Section : 8.

4: Estimating Population Variance from Sample Variance For a sample of n observations, the sample variance is equal to:

( xi x) 2 /(n 1)
i 1

The relationship between sample variance and population variance is captured by the chi-square distribution. The value of [(n 1) S2 / 2] is approximately chi-square distributed, if the population from which the sample values are obtained is normally distributed. If the population is not normally distributed, then we can not use chi-square statistic to estimate population variance. Chi-Square formula for single variance:

(n 1) * S 2 / 2

Confidence Interval to Estimate Population Variance:

(n 1) S 2

(n 1) S 2

/2

2 1 ( / 2 )

In the above formula, the degree of freedom for chi-square = (n 1) In the above formula, the value of (i.e., type 1 error) = 0.05 if we are estimating 95% confidence interval. Some properties of Chi-square distribution: a) It can not take any negative value b) It is skewed to right. Hence it is not symmetric c) Mean = df and SD = (2df) (1/2) d) As df increases, the distribution tends to become normal. Hence, the shape of the chi-square distribution depends on the degree of freedom.

How to obtain the values of Refer to table A.8 (pp: 800)

/2

and

2 1 ( / 2 )

Suppose your sample had 10 objects. Hence, degree of freedom = (10 1) = 9 Suppose you are interested to compute a 95% CI. Hence, = 0.05, / 2 = 0.025, this refers to the area in right tail of the distribution. From the table, at degree of freedom = 9 and area in right tail = 0.025, the critical chi-square value is:

2 0.025, 9

19 .0228

Similarly, for the chi-square value corresponding to left tail must be obtained by determining how much area lies to the right of the left tail.

Hence,

2 1( 0.05 / 2 ),9

2 0.975, 9

2.70039

Problem 8.37: S = 4.3 The Point estimate of variance is equal to = S2 = (4.3)2 = 18.49 Number of workers in sample = 20. Hence degree of freedom for chi-square distribution = 20 1 = 19 Alpha = 1 0.98 = 0.02 Hence, / 2 = 0.01 and (1 / 2 ) = 0.99 Computing a 98% CI for Population variance:
(n 1) S 2 (n 1) S 2

/2

2 1 ( / 2 ) 2

(20 1) * 18.49

351.31

351.31

(20 1) * 18.49

/2

2 1 ( / 2 )

2 0.01,19

2 0.99 ,19

351.31 351.31 2 36.1908 7.6327

2

9.707 46.027

Section 8.5: Estimating Sample Size when Estimating Population mean

Z X

* n

The difference between sample mean X-bar and population Mean is known as the error in estimation, which can be denoted by E
Z E

* n
2 /2 2 2

Hence,

n Z * E

Where, = probability of committing Type 1 error. In other words, if you want to be 95% confident about your estimation, then = 0.05. For example, in this case, the value of Z(/2) = 1.96 As it is evident from the above formula, to compute the sample size, the value of population standard deviation needs to be known. However, the value of is unknown in most instances. In those cases, it is acceptable to use the following estimate to represent : = (Range)