Interval Estimate

Definition

An interval estimate is a range of values used to estimate an unknown population parameter, providing more information than a single point estimate. It gives a lower and upper bound within which the parameter is believed to fall, often accompanied by a level of confidence indicating the likelihood that this range captures the true parameter. This approach is crucial in statistical inference, as it reflects the inherent uncertainty in estimating population parameters based on sample data.

5 Must Know Facts For Your Next Test

1. An interval estimate is typically constructed using sample statistics, such as sample mean and standard deviation, to create confidence intervals around the parameter being estimated.
2. The width of an interval estimate depends on the desired confidence level; higher confidence levels result in wider intervals to ensure the true parameter is captured.
3. Interval estimates can be used for various parameters, including means, proportions, and differences between groups, each requiring specific formulas.
4. A 95% confidence interval means that if we were to take many samples and create intervals for each one, approximately 95% of those intervals would contain the true parameter.
5. In practice, calculating an interval estimate often involves using t-distributions or z-distributions, depending on sample size and whether the population standard deviation is known.

Review Questions

• How does an interval estimate provide more information than a point estimate when estimating population parameters?
  • An interval estimate provides a range of values within which a population parameter is likely to fall, whereas a point estimate gives only a single value. This range accounts for sampling variability and uncertainty in estimation, which is crucial when making inferences about populations. By indicating both lower and upper bounds along with a confidence level, interval estimates give a clearer picture of the reliability of the estimation process.
• Discuss the relationship between confidence levels and the width of an interval estimate. How does this impact decision-making?
  • The relationship between confidence levels and the width of an interval estimate is inversely proportional; as confidence levels increase, the width of the interval also increases. This means that if you want to be more certain that your estimate captures the true parameter, you need to accept a broader range of possible values. This can impact decision-making by providing more conservative estimates that may encompass greater variability or uncertainty.
• Evaluate how changing sample sizes affects interval estimates and their implications for statistical analysis.
  • Changing sample sizes has a significant impact on interval estimates. Larger sample sizes typically lead to narrower confidence intervals because they provide more accurate estimates of the population parameter due to reduced sampling error. This enhances the precision of conclusions drawn from statistical analysis. Conversely, smaller sample sizes may result in wider intervals, indicating greater uncertainty and potentially less reliable findings, which can affect decision-making processes based on these analyses.

Related terms

Point Estimate: A single value that serves as an approximation for an unknown population parameter.

Confidence Level: The probability that the interval estimate contains the true population parameter, commonly expressed as a percentage such as 95%.

Margin of Error: The maximum expected difference between the true population parameter and the point estimate or interval estimate.