Module 4

Sampling Theory

Introduction
In our daily life we come across persons
making an assessment of the population through samples. For
example, the housewife tests a small quantity of rice to see if it
has be well cooked or not, a grain merchant while purchasing
wheat examines only a handful of it to form an idea about the
quantity of wheat. In most of the cases it is neither practical
nor desirable to collect the data for each and every member of
the population, particularly when the population is either
large or infinite or it is a hypothetical population, as this
collection is time consuming, too expensive and so on.
Hence, in such situations, the use of sampling technique has
been valuable.

Terminologies Used
Universe or Population: By universe or population we mean the
collection of individuals or of their attributes or individuals
obtained as results of some experiment or operation.
Example: People suffering from diabetes, collection of people
drawing more than Rs.4 lakh per annum,
A population which has finite number of units is
called finite population. Ex: The number of students in a particular
school.

A population having infinite number of units is

called infinite population. Ex: The number of blonde-haired people
in the world.

Types Of Population
Population or universe is of following two types:

Existent population or Universe: By existent population, we

mean an aggregate of concrete objects such as students in a
college or population of a city.
Hypothetical population or Universe: By hypothetical
population, we mean all possible ways in which an event may
happen.
Ex: The number of ways in which alphabets can be arranged to
form a word, the collection of heads and tails obtained by tossing
a coin infinite number of times.

The Sample:
A part of the population selected according to some rule or plan for drawing
conclusions regarding population characteristics is called sample. A sample
represents its population. The number of individuals in a sample is
called sample size.
Requirements of Good Sample
To draw unbiased, valid and reliable results, the sample should possess
the following essentials.
Representiveness: The sample should be representative of the population
in some sense.
Homogeneity: There should be no basic difference between the two
samples drawn from the same population.
Adequacy: The number of sampling units in the sample should be
adequate.
Independence: The sampling units in the sample should be independent.
Similar regulating conditions: The regulating conditions should be similar
for every sampling unit.

Parameters:
For a variable in the population, suppose we find constants such as
mean, standard deviation, etc., these constants are called parameters
of the population.
Parameter is a statistical constant of the population.
Sampling Unit and the Frame:
The elementary unit or a group of elementary units in the population which
is used as the basis of selection is called sampling unit. In other words, the
sampling unit is the simplest unit in the selection process of sample
survey.
A complete list of sampling units, map or other acceptable material, which
represents population to be covered, is called the sampling frame. For
example, in a housing survey, house is a sampling unit. House owner
is the observational unit and a list of houses along with all relevant
information is a sampling frame.

Complete Enumeration Versus

Sample Enumeration
A survey or an enumeration is an investigation of what is present in
a particular population.
There are two types of enumerations:
When each unit in the population is examined for the characteristic under study, we
call it a complete enumeration or the complete census. The process applied in
National Population Census is complete enumeration.
When only part of the population, called sample, is selected from the population and
is examined then we have a sample enumeration or sample survey.

ADVANTAGES OF A SAMPLE SURVEY OVER COMPLETE CENSUS

1) Reduced cost of the survey: The cost of survey is considerably reduced
when sampling methods are adopted rather than going for 100%
enumeration.
2) Greater Accuracy: The sampling results can be more accurate because
the sources of error like the training of field workers, clarity of
instructions, possible errors in location, measurement and their
recording, personal bias etc., could be controlled more effectively by
employing persons of higher caliber for a reduced field of study.
3) Saving of the time: The sampling results are obtained more quickly as
only a part of the population is studied here. Hence it saves
significant amount of time.
4) Greater Scope of the Sampling Results: The scope is enlarged, since the
highly trained personnel and specialized equipments are provided for
sampling survey.
5) Adaptability: There are cases where complete enumeration is not
possible and sampling methods are the only scientific way of fact
finding. For example: A drop of blood from the human body will tell
the necessary details as given by the whole of the blood itself.

Limitations Of Sample Survey

When the information is needed on every unit in the
population such as individuals dwelling or business
establishments, a sample survey cannot be of much help for it
fails to provide information on individual count.
Sampling gives rise to certain errors. If these errors are too
large, the results of the sample survey will be of extremely
limited use.
While in a census survey it may be easy to check the omissions
of certain units in view of complete coverage, this is not so in
the case of sample survey.
Note that sample surveys are extremely common than census surveys.

Objects Of Sampling Or The Rule Of Sampling Theory

1) The main object of sampling studies is to obtain maximum possible
information with reliability about the population at the minimum
possible cost, time and energy.
2) A considerable part of sampling theory deals with the estimation of
the population parameters along with determinable errors of estimate.
The sampling variance gives the measure of its precision.
3) The sample survey is sometimes made to verify the results obtained
by complete enumeration.
4) The sample survey is made to obtain the specific information needed
in the various fields such as Business survey, Social Survey, Economic
Survey
5) Sampling methods are accepted or employed for bringing efficiency in
the survey.

Problems Of Sample Method Of Investigation

Determination of the size of the sample: The sample size should not be two small
or too large. The sample size depends on:

The homogeneity or heterogeneity of the population.

Nature of the investigation.

Availability of resources i.e., money, time, energy, trained enumerators.

Degree of accuracy.

Methods of sampling.

Discussion of the effect of bias: The cause of possible biases and their reduction is
also considered while using sample method of investigation.

Testing the reliability of the sample: The reliability of the sample may be tested
by:

Comparing the two parts of the sample.

Comparing the two samples of the same size.

Comparing a sample with a sub-sample.

Main Steps In A Sample Survey

Specification of the Objectives of the Survey: The aims and objectives of the survey
must be clearly explained to the experimenter, so that the unnecessary data may be
avoided.

Definition of the Population to be sampled: The population from which a sample is to

be taken must be clearly defined. For example to estimate the average yield of rice per
plot, it is necessary to define the size of the plots where rice is grown. Ambiguous terms
should be described well e.g. Literacy.

Definition of Sampling units: The sampling units must together constitute the whole
population and they must be distinct and non-overlapping so that each elementary unit
in the population belongs to one and only one sampling unit.

Construction of the Frame: The frame must be clear and unambiguous. A sampling
frame is a list of units and maps of area units, machine of tabulation equipment,
transport and communication facilities,.

 The Questionnaire or Schedule: The questionnaire or the schedulemaking requires a special aptitude which is attained by sharp
intelligence, sound common sense and rich experience. The
questions should be short, simple, non-offending, corroborative,
non-inquisitorial and courteous in tone. They should be well
planned and arranged in a logical sequence. The questionnaire must
not have a scope for guessing on the part of the interviewers.
Selection of Proper Sampling Techniques: Selection of an appropriate
sampling technique yields more reliable results.
Organization of Field Work: The success of a sample survey completely
depends upon the reliable field work. If the field work is properly
and honestly done and a careful supervision of investigation is
made, we can achieve reliable results from the survey.
Collection of Data: Any method of collection of data may be used.

 Dealing with Non-respondents: Sometimes the data is not obtained

from all the units selected in the sample. For example, the selected
respondent may not be available at home or may refuse or may fail
to give the desired information when contacted. This
incompleteness of the information is called non-response and is
sometimes so large that it may change the results. Hence the
technique of dealing with non-response units should be decided
well in advance.

Analysis of Data: After collection of the appropriated data, careful

analysis is to be made and appropriate formula used to obtain the
estimate of the parameters.
Preparation of Reports: A detailed statement of the different stages of
the survey should be prepared.

METHODS OF SAMPLING
The process of selecting a sample is called
Sampling Method or Sampling Technique. They
depend mainly on the purpose of survey. There are
three main techniques of selecting sample:
1. Subjective or Purposive Sampling.
2. Probability or Objective Sampling.
3. Mixed Sampling.

The sampling methods may be classified as follows:

Simple Random
Sampling
Stratefied
Random
Sampling
Random Sampling
(Probability Sampling)

Systematic Random
Sampling

Multistage Random
Sampling

Cluster Sampling
Sampling

Delibrate Sampling

Quota Sampling
Non-Random Sampling
Convienience Sampling

Extensive Sampling

DELIBERATE OR PURPOSIVE SAMPLING

This is the easiest technique of sampling in which one selects a desired
number of sampling units which he thinks representative of the
population according to his own criterion. Here only those units are
selected which are convenient to the experimenter and he takes them
relevant to the purpose.
The sample may be selected according to the following procedure:
1. Select only those units which have average characteristics. The
extreme units are left.
2. Select only those units which he thinks are relevant to the purpose s
and no important unit is left.
3. Select the units from groups in the same proportion as they are in the
population.
4. Select the units according to his convenience.

DEMERITS
1.

A sample selected with a definite purpose is likely to suffer

from the drawback of favoritism. The samples may not be a
true representation of the population, but it will be biased.

2.

Sampling error cannot be determined, as there is no place for

probability in selecting a purposive sample.

3.

There is no guarantee of the estimates obtained by this

method.

4.

The results may be misused. Ex: Politicians, Labor unions,

advertisers, businessmen,. They use the result as if they
represent the entire population.

5.

The comparison of results with other methods is not possible.

Merits
1) This process of sampling is very easy.

2) There is a possibility of selecting a good sample after decision about

sample size.
3) The important units can be included.

Utility
1) When the number of units in the population is very small and there is a
possibility of neglecting important units

2) When sample size is small.

3) When important units are to be studied thoroughly.

PROBABILITY OR RANDOM OR
CHANCE SAMPLING
In this technique, samples are
selected according to some laws of
chance (probability) in such a way
that each unit of population has a
known or definite probability of
being selected.

TECHNIQUES OF RANDOM SAMPLING

Lottery Method
Blind fold selection or drawing chips from a bowl : N identical cards or
pieces of paper of the same size and shape are taken and are numbered
from 1 to N (population size). Also sampling units are numbered from
1 to n(sample size). These cards are mixed up very thoroughly in a bag
or bowl and n cards are drawn out either one by one or in one stroke.
Sampling units bearing the number of these cards will constitute our
desired random sample.

Rotating the Drum: With an infinite population, we may adopt lottery

method in which all the cards are placed in a metal cylinder which is
thrown into large rotating drum, working under a mechanical system.
The rotation of the drum makes the cards thoroughly mixed up or
randomized. Then a sample of n cards is drawn out of the container
mechanically and corresponding n sampling units are taken to
constitute the desired sample.

By Means of Random Number Table

Random numbers are digits 0,1,2,..9 scrambled in a particular

fashion or in the form of a particular series.

MERITS
Unbiased and Scientific Method: It is more scientific method of
taking out a sample from population. There is no place for
biasedness and no room for discrimination as equal chance is
given to each unit to be selected in a sample.
Selection is effortless: Which item is to be selected and which not,
is not determined by the investigator. The selection is effortless.
No planning: There is no need to plan a selection.
Economical: This process reduces cost, time and energy.
Sampling Error can be measured and Parameters can be Estimated:
The accuracy of the results can be determined by comparing
the two samples.

DEMERITS
Unsuitable: When some items are so important that
they should be selected in the sample, this device is
not suitable.
Lack of Representiveness: If the size of random sample
is not large and there is a great variability in the
population, random sample may not be true
representative of the population.
True Randomness is not easy: It is not easy in practice
to ensure true randomness in the selection of items
of a sample.

LIMITATIONS
The results and conclusions of random sample are
reliable only when 1) the area of investigation is
large 2) all the items are heterogeneous 3) the items
are independent of each other 4) there is no place for
biasedness.

A random sample may result in the selection of the

sampling units which are widely spread
geographically and in such a case there may be
administrative inconvenience and increase in cost,
energy and time.

Mixed Sampling
The technique in which samples are selected partly by objective
sampling (some probability rule) and partly like a purposive
sampling (no assignments of probability) is called mixed sampling.
Stratified Random Sampling
The procedure of taking a sample of size n from the population of size
N as given below is called Stratified Sampling and the sample so
obtained is called Stratified Sample.
Principles of Stratification
In stratified random sampling, we consider the following main
points:
To decide the number of strata to be made.
To form strata.
To decide sample size from each stratum.
The criterion which enables us to classify various sampling units
into different strata is termed as stratifying factor. For example,
administrative convenience, nature of information available,
geographical area, income, age,

MERITS

Increased precision: The main objective of stratification is to give higher

degree of relative precision.

Administrative Convenience: Field officer can be established in various

administrative zones with well-defined jurisdiction thereby leading to
better organization and supervision of field work.

Different Sampling Designs: Stratification makes it possible to use different

sampling designs to different strata.

Different Approach: Stratification by natural characteristics helps in

improving the sampling design. There may be different type of surveying
problems in plains, deserts and hilly areas which may need different
approaches and this is possible in stratified random sampling.

Location of units: Selection is simple because these can be very easily

located and enumerated.

Adequate Representation: Stratification ensures adequate representation to

various groups of the population which may be of some importance.

DEMERITS
An effect of bias: If proper stratification of the
population is not done, the sample would have an
effect of bias.
Difficulty in Stratification: Sometime problem arises,
such as over-lapping or where a unit should be
classified.
Unsuitability: Stratified random sampling is not
possible unless some information concerning the
population and its strata is available.

Systematic Sampling
A sampling technique in which sampling units are arranged in some
systematic order and only the first unit of the sample is selected at random
and thereafter rest of the units are automatically selected at equally spaced
intervals has been named Systematic Sampling.
Merits
It is operationally more simple, convenient and speedy.
It is a time saving and economical device.
Each part of the population has an equal chance to the represented in
the sample
It may give more precise estimates provided the frame is arranged at
random.
It is free from personal biases.
Demerits
Systematic samples are not in general random samples.
It is not possible to find an unbiased estimate of N.

MULTISTAGE SAMPLING
Sometimes sampling is done in stages in
order to reduce the cost of the survey or to concentrate upon
the field of work to obtain the precise estimates. The
procedure of first selecting large-sized units, and then to
select from the smaller units to form a sample, is called rulesampling or two-state sampling. The large size units are called
first-state units and smaller units are second-stage units.
Similarly we can select even smaller units from second-stage
units. This will be called third-stage sampling. This procedure
can be carried up to a number of stages, which will be called
multi-stage sampling.

Merits
This technique is suitable to estimate population of a
city at a local level
In case of multistage random sampling the
conclusions are satisfactory.
Multistage sampling introduces flexibility in
sampling procedures at each stage.
There is a significant saving in the operational cost
particularly if the investigation covers a large area.
By proper supervision non-sampling errors are
minimized.
Demerits
It is usually less efficient than a suitable single stage
sampling of the same size.
It consists of all the demerits of random sampling.

Some Other Methods of Sampling

MULTIPHASE SAMPLING
Sometimes information is obtained
about various problems with the help of one kind
of data. For this, a large sample is taken once in the
first phase according to some method of sampling
and then a sub-sample of this large sample is
selected in the next phase for collecting more
detailed information for different types of
problems. This type of sampling is known as
Multiphase sampling. These samples are called as
first phase, second phase, third phase and so on.

CLUSTER SAMPLING
A group of elementary units in the population is
called a cluster. When a cluster is considered as a
sampling unit, the corresponding sampling procedures
are called Cluster Sampling.
In this method of sampling, some of the clusters
are selected and they are examined completely.
Sometimes two or more clusters may be chosen
randomly from the original population of clusters and
then sampling is carried out in these clusters.

AREA SAMPLING
When the entire area containing
the population under study is sub-divided into
smaller area segments such that each element of
the population is associated with one and only one
of these segments, the sampling procedure of
taking out these area segments is known as Area
Sampling.

Non-probability Sampling
A non-probability sample is also known as non-random sample.
Here, each element in the population does not have an equal
chance of being selected. Three types of non-probability samples
are quota sampling, judgment sampling and convenience sampling.
Quota Sampling
In stratified sampling, when sampling within each stratum is not
simple random, then the investigator is sent out and told in
advance to obtain a specified number of units from the stratum
assigned to him. Thus, the quota to be examined is fixed for each
investigator or interviewer, but the choice of units is left to him.
Thus the units are selected per convenience of the investigator.
This may lead to some biased estimates. This is called Quota
Sampling. This is a particular form of Stratified sampling.

Judgment Sampling
The main characteristic of judgment sampling is that
units or elements in the population are purposively selected. It is
because of this that judgment samples are also called purposive
samples. Since the process of selection is not based on the random
method, a judgment sample is considered to be non-probability
sampling.
Convenience Sampling
Convenience sampling as the name implies, is
based on the convenience of the statistician who is to select a
sample. This type of sampling is also accidental sampling, as the
respondents in the sample are included in it merely on account
of their being available on the spot where the survey is in
process.

SELECTION OF APPROPRIATE METHOD OF SAMPLING

The following factors are to be considered while

adopting a sampling method:
Purpose of the investigation.
Type of universe or nature of universe.

Type of sampling units.

Sources of information.
Size of the sample.

SIZE OF THE SAMPLE

Size of the sample means the
number of sampling units selected from the
population for investigation. Thus, size of the
sample is directly related to standard of
accuracy, unit cost and administration of
investigation.
The size of the sample should ensure minimum
of cost and standard error.

SAMPLING IN ACCOUNTING AND AUDITING

Sampling techniques have a variety of

applications in accountings and auditing for a big
enterprise, an auditor is confronted with a large
number of documents and entries. It is generally, not
possible to examine all of them in the available time
and at the reasonable cost. Auditing, therefore, use
sampling methods to make reliable statements about
classical errors, reserves of bad debts, amounts of
improper and illegal payments, etc. Random sampling
methods are defendable before the court of Law.