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It is important that the "standard deviation" used must be appropriate for the parameter we are estimating, so in this section we need to use the standard deviation that applies to sample means, which is σ n . The fraction σ n , is commonly called the "standard error of the mean" in order to distinguish clearly the standard deviation for a mean from the population standard deviation σ .

    In summary, as a result of the central limit theorem:

  • X ¯ is normally distributed, that is, X ¯ ~ N ( μ X , σ n ) .
  • When the population standard deviation σ is known, we use a normal distribution to calculate the error bound.

Calculating the confidence interval

To construct a confidence interval estimate for an unknown population mean, we need data from a random sample. The steps to construct and interpret the confidence interval are:

  • Calculate the sample mean x ¯ from the sample data. Remember, in this section we already know the population standard deviation σ .
  • Find the z -score that corresponds to the confidence level.
  • Calculate the error bound EBM .
  • Construct the confidence interval.
  • Write a sentence that interprets the estimate in the context of the situation in the problem. (Explain what the confidence interval means, in the words of the problem.)

We will first examine each step in more detail, and then illustrate the process with some examples.

Finding the z -score for the stated confidence level

When we know the population standard deviation σ , we use a standard normal distribution to calculate the error bound EBM and construct the confidence interval. We need to find the value of z that puts an area equal to the confidence level (in decimal form) in the middle of the standard normal distribution Z ~ N (0, 1).

The confidence level, CL , is the area in the middle of the standard normal distribution. CL = 1 – α , so α is the area that is split equally between the two tails. Each of the tails contains an area equal to α 2 .

The z-score that has an area to the right of α 2 is denoted by z α 2 .

For example, when CL = 0.95, α = 0.05 and α 2 = 0.025; we write z α 2 = z 0.025 .

The area to the right of z 0.025 is 0.025 and the area to the left of z 0.025 is 1 – 0.025 = 0.975.

z α 2  =  z 0. 025  = 1 .96 , using a calculator, computer or a standard normal probability table.

invNorm (0.975, 0, 1) = 1.96

Note

Remember to use the area to the LEFT of z α 2 ; in this chapter the last two inputs in the invNorm command are 0, 1, because you are using a standard normal distribution Z ~ N (0, 1).

Calculating the error bound ( EBM )

The error bound formula for an unknown population mean μ when the population standard deviation σ is known is

  • EBM = ( z α 2 ) ( σ n )

Constructing the confidence interval

  • The confidence interval estimate has the format ( x ¯ E B M , x ¯ + E B M ) .

The graph gives a picture of the entire situation.

CL + α 2 + α 2 = CL + α = 1.

This is a normal distribution curve. The peak of the curve coincides with the point x-bar on the horizontal axis. The points x-bar - EBM and x-bar + EBM are labeled on the axis. Vertical lines are drawn from these points to the curve, and the region between the lines is shaded. The shaded region has area equal to 1 - a and represents the confidence level. Each unshaded tail has area a/2.

Writing the interpretation

The interpretation should clearly state the confidence level ( CL ), explain what population parameter is being estimated (here, a population mean ), and state the confidence interval (both endpoints). "We estimate with ___% confidence that the true population mean (include the context of the problem) is between ___ and ___ (include appropriate units)."

Questions & Answers

what is statistics
ADAM Reply
can anyone explain it better for me
ADAM
frequency distribution
Wasim Reply
noun STATISTICS a mathematical function showing the number of instances in which a variable takes each of its possible values.
Robin
ok
ADAM
Common language-- taking a bunch of information and seeing if it is related or not to other info
Mandy
Does standard deviation have measuring unit?
Mohamed
yes, the measuring unit of the data you are looking at, for example centimetres for height.
Emma
thanks
Mohamed
is that easy to plot a graph between three axis?
Mohamed
yes we can but we do not have that much effective tools. If the graph is normal or less complicated then it is plotted effectively otherwise it will give you nightmare.
umair
whats the difference between discrete and contineous data
umar
Discrete variables are variables that can assume finite number of values. Continuous variables are variables that can assume infinite number of values
Mike
i will give you an example: {0,4,84} it contains discrete or limited values like it can also contain boolean values{true,false} or {0,1} and continuous are like {1,2,3,4,5......} , {0,0.1,0.2,0.3,0.4...........}
umair
a no. of values which are countable are called discrete variables on the other hand, a no. of values which are not countable are called continuous variables
Aliya
Yup, I would like to support Mr.Umair's argument by saying that it can only apply if we have a 3-D graph,otherwise a plane graph will not apply at all
festus
Aliya and Mike thnks to both of you ❤❤
umar
what's variance
Sulaiman Reply
what's case control study?
Shakilla
hi
Noman
?
Sulaiman
what is covariance
Florence Reply
In probability theory and statistics, covariance is a measure of the joint variability of two random variables.[1] If the greater values of one variable mainly correspond with the greater values of the other variable, and the same holds for the lesser values, (i.e., the variables tend to show simila
Robin
Economics department, faculty of social sciences, NOUN. You are required to calculate: the covariance and State whether the covariance is positive or negative. (11½ marks) Observation E D 1 15 17.24 2 16 15.00 3 8 14.91 4 6 4.50 5 15 18.00 6 12 6.29 7 12 19.23 8 18 18.69 9 12 7.21 10 20 4
Florence
In probability theory and statistics, covariance is a measure of the joint variability of two random variables.
Robin
what is the purpose of statistics and why it is important that statistics to be a solo and one complete field?
Edu-info Reply
to organize,analyze and interpret information in order to make decision
Berema
what is noun?
Katama Reply
so simple. the name of any person,place or thing.
Edu-info
Using the Chi-square test, two coins were flipped a hundred times. What will be the chances of getting a head and getting a tale? Given observed values is 62 heads and 38 tails. Expected value is 50 heads, 50 tails. Is the difference due to chance or a significant error? a. Draw your hypothesis
DokBads Reply
how can I win
Jagogo Reply
what is difference between the blocking and confounding
Rukhsana Reply
how do you get 2/50 ?
CL Reply
can you explained it for me
korankye
an easier definition of inferential statistics
Kenedy Reply
Inferential statistics makes inferences and predictions about a population based on a sample of data taken from the population in question.
Rukhsana
Inferential statistics helps you to extract insights from a random sample data which then helps you to use specific predictive Modeling/machine learning technic to predict or forecast.
Manish
what is stemplot? can anyone explain?
Javokhirbek
what is statistics
ernest Reply
what is collection of data
ernest
no collection data was provided just the mean =14
Leticia
sd=14 describe the position of score to the mean how many points below or above z=1.00 z=1.50
Leticia
I have this sample score 14 18 12 22 14 22 21 20 13 26 13 26 16 21 they want me to.compute the z- score of x= 15 ×=40 and x=9?
Leticia
how do you understand that it is the mean?
Kenedy
fact and figure
hira
factors to consider when using secondary data
Edmond Reply
define binomial distribution
Samuel Reply
the distribution in which the outcome is of dichotomous
bimal
can you tell me Standar division is =14 what is the position of the score relative to the mean how many point above/below the mean?
Leticia
What do you call a measure of central tendency (i.e., average) appropriate for data measured on the continuous scale
DokBads Reply
arithmetic mean
bimal

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Source:  OpenStax, Introductory statistics. OpenStax CNX. May 06, 2016 Download for free at http://legacy.cnx.org/content/col11562/1.18
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