HOW TO CALCULATE THE MARGIN OF ERROR FOR A SAMPLE PROPORTION

When you report the results of a statistical survey, you need to include the margin of error.

The general formula for the margin of error for a sample proportion (if certain conditions
are met) is

where

is the sample proportion, n is the sample size, and z* is the appropriate z*-value for your
desired level of confidence (from the following table).

z*-Values for Selected (Percentage) Confidence

Levels

Percentage Confidence z*-Value

80 1.28

90 1.645

95 1.96

98 2.33

99 2.58

Note that these values are taken from the standard normal (Z-) distribution. The area

between each z* value and the negative of that z* value is the confidence percentage

(approximately). For example, the area between z*=1.28 and z=-1.28 is approximately 0.80.
 Hence this chart can be expanded to other confidence percentages as well. The chart shows
only the confidence percentages most commonly used.

Here are the steps for calculating the margin of error for a sample proportion:

1. Find the sample size, n, and the sample proportion.

The sample proportion

is the number in the sample with the characteristic of interest, divided by n.

2. Multiply the sample proportion by

3. Divide the result by n.

4. Take the square root of the calculated value.
You now have the standard error,

5. Multiply the result by the appropriate z*-value for the confidence level desired.
Refer to the above table for the appropriate z*-value. If the confidence level is 95%, the z*-
value is 1.96.

Here’s an example: Suppose that the Gallup Organization’s latest poll sampled 1,000 people

from the United States, and the results show that 520 people (52%) think the president is
doing a good job, compared to 48% who don’t think so. First, assume you want a 95% level

of confidence, so z* = 1.96. The number of Americans in the sample who said they approve
of the president was found to be 520. This means that the sample proportion,

is 520 / 1,000 = 0.52. (The sample size, n, was 1,000.) The margin of error for this polling
question is calculated in the following way:
 According to this data, you conclude with 95% confidence that 52% of all Americans
approve of the president, plus or minus 3.1%.

Two conditions need to be met in order to use a z*-value in the formula for the margin of
error for a sample proportion:

1. You need to be sure that

2. is at least 10.
3. You need to make sure that

4. is at least 10.

In the example of a poll on the president, n = 1,000,

Now check the conditions:

Both of these numbers are at least 10, so everything is okay.

Most surveys you come across are based on hundreds or even thousands of people, so

meeting these two conditions is usually a piece of cake (unless the sample proportion is very
large or very small, requiring a larger sample size to make the conditions work).