Sections 7.1 and 7.2. This chapter presents the beginning of inferential statistics. The two major applications of inferential statistics

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1 Sections 7.1 and 7.2 This chapter presents the beginning of inferential statistics. The two major applications of inferential statistics Estimate the value of a population parameter Test some claim (or hypothesis) about a population.

2 Estimation of Population parameters: proportions, means, and variances. Point estimate: Population proportion (p).( Interval estimate: Confidence Interval for p. Calculate sample sizes needed to estimate those parameters.

3 Point Estimate p = population proportion p ˆ x = n sample proportion (pronounced p-hat ) of x successes in a sample of size n. Unbiased estimate (best estimate) ˆ ˆ q = 1 - p = sample proportion of failures in a sample size of n

4 Example: Photo-Cop Survey Responses 829 adult Minnesotans were surveyed, and 51% of them are opposed to the use of the photo-cop for issuing traffic tickets. Using these survey results, find the best estimate of the proportion of all adult Minnesotans opposed to photo- cop use. Best point estimate=sample proportion=51%.

5 Confidence Interval Why?: point estimate is not reliable under re-sampling. A confidence interval (CI): a range (or an interval) of values used to estimate the true population parameter.

6 Confidence Level α: : between 0 and 1 A confidence level: 1 - α or 100(1- α)%. E.g. 95%. This is the proportion of times that the confidence interval actually does contain the population parameter, assuming that the estimation process is repeated a large number of times. Other names: degree of confidence or the confidence coefficient.

7 The Critical Value z α/ 2 Given α

8 Finding zα/2 for 95% Degree of Confidence α = 5% α/2 = 2.5% =.025 Critical value

9 Sampling Distribution of p^ The sampling distribution of sample proportion can be approximated by a normal distribution if np 15 and nq 15 : phat is approximately N(p, pq/n), q=1-p. p z = pˆ p pq ˆ ˆ n p p^

10 Margin of Error of ^p the maximum likely (with probability 1 α) difference between the observed proportion ^ p and the true population proportion p. z E = α / 2 ˆp qˆ n Standard Error of p^

11 100(1-α)% Confidence Interval for Population Proportion p ˆ E < p< ˆp + E where E = z α / 2 p ˆ q ˆ n

12 Confidence Interval for Population Proportion p ˆ E < p < pˆ + E p ˆ + E (p ˆ E, p ˆ + E)

13 Procedure for Constructing a Confidence Interval for p 1.. Verify that the required assumptions are satisfied. Both np 15 5 and nq 15 are satisfied. 2.. Refer to Table A-2 A 2 and find the critical value z α/2 that corresponds to the desired confidence level. 3.. Evaluate the margin of error E = z α/2 ˆˆ /2 p q n

14 ˆ ˆ the general format for the confidence interval: 4. Compute p E and p + E. Substitute those values in the general format for the confidence interval: ˆp E < p < p ˆ + E 5. Round the resulting confidence interval limits to three significant digits.

15 Example: In the Chapter Problem, we noted that 829 adult Minnesotans were surveyed, and 51% of them are opposed to the use of the photo-cop for issuing traffic tickets. Use these survey results. 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 the majority of adult Minnesotans oppose use the the photo- cop?

16 a) Find the margin of error E that corresponds to a 95% confidence level First, we check for assumptions. We note that np = , and nq = ˆ ˆ Next, we calculate the margin of error. We have found that p =0.51, q = = 0.49, z α/2 = 1.96, and n = 829. ˆ ˆ E = 1.96 (0.51)(0.49) 829 E =

17 b) Find the 95% confidence interval for the population proportion p. We substitute our values from Part a to obtain 95% Confidence Interval for p is: ˆ P -E < p < p ˆ +E < p < , < p < 0.544

18 c) Based on the results, can we safely conclude that the majority of adult Minnesotans oppose use of the photo- cop? Based on the survey results, we are 95% confident that the limits of 47.6% and 54.4% contain the true percentage of adult Minnesotans opposed to the photo-cop. The percentage of opposed adult Minnesotans is likely to be any value between 47.6% and 54.4%. However, a majority requires a percentage greater than 50%, so we cannot safely conclude that the majority is opposed (because the entire confidence interval is not greater than 50%).

19 Determining Sample Size Recall : E = z α / 2 p ˆ qˆ n (solve for n by algebra) n = zα / 2 E 2 2 p ˆ qˆ

20 Sample Size for Estimating Proportion p When an estimate p ˆ of p is known: n = ˆ ˆ ( ) 2 p q zα / 2 E 2 When no estimate of p is known: n = ( ) zα / 2 E 2

21 Example: Suppose a sociologist wants to determine the current percentage of U.S. households using . e How many households must be surveyed in order to be 95% confident that the sample percentage is in error by no more than four percentage points? a) Use this result from an earlier study: In 1997, 16.9% of U.S. households used e (based on data from The World Almanac and Book of Facts). b) Assume that we have no prior information suggesting a possible value of p.

22 a) Use this result from an earlier study: In 1997, 16.9% of U.S. households used e (based on data from The World Almanac and Book of Facts). n = [ [z a/2 ] 2 p q E 2 ˆˆ = [1.96] 2 (0.169)(0.831) = = 338 households To be 95% confident that our sample percentage is within four percentage points of the true percentage for all households, we should randomly select and survey 338 households.

23 b) Assume that we have no prior information suggesting a possible value of p. n = [ [z a/2 ] E 2 = (1.96) 2 (0.25) = = 601 households With no prior information, we need a larger sample to achieve the same results with 95% confidence and an error of no more than 4%.

24 Finding the Point Estimate and E from a Confidence Interval Point estimate of p: p ˆ (upper confidence limit) + (lower confidence limit) = 2 Margin of Error: E = (upper confidence limit) (lower confidence limit) 2