z-Value for Proportions
Standardize p to a Z value with the formula:

p  p 
Z 
σp  (1  )
n

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-27
 Example

 If the true proportion of voters who support

Proposition A is π = 0.4, what is the probability
that a sample of size 200 yields a sample
proportion between 0.40 and 0.45?

 i.e.: if π = 0.4 and n = 200, what is

P(0.40 ≤ p ≤ 0.45) ?

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-28
 Example
(continued)
 if π = 0.4 and n = 200, what is
P(0.40 ≤ p ≤ 0.45) ?

 (1  ) 0.4(1  0.4)

Find σ p : σ p    0.03464
n 200

Convert to P(0.40  p  0.45)  P 0.40  0.40  Z  0.45  0.40 

 
standard  0.03464 0.03464 
normal:  P(0  Z  1.44)

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-29
 Example
(continued)
 if π = 0.4 and n = 200, what is
P(0.40 ≤ p ≤ 0.45) ?
Use cumulative standard normal table:
P(0 ≤ Z ≤ 1.44) = P(Z ≤1.44) – P(Z < 0)
= 0.9251  0.5000 = 0.4251
Standardized
Sampling Distribution Normal Distribution

0.4251

Standardize

0.40 0.45 0 1.44

p Z
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-30
 Reasons for Drawing a Sample

 Less time consuming than a census

 Less costly to administer than a census
 Less cumbersome and more practical to
administer than a census of the targeted
population

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-31
 Types of Samples Used

 Nonprobability Sample
 Items included are chosen without regard to
their probability of occurrence

 Probability Sample
 Items in the sample are chosen on the basis
of known probabilities

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-32
 Types of Samples Used
(continued)

Samples

Non-Probability Probability Samples

Samples

Simple Stratified
Judgement Chunk Random

Quota Systematic Cluster

Convenience

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-33
 Probability Sampling

 Items in the sample are chosen based on

known probabilities

Probability Samples

Simple
Systematic Stratified Cluster
Random

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-34
 Simple Random Samples

 Every individual or item from the frame has an

equal chance of being selected
 Selection may be with replacement or without
replacement
 Samples obtained from table of random
numbers or computer random number
generators

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-35
 Systematic Samples
 Decide on sample size: n
 Divide frame of N individuals into groups of k
individuals: k=N/n
 Randomly select one individual from the 1st
group
 Select every kth individual thereafter
N = 64
n=8 First Group
k=8
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-36
 Stratified Samples
 Divide population into two or more subgroups (called
strata) according to some common characteristic
 A simple random sample is selected from each subgroup,
with sample sizes proportional to strata sizes
 Samples from subgroups are combined into one

Population
Divided
into 4
strata

Sample
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-37
 Cluster Samples
 Population is divided into several “clusters,”
each representative of the population
 A simple random sample of clusters is selected
 All items in the selected clusters can be used, or items can be
chosen from a cluster using another probability sampling
technique

Population
divided into
16 clusters. Randomly selected
clusters for sample

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-38
 Advantages and Disadvantages
 Simple random sample and systematic sample
 Simple to use
 May not be a good representation of the population’s
underlying characteristics
 Stratified sample
 Ensures representation of individuals across the
entire population
 Cluster sample
 More cost effective
 Less efficient (need larger sample to acquire the
same level of precision)
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-39
 Evaluating Survey Worthiness

 What is the purpose of the survey?

 Is the survey based on a probability sample?
 Coverage error – appropriate frame?
 Nonresponse error – follow up
 Measurement error – good questions elicit good
responses
 Sampling error – always exists

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-40
 Types of Survey Errors
 Coverage error or selection bias
 Exists if some groups are excluded from the frame and
have no chance of being selected
 Nonresponse error or bias
 People who do not respond may be different from those
who do respond
 Sampling error
 Variation from sample to sample will always exist
 Measurement error
 Due to weaknesses in question design, respondent
error, and interviewer’s effects on the respondent

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-41
 Types of Survey Errors
(continued)

Excluded from
 Coverage error frame

Follow up on
 Non response error nonresponses

Random
 Sampling error differences from
sample to sample

 Measurement error Bad or leading

question
Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-42
 Chapter Summary
 Introduced sampling distributions
 Described the sampling distribution of the mean
 For normal populations
 Using the Central Limit Theorem

 Described the sampling distribution of a proportion

 Calculated probabilities using sampling distributions
 Described different types of samples and sampling
techniques
 Examined survey worthiness and types of survey
errors

Business Statistics, A First Course (4e) © 2006 Prentice-Hall, Inc. Chap 7-43