CHAPTER 8

8. STATISTICAL INFERENCE ABOUT ONE POPULATION

8.1. Introduction
Statistical inference is the process of making interpretations or conclusions from sample data for the
totality of the population. It is only the sample data that is ready for inference.
In statistics there are two ways though which inference can be made.
 Statistical estimation
 Statistical hypothesis testing.

Statistical estimation: This is one way of making inference about the population parameter where the
investigator does not have any prior notion about values or characteristics of the population parameter.
It is the process by which sample data are used to indicate the value of an unknown quantity in a
population.
There are two ways estimation.
i. Point Estimation: It is a procedure that results in a single value as an estimate for a parameter.
ii. Interval estimation: It is the procedure that results in the interval of values as an estimate for a
parameter, which is interval that contains the likely values of a parameter. It deals with
identifying the upper and lower limits of a parameter. The limits by themselves are random
variable.
Estimator and Estimate
Estimator: is the rule or random variable that helps us to approximate a population parameter.
It is any quantity calculated from the data which is used to give information about an unknown quantity
in a population.
Estimate: is the different possible value which an estimator can assume. It is an indication of the value
of an unknown quantity based on observed data.
Or it is the particular value of an estimator that is obtained from a particular sample of data and used to
indicate the value of a parameter.

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Example: The sample mean is an estimator for the population mean and 10 is an estimate,

which is one of the possible value of .

Properties of best estimator

The following are some qualities of an estimator
 It should be unbiased.
 It should be consistent.
 It should be relatively efficient.
 Sufficiency
To explain these properties let be an estimator of θ
1. Unbiased Estimator: An estimator whose expected value is the value of the parameter being
estimated. i.e. E( )= θ.
2. Consistent Estimator: An estimator which gets closer to the value of the parameter as the
sample size increases. i.e. gets closer to θ as the sample size increases.
3. Relatively Efficient Estimator: The estimator for a parameter with the smallest variance. This
actually compares two or more estimators for one parameter.
Sufficiency: an estimator that uses the entire information in estimating the parameter of our interest
is called a sufficient estimator.

8.2 Point and interval estimation of the mean and proportion

Point and Interval estimation of the population mean: µ
 Point Estimation of the population mean
Another term for statistic is point estimate, since we are estimating the parameter value. A point

estimator is the mathematical way we compute the point estimate. For instance, sum of xi over n is

 xi
the point estimator used to compute the estimate of the population means,  .That is X  is a
n
point estimator of the population mean.
 Confidence interval estimation of the population mean

Although X possesses nearly all the qualities of a good estimator, because of sampling error, we know
that it's not likely that our sample statistic will be equal to the population parameter, but instead will fall
into an interval of values. We will have to be satisfied knowing that the statistic is "close to" the
parameter. That leads to the obvious question, what is "close"?

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We can phrase the latter question differently: How confident can we be that the value of the statistic
falls within a certain "distance" of the parameter? Or, what is the probability that the parameter's value
is within a certain range of the statistic's value? This range is the confidence interval.

The confidence level is the probability that the value of the parameter falls within the range specified
by the confidence interval surrounding the statistic.

 There are different cases to be considered to construct confidence intervals.

Case 1: If sample size is large or if the population is normal with known variance

Recall the Central Limit Theorem, which applies to the sampling distribution of the mean of a sample.
Consider samples of size n drawn from a population, whose mean is  and standard deviation is

 with replacement and order important. The population can have any frequency distribution. The


sampling distribution of X will have a mean x   and a standard deviation  x  , and
n
approaches a normal distribution as n gets large. This allows us to use the normal distribution curve for
computing confidence intervals.

X 
Z  has a normal distributi on with mean  0 and var iance  1
 n
   X  Z n
 X , where  is a measure of error.
  Z n

- For the interval estimator to be good the error should be small. How it be small?
 By making n large
 Small variability
 Taking Z small

To obtain the value of Z, we have to attach this to a theory of chance. That is, there is an area of size
1 such that
P ( Z 2  Z  Z 2 )  1  
Where   is the probabilit y that the parameter lies outside the int erval
Z 2  s tan ds for the s tan dard normal var iable to the right of which
 2 probabilit y lies , i.e P ( Z  Z 2 )   2

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 X 
 P( Z 2   Z 2 )  1  
 n
 P( X  Z 2  n    X  Z 2  n)  1  

 ( X  Z 2  n , X  Z 2  n ) is a1001   % conifidence int erval for 

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But usually  is not known, in that case we estimate by its point estimator S2

 ( X  Z 2 S n , X  Z 2 S n ) is a1001   % conifidenc e int erval for 

Here are the Z values corresponding to the most commonly used confidence levels.

100(1   ) %   2 Z 2

90 0.10 0.05 1.645

95 0.05 0.025 1.96
99 0.01 0.005 2.58

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Case 2: If sample size is small and the population variance,  is not known.

X 
t has t distribution with n  1 deg rees of freedom.
S n

 ( X  t 2 S n , X  t 2 S n ) is a1001   % conifidence int erval for 

The

unit of measurement of the confidence interval is the standard error. This is just the standard deviation
of the sampling distribution of the statistic.

Examples:

1. From a normal sample of size 25 a mean of 32 was found .Given that the population standard
deviation is 4.2. Find

a) A 95% confidence interval for the population mean.

b) A 99% confidence interval for the population mean.

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 Solution:

X  32,   4.2, 1    0.95    0.05,  2  0.025

 Z 2  1.96 from table.
 The required int erval will be X  Z 2  n
a)
 32  1.96 * 4.2 25
 32  1.65
 (30.35, 33.65)

b)

X  32,   4.2, 1    0.99    0.01,  2  0.005

 Z 2  2.58 from table.
 The required int erval will be X  Z 2  n
 32  2.58 * 4.2 25
 32  2.17
 (29.83, 34.17)
2. A drug company is testing a new drug which is supposed to reduce blood pressure. From the six
people who are used as subjects, it is found that the average drop in blood pressure is 2.28 points,
with a standard deviation of .95 points. What is the 95% confidence interval for the mean change in
pressure?

Solution:

That is, we can be 95% confident that the mean decrease in blood pressure is between 1.28 and 3.28
points.

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Point and Interval estimation of the population proportion P
 Point Estimation of the population proportion

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 Confidence interval estimation of the population proportion

Example: A survey of 1721 people found that 15.9% of individuals prefer a certain brand product. Find
the 95% confidence interval of the true proportion of people who prefer that
brand.

8.3 Hypothesis testing about the mean and proportion

Hypothesis Testing

This is also one way of making inference about population parameter, where the investigator has prior
notion about the value of the parameter.

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Definitions:

 Statistical hypothesis: is an assertion or statement about the population whose plausibility is to be

evaluated on the basis of the sample data.

 Test statistic: is a statistics whose value serves to determine whether to reject or accept the
hypothesis to be tested. It is a random variable.

 Statistic test: is a test or procedure used to evaluate a statistical hypothesis and its value depends
on sample data.

There are two types of hypothesis:

Null hypothesis:
- It is the hypothesis to be tested.
- It is the hypothesis of equality or the hypothesis of no difference.
- Usually denoted by H0.
Alternative hypothesis:

- It is the hypothesis available when the null hypothesis has to be rejected.

- It is the hypothesis of difference.
- Usually denoted by H1 or Ha.
Types and size of errors:
- Testing hypothesis is based on sample data which may involve sampling and non sampling errors.
- The following table gives a summary of possible results of any hypothesis test:
Decision

Reject H0 Don't reject H0

H0 Type I Error Right Decision

Truth
H1 Right Decision Type II Error

- Type I error: Rejecting the null hypothesis when it is true.

- Type II error: Failing to reject the null hypothesis when it is false.
NOTE:
1. There are errors that are prevalent in any two choice decision making problems.
2. There is always a possibility of committing one or the other errors.

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3. Type I error (  ) and type II error (  ) have inverse relationship and therefore, can not be
minimized at the same time.
 In practice we set  at some value and design a test that minimize  . This is because a type I
error is often considered to be more serious, and therefore more important to avoid, than a type II
error.
General steps in hypothesis testing:
1. Specify the null hypothesis (H0) and the alternative hypothesis (H1).
2. Specify the significance level, 
3. Identify the sampling distribution (if it is Z or t) of the estimator.
4. Identify the critical region.
5. Calculate a statistic analogous to the parameter specified by the null hypothesis.
6. Making decision.
7. Summarization of the result.
Hypothesis testing about the population mean, :

Suppose the assumed or hypothesized value of  is denoted by  0 , then one can formulate two sided

(1) and one sided (2 and 3) hypothesis as follows:

1. H 0 :   0 vs H1 :    0
2. H 0 :   0 vs H1 :    0
3. H 0 :   0 vs H1 :    0

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Case 1: When sampling is from a normal distribution with  known

- The relevant test statistic is

X  0
Z cal 
 n
- After specifying  we have the following regions (critical and acceptance) on the standard normal
distribution corresponding to the above three hypothesis.

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Summary table for decision rule:

H0 Reject H0 if Accept H0 if Inconclusive if

  0 Z cal  Z 2 Z cal  Z 2 Z cal  Z 2 or Z cal   Z 2

  0 Z cal   Z Z cal   Z Z cal   Z

  0 Z cal  Z Z cal  Z Z cal  Z

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Case 2: When sampling is from a normal distribution with  unknown and small sample size

- The relevant test statistic is

X  0
t cal  ~ t with n  1 deg rees of freedom.
S n

- After specifying  we have the following regions on the student t-distribution corresponding to the
above three hypothesis.

H0 Reject H0 if Accept H0 if Inconclusive if

  0 tcal  t 2 tcal  t 2 tcal  t 2 or tcal  t 2

  0 tcal  t tcal  t tcal  t

  0 tcal  t tcal  t tcal  t

Case 3: When sampling is from a non- normally distributed population or a population whose
functional form is unknown.

- If a sample size is large one can perform a test hypothesis about the mean by using:
X  0
Z cal  , if  2 is known.
 n
X  0
 , if  2 is unknown.
S n

- The decision rule is the same as case I.

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Examples:
1. Test the hypotheses that the average height content of containers of certain lubricant is 10 liters if the
contents of a random sample of 10 containers are 10.2, 9.7, 10.1, 10.3, 10.1, 9.8, 9.9, 10.4, 10.3, and
9.8 liters. Use the 0.01 level of significance and assume that the distribution of contents is normal.
Solution:

Let   Population mean. ,  0  10

Step 1: Identify the appropriate hypothesis

H 0 :   10 vs H1 :   10
Step 2: select the level of significance,   0.01( given)
Step 3: Select an appropriate test statistics
t- Statistic is appropriate because population variance is not known and the sample size is also small.
Step 4: identify the critical region.
Here we have two critical regions since we have two tailed hypothesis

The critical region is tcal  t0.005 (9)  3.2498

 (3.2498, 3.2498) is accep tan ce region.
Step 5: Computations:

X  10.06, S  0.25
X   0 10.06  10
 t cal    0.76
S n 0.25 10
Step 6: Decision
Accept H0 , since tcal is in the acceptance region.
Step 7: Conclusion
At 1% level of significance, we have no evidence to say that the average height content of containers
of the given lubricant is different from 10 litters, based on the given sample data.

2. The mean life time of a sample of 16 fluorescent light bulbs produced by a company is computed to
be 1570 hours. The population standard deviation is 120 hours. Suppose the hypothesized value for
the population mean is 1600 hours. Can we conclude that the life time of light bulbs is decreasing?
(Use   0.05 and assume the normality of the population)
Solution:

Let   Population mean. ,  0  1600

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 Step 1: Identify the appropriate hypothesis

H 0 :   1600 vs H1 :   1600
Step 2: select the level of significance,   0.05 ( given)
Step 3: Select an appropriate test statistics
Z- Statistic is appropriate because population variance is known.
Step 4: identify the critical region.

The critical region is Z cal   Z 0.05  1.645

 (1.645, ) is accep tan ce region.
Step 5: Computations:

X   0 1570  1600
Z cal    1.0
 n 120 16
Step 6: Decision
Accept H0, since Zcal is in the acceptance region.
Step 7: Conclusion
At 5% level of significance, we have no evidence to say that that the life time of light bulbs is
decreasing, based on the given sample data.

Hypothesis testing about the population proportion, P:

A hypothesis test involving a population proportion can be considered as a binomial experiment when
there are only two outcomes and the probability of a success does not change from trial to trial.
Since a normal distribution can be used to approximate the binomial distribution when np ≥ 5 and nq ≥
5, the standard normal distribution can be used to test hypotheses for proportions.
The estimate of P from a sample of size n is the sample proportion, = x/n, where x is the number of
successes in the sample. Using the normal approximation, the appropriate statistic to perform
inferences on p is
p−p
Z
pq
n
P = population proportion
n = sample size

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Procedures for test of hypothesis about a single population proportion (p)
One-Tailed Test Two-Tailed Test
Ho: p = pO Ho: p = pO
H1: p > pO or p < pO H1: p ≠ pO
p− po
Test statistic: z= po qo n

Rejection region: Rejection region:

z > zα or z < - zα │z│ > zα 2

Where p(z > zα ) = α and p(z > zα 2 ) = α 2.

Example

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 Example
A statistician claims that at most 77% of the population oppose replacing $1 bills with $1 coins. To
see this claim is valid, the statistician selected a sample of 80 people and found that 55 were
opposed to replacing the $ 1 bills. At  =0.01, test that at most 77% of the population are opposed
to the change.

Step 4 Do not reject the null hypothesis, since the test value does not fall in the critical region

8.4. Sample Size Determination

Sample size determination is closely related to statistical estimation. Quite often you ask, how large a
sample is necessary to make an accurate estimate? The answer is not simple, since it depends on three
things: the margin of error, the population standard deviation, and the degree of confidence.

The large the level of confidence selected, the large the sample size. A small allowable error will
require a large sample. A large allowable error will permit a smaller sample. The maximum allowable
error is one half the width of the corresponding CI. If the population is widely dispersed, large sample
is required.

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15
The formula for determining sample size requires the use of the population standard deviation. What
happens when is unknown? In this case, an attempt is made to estimate . One such way is to use the
standard deviation s obtained from a sample taken previously as an estimate for .

Sample Size for Proportions

To find the sample size needed to determine a confidence interval about a proportion, use this formula:

8.5. Tests of association

 Suppose we have a population consisting of observations having two attributes or qualitative
characteristics say A and B.
 If the attributes are independent then the probability of possessing both A and B is PA*PB
Where PA is the probability that a number has attribute A.
PB is the probability that a number has attribute B.
- Suppose A has r mutually exclusive and exhaustive classes.
B has c mutually exclusive and exhaustive classes

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- The entire set of data can be represented using r * c contingency table.
B

A B1 B2 . . Bj . Bc Total

A1 O11 O12 O1j O1c R1

A2 O21 O22 O2j O2c R2

Ai Oi1 Oi2 Oij Oic Ri

Ar Or1 Or2 Orj Orc

Total C1 C2 Cj n

- The chi-square procedure test is used to test the hypothesis of independency of two attributes .For
instance we may be interested
 Whether the presence or absence of hypertension is independent of smoking habit or not.
 Whether the size of the family is independent of the level of education attained by the
mothers.
 Whether there is association between father and son regarding boldness.
 Whether there is association between stability of marriage and period of acquaintance ship
prior to marriage.

- The  2 statistic is given by:

 (Oij  eij ) 2 
 2 ( r 1)(c 1)
r c
2
 cal     ~
i 1 j 1 
 eij 

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Where Oij  the number of units that belong to category i of A and j of B.
eij  Expected frequency that belong to category i of A and j of B.

- The eij is given by :

Where Ri  the i th row total .

Ri * C j
eij  C j  the j th column total .
n
n  total number of oservation s

r c r c
Remark: n    Oij    eij
i 1 j 1 i 1 j 1

- The null and alternative hypothesis may be stated as:

H 0 : There is no associatio n between A and B.
H1 : not H 0 ( There is associatio n between A and B ).

Decision Rule: Reject H0 for independency at  level of significance if the calculated value of

 2 exceeds the tabulated value with degree of freedom equal to (r  1)(c  1) .

r c  (Oij  eij ) 2 
 Reject H 0 if  2
cal      2 ( r 1)(c 1) at 
i 1 j 1 
 eij 

Examples:

1.A geneticist took a random sample of 300 men to study whether there is association between father
and son regarding boldness. He obtained the following results.
Son

Father Bold Not

Bold 85 59

Not 65 91

Using   5% , test whether there is association between father and son regarding boldness.

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Solution:

H 0 : There is no associatio n between Father and Son regarding boldness.

H1 : not H 0

- First calculate the row and column totals

R1  144, R2  156, C1  150, C2  150

- Then calculate the expected frequencies( eij’s)

Ri * C j
eij 
n

R1 * C1 144 *150 R1 * C2 144 *150

 e11    72 e12    72
n 300 n 300

R2 * C1 156 *150 R2 * C2 156 *150

e21    78 e22    78
n 300 n 300

- Obtain the calculated value of the chi-square.

2
2 2  (Oij  eij ) 2 
 cal    
i 1 j 1 
 eij 
(85  72) 2 (59  72) 2 (65  78) 2 (91  78) 2
     9.028
72 72 78 78

- Obtain the tabulated value of chi-square

  0.05
Degrees of freedom  (r  1)(c  1)  1 *1  1
 02.05 (1)  3.841 from table.
2
- The decision is to reject H0 since  cal   02.05 (1)
Conclusion: At 5% level of significance we have evidence to say there is association between father
and son regarding boldness, based on this sample data.

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2. Random samples of 200 men, all retired were classified according to education and number of
children is as shown below
Education Number of children
level
0-1 2-3 Over 3

Elementary 14 37 32

Secondary 31 59 27
and above

Test the hypothesis that the size of the family is independent of the level of education attained by
fathers. (Use 5% level of significance)

Solution:

H 0 : There is no association between the size of the family and the level of
education attained by fathers.
H1 : not H 0 .

- First calculate the row and column totals

R1  83, R2  117, C1  45, C2  96, C3  59

- Then calculate the expected frequencies( eij’s)

Ri * C j  e11  18.675, e12  39.84, e13  24.485
eij 
n e21  26.325, e22  56.16, e23  34.515

- Obtain the calculated value of the chi-square.

2
2 3  (Oij  eij ) 2 
 cal    
i 1 j 1
 eij 
(14  18.675) 2 (37  39.84) 2 (27  34.515) 2
   ...   6.3
18.675 39.84 34.515

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 - Obtain the tabulated value of chi-square
  0.05
Degrees of freedom  ( r  1)(c  1)  1 * 2  2
 02.05 ( 2)  5.99 from table.

2
- The decision is to reject H0 since  cal   02.05 (2)
Conclusion: At 5% level of significance we have evidence to say there is association between the size
of the family and the level of education attained by fathers, based on this sample data.

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