Chapter 5

Estimates and Sample Sizes

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-1

 Review

• In Chapters 2 & 3, we used descriptive statistics when

we summarized data using tools such as graphs and
statistics such as the mean and standard deviation.
• Chapter 6 we introduced critical values:
zα denotes the z score with an area of α to its right.
If α = 0.025, the critical value is z0.025 = 1.96.

That is, the critical value z0.025 = 1.96 has an area of

0.025 to its right.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-2

 Preview
This chapter presents the beginning of inferential
statistics.
• The two major activities of inferential statistics are (1) to
use sample data to estimate values of a population
parameters, and (2) to test hypotheses or claims made
about population parameters.
• We introduce methods for estimating values of these
important population parameters: proportions, means,
and standard deviation / variances.
• We also present methods for determining sample sizes
necessary to estimate those parameters.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-3

 Key Concept
In this section we present methods for using a
sample proportion to estimate the value of a
population proportion.
• The sample proportion is the best point estimate
of the population proportion.
• We can use a sample proportion to construct a
confidence interval to estimate the true value of a
population proportion, and we should know how to
interpret such confidence intervals.
• We should know how to find the sample size
necessary to estimate a population proportion.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-4

 Definition

A point estimate is a single value (or point)

used to approximate a population
parameter.

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 Definition

The sample proportion p̂ is the best point

estimate of the population proportion p.

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 Example

The Pew Research Center conducted a survey of 1007

adults and found that 85% of them know what Twitter is.

The best point estimate of p, the population proportion, is

the sample proportion:

pˆ 0.85

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-7

 Definition

A confidence interval (or interval estimate)

is a range (or an interval) of values used to
estimate the true value of a population
parameter.

A confidence interval is sometimes

abbreviated as CI.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-8

 Definition
A confidence level is the probability 1 – α (often
expressed as the equivalent percentage value) that
the confidence interval actually does contain the
population parameter, assuming that the estimation
process is repeated a large number of times. (The
confidence level is also called degree of confidence,
or the confidence coefficient.)

Most common choices are 90%, 95%, or 99%.

(α = 0.10), (α = 0.05), (α = 0.01)

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-9

 Interpreting a Confidence Interval
We must be careful to interpret confidence intervals correctly. There is
a correct interpretation and many different and creative incorrect
interpretations of the confidence interval 0.828 < p < 0.872.

“We are 95% confident that the interval from 0.828 to 0.872 actually
does contain the true value of the population proportion p.”

This means that if we were to select many different samples of size

1007 and construct the corresponding confidence intervals, 95% of
them would actually contain the value of the population proportion p.

(Note that in this correct interpretation, the level of 95% refers to the
success rate of the process being used to estimate the proportion.)

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-10

 Using Confidence Intervals
for Hypothesis Tests
A confidence interval can be used to test some claim made
about a population proportion p.

For now, we do not yet use a formal method of hypothesis

testing, so we simply generate a confidence interval and
make an informal judgment based on the result.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-11

 Critical Values
A standard z score can be used to distinguish between sample
statistics that are likely to occur and those that are unlikely to
occur. Such a z score is called a critical value. Critical values are
based on the following observations:

1. Under certain conditions, the sampling distribution of

sample proportions can be approximated by a normal
distribution.

2. A z score associated with a sample proportion has a

probability of α/2 of falling in the right tail.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-12

 Critical Values
3. The z score separating the right-tail region is commonly
denoted by zα/2 and is referred to as a critical value
because it is on the borderline separating z scores from
sample proportions that are likely to occur from those that
are unlikely to occur.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-13

 Definition

A critical value is the number on the borderline

separating sample statistics that are likely to occur from
those that are unlikely to occur.

The number zα/2 is a critical value that is a z score with

the property that it separates an area of α/2 in the right
tail of the standard normal distribution.

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Finding zα/2 for a 95%
Confidence Level

 za / 2 za / 2

Critical Values

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 Common Critical Values

Confidence Level α Critical Value, zα/2

90% 0.10 1.645

95% 0.05 1.96

99% 0.01 2.575

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-16

 Definition

When data from a simple random sample are used to

estimate a population proportion p, the margin of error,
denoted by E, is the maximum likely difference (with
probability 1 – α, such as 0.95) between the observed
proportion p̂ and the true value of the population
proportion p.

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 Margin of Error for Proportions
The margin of error E is also called the maximum error of the
estimate and can be found by multiplying the critical value and
the standard deviation of the sample proportions:

ˆˆ
pq
E z 2
n

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-18

Confidence Interval for Estimating a
Population Proportion p

p = population proportion
p̂ = sample proportion
n = number of sample values
E = margin of error
zα/2 = z score separating an area of α/2 in the
right tail of the standard normal distribution.

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 Confidence Interval for Estimating a
Population Proportion p
1. The sample is a simple random sample.

2. The conditions for the binomial distribution are satisfied:

there is a fixed number of trials, the trials are independent,
there are two categories of outcomes, and the probabilities
remain constant for each trial.

3. There are at least 5 successes and 5 failures.

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Confidence Interval for Estimating a
Population Proportion p

p̂ 
where
ˆˆ
pq
E z 2
n
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Confidence Interval for Estimating a
Population Proportion p

p̂ E
ˆ 
( p

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 Round-Off Rule for
Confidence Interval Estimates of p

Round the confidence interval limits for

p to three significant digits.

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 Procedure for Constructing
a Confidence Interval for p
1. Verify that the required assumptions are satisfied. (The
sample is a simple random sample, the conditions for the
binomial distribution are satisfied, and the normal
distribution can be used to approximate the distribution of
sample proportions because np ≥ 5, and nq ≥ 5 are both
satisfied.)

2. Refer to Table A-2 and find the critical value zα/2 that
corresponds to the desired confidence level.

3. Evaluate the margin of error ˆˆ n

E z 2 pq

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 Procedure for Constructing
a Confidence Interval for p - cont

4. Using the value of the calculated margin of error E and

the value of the sample proportion,
of p̂ 
, find the values p̂
and E p̂  E
. Substitute those values in the
general format for the confidence interval:

p̂ 
5. Round the resulting confidence interval limits to three
significant digits.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-25

 Example
In the Chapter Problem we noted that a Pew Research
Center poll of 1007 randomly selected adults showed that
85% of respondents know what Twitter is. The sample
results are n = 1007 and pˆ 0.70.

a. Find the margin of error E that corresponds to a 95% confidence

level.
b. Find the 95% confidence interval estimate of the population
proportion p.
c. Based on the results, can we safely conclude that more than 75%
of adults know what Twitter is?
d. Assuming that you are a newspaper reporter, write a brief
statement that accurately describes the results and includes all of
the relevant information.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-26

 Example - Continued
Requirement check: simple random sample; fixed
number of trials, 1007; trials are independent; two
outcomes per trial; probability remains constant. Note:
number of successes and failures are both at least 5.
a) Use the formula to find the margin of error.

E z 2
ˆˆ
pq
1.96
0.850.15 
n 1007
E 0.0220545

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-27

 Example - Continued
b) The 95% confidence interval:

pˆ  E  p  pˆ  E
0.85  0.0220545  p  0.85  0.0220545
0.828  p  0.872

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-28

 Example - Continued
c) Based on the confidence interval obtained in part
(b), it does appear that more than 75% of adults
know what Twitter is.

Because the limits of 0.828 and 0.872 are likely to

contain the true population proportion, it appears
that the population proportion is a value greater than
0.75.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-29

 Example - Continued
d) Here is one statement that summarizes the results:

85% of U.S. adults know what Twitter is. That

percentage is based on a Pew Research Center poll
of 1007 randomly selected adults.

In theory, in 95% of such polls, the percentage

should differ by no more than 2.2 percentage points
in either direction from the percentage that would be
found by interviewing all adults in the United States.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-30

 Sample Size

Suppose we want to collect sample data in order

to estimate some population proportion.
The question is how many sample items must
be obtained?

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Determining Sample Size

ˆˆ
pq
E  za
2 n

(solve for n by algebra)

2
ˆˆ
( za ) pq
n 2
2
E
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 Sample Size for Estimating
Proportion p
When an estimate of is known:
p̂
2
ˆˆ
( za ) pq
n 2
2
E
When no estimate of is known:
p̂
2
( za ) 0.25
n 2
E2
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 Round-Off Rule for Determining
Sample Size

If the computed sample size n is not a whole

number, round the value of n up to the next
larger whole number.

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 Example

Many companies are interested in knowing the

percentage of adults who buy clothing online.

How many adults must be surveyed in order to be 95%

confident that the sample percentage is in error by no
more than three percentage points?

a. Use a recent result from the Census Bureau: 66%

of adults buy clothing online.

b. Assume that we have no prior information suggesting

a possible value of the proportion.

Copyright © 2015, 2011, 2008 Pearson Education, Inc. Section 7.1-35

 Example - Continued
a) Use pˆ 0.66 and qˆ 1  pˆ 0.34
 0.05 so z 2 1.96
E 0.03
To be 95% confident that
 z 
2
 2
ˆˆ
pq our sample percentage is
n within three percentage
E2 points of the true
percentage for all adults,
1.96  0.66 0.34 
2
we should obtain a simple
 random sample of 958
0.03 
2
adults.

957.839
958
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 Example - Continued
b) Use  0.05 so z 2 1.96
E 0.03

To be 95% confident that

our sample percentage is
 z 
2
 2 0.25 within three percentage
n points of the true
E2
percentage for all adults,
1.96  0.25
2
we should obtain a simple
 random sample of 1068
0.03 
2
adults.
1067.1111
1068
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