Lesson 7 of 8 · 15 min

Confidence intervals for the mean

A confidence interval turns a point estimate into a range: point estimate ± reliability factor × standard error.

In short

  • A point estimate (e.g. Xˉ\bar X) is a single best guess of a parameter. An interval estimate, or confidence interval, is a range built around it with a stated confidence level 1−α1 - \alpha.
  • Structure: point estimate ± reliability factor × standard error. The reliability factor is the critical value (z or t) that leaves α/2\alpha/2 in each tail.
  • z-values to know: 1.645 (90%), 1.96 (95%), 2.576 (99%). A value with 0.025 in one tail belongs to a 95% interval; 0.05 in one tail belongs to a 90% interval.
  • Use z when σ\sigma is known (normal population, or any population with a large sample). Use t with n − 1 degrees of freedom when σ\sigma is unknown. With a small sample from a clearly non-normal population, neither z nor t gives a valid interval.
  • The interval widens with a higher confidence level, a larger standard deviation, or a t instead of a z. It narrows as n grows, in proportion to 1/n1/\sqrt{n}.

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Confidence intervals for the mean · Estimation and Inference