Introduction to Confidence Intervals

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Today I will show you how to calculate a confidence
interval.

• Definition of a confidence interval

• Connection between the sampling distribution and the idea of
a confidence interval
• Steps for obtaining a confidence interval

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A population parameter is a number calculated using
data from an entire population. While this number
always exists in an abstract sense, we rarely are able to
get the data to calculate it.

So instead, we calculate a confidence interval: a range

of values within which a population parameter is highly
likely to fall.

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The general confidence interval formula:

We are _% confident that the population parameter is

between 𝑠𝑎𝑚𝑝𝑙𝑒 𝑠𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐 − 𝑚𝑎𝑟𝑔𝑖𝑛 𝑜𝑓 𝑒𝑟𝑟𝑜𝑟 and
𝑠𝑎𝑚𝑝𝑙𝑒 𝑠𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐 + 𝑚𝑎𝑟𝑔𝑖𝑛 𝑜𝑓 𝑒𝑟𝑟𝑜𝑟

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Starting with a basic sampling distribution for a sample
proportion
Table 1. Sampling distribution for sample proportions
“Neighborhood” Cumulative
𝑝Ƹ values z-scores Frequencies probability probability
-4.00 0.0001 0.0000
-3.00 0.0044 0.0013
-2.00 0.0540 0.0028
-1.00 0.2420 0.1587
𝑝Ƹ = 𝜋 0.00 0.3989 0.5000
1.00 0.2420 0.8413
2.00 0.0540 0.9772
3.00 0.0044 0.9987
4.00 0.0001 1.0000
Totals 1.0000

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 Adding rows for z-scores of -1.96 and +1.96

Table 1. Sampling distribution for sample proportions

“Neighborhood” Cumulative
𝑝Ƹ values z-scores Frequencies probability probability
-4.00 0.0001 0.0000
-3.00 0.0044 0.0013
-2.00 0.0540 0.0028
-1.9600 0.0250
-1.00 0.2420 0.1587
𝑝Ƹ = 𝜋 0.00 0.3989 0.5000
1.00 0.2420 0.8413
1.9600 0.9750
2.00 0.0540 0.9772
3.00 0.0044 0.9987
4.00 0.0001 1.0000
Totals 1.0000

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 𝑃 −1.96 ≤ 𝑧 ≤ 1.96 = 0.95

Table 1. Sampling distribution for sample proportions

“Neighborhood” Cumulative
𝑝Ƹ values z-scores Frequencies probability probability
-4.00 0.0001 0.0000
-3.00 0.0044 0.0013
-2.00 0.0540 0.0028
-1.9600 0.0250
-1.00 0.2420 0.1587
𝑝Ƹ = 𝜋 0.00 0.3989 0.5000
1.00 0.2420 0.8413
1.9600 0.9750
2.00 0.0540 0.9772
3.00 0.0044 0.9987
4.00 0.0001 1.0000
Totals 1.0000

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 Repeating the same steps for z-scores of ± 1.6449
𝑃 −1.6449 ≤ 𝑧 ≤ 1.6449 = 0.90
Table 1. Sampling distribution for sample proportions
“Neighborhood” Cumulative
𝑝Ƹ values z-scores Frequencies probability probability
-4.00 0.0001 0.0000
-3.00 0.0044 0.0013
-2.00 0.0540 0.0028
-1.6449 0.0500
-1.00 0.2420 0.1587
𝑝Ƹ = 𝜋 0.00 0.3989 0.5000
1.00 0.2420 0.8413
1.6449 0.9500
2.00 0.0540 0.9772
3.00 0.0044 0.9987
4.00 0.0001 1.0000
Totals 1.0000

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 Repeating the same steps for z-scores of ± 2.5758
𝑃 −2.5758 ≤ 𝑧 ≤ 2.5758 = 0.99
Table 1. Sampling distribution for sample proportions
“Neighborhood” Cumulative
𝑝Ƹ values z-scores Frequencies probability probability
-4.00 0.0001 0.0000
-3.00 0.0044 0.0013
-2.5758 0.0050
-2.00 0.0540 0.0028
-1.00 0.2420 0.1587
𝑝Ƹ = 𝜋 0.00 0.3989 0.5000
1.00 0.2420 0.8413
2.00 0.0540 0.9772
2.5758 0.9950
3.00 0.0044 0.9987
4.00 0.0001 1.0000
Totals 1.0000

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Where did the ±1.6449, ±1.9600, and ±2.5758 come from?

• In actuality, these z-scores were derived “backwards”, using a

“target probability” (0.90, 0.95, and 0.99) to figure out z-
scores that would give us the probability
• Given a target probability (0.90, 0.95, or 0.99),
calculate 𝛼 = 1 − "𝑡𝑎𝑟𝑔𝑒𝑡 𝑝𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦"
𝛼
• Calculate
2
𝛼
• Calculate 1 −
2
𝛼 𝛼
• Treat and 1 − as cumulative probabilities and insert a new row for
2 2
each into the sampling distribution
• Use NORM.S.INV() to determine the z-score for these cumulative
probabilities

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 Returning to the sampling distribution for sample
proportions, where 𝑃 −1.96 ≤ 𝑧 ≤ 1.96 = 0.95
Table 1. Sampling distribution for sample proportions
“Neighborhood” Cumulative
𝑝Ƹ values z-scores Frequencies probability probability
-4.00 0.0001 0.0000
-3.00 0.0044 0.0013
-2.00 0.0540 0.0028
-1.9600 0.0250
-1.00 0.2420 0.1587
𝑝Ƹ = 𝜋 0.00 0.3989 0.5000
1.00 0.2420 0.8413
1.9600 0.9750
2.00 0.0540 0.9772
3.00 0.0044 0.9987
4.00 0.0001 1.0000
Totals 1.0000

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Some algebraic rearrangement

ො
𝑝−𝜋
Since 𝑧𝑝ො =
𝜎𝑝
ෝ

𝑝ො = 𝜋 + 𝑧𝑝ො × 𝜎𝑝ො

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 𝑃 𝜋 − 1.96 × 𝜎𝑝ො ≤ 𝑝Ƹ ≤ 𝜋 + 1.96 × 𝜎𝑝ො = 0.95

Table 1. Sampling distribution for sample proportions

“Neighborhood” Cumulative
𝑝Ƹ values z-scores Frequencies probability probability
-4.00 0.0001 0.0000
-3.00 0.0044 0.0013
-2.00 0.0540 0.0028
𝜋 − 1.96 × 𝜎𝑝ො -1.9600 0.0250
-1.00 0.2420 0.1587
𝑝Ƹ = 𝜋 0.00 0.3989 0.5000
1.00 0.2420 0.8413
𝜋 + 1.96 × 𝜎𝑝ො 1.9600 0.9750
2.00 0.0540 0.9772
3.00 0.0044 0.9987
4.00 0.0001 1.0000
Totals 1.0000

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 Margin of Error

From this sampling distribution, we can calculate an exact

number for a margin of error (MOE)
• For the sampling distribution for 𝑝,Ƹ 𝑀𝑂𝐸 = ±𝑧𝑝ො × 𝜎𝑝ො
• The value 𝑧𝑝ො is referred to as a critical value
• Therefore, 𝑀𝑂𝐸 = 𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 × 𝑠𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑒𝑟𝑟𝑜𝑟

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 “Transplanting” the margin or error

• We refer to the “target probability”, when expressed as a

percentage as a confidence level
• In general, for any confidence level, XX% of the sample
proportions will fall between 𝜋 − 𝑀𝑂𝐸 and 𝜋 + 𝑀𝑂𝐸
• But what if we algebraically “transplant” 𝑝Ƹ in place of 𝜋 in the
statement above
• It will be true that XX% of the sample proportions, when
“augmented” by the MOE, give a range into which 𝜋 would
fall

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Thus, we get the general confidence interval formula:

We are _% confident that the population parameter is

between 𝑠𝑎𝑚𝑝𝑙𝑒 𝑠𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐 − 𝑀𝑂𝐸 and
𝑠𝑎𝑚𝑝𝑙𝑒 𝑠𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐 + 𝑀𝑂𝐸

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 We can calculate confidence intervals for any sample
statistic if the sampling distribution is built using either
a z-score or a t-score

• Calculate one sample statistic (𝑝,Ƹ 𝑥,ҧ etc.) using data from just
one sample
• Use the given confidence level and either NORM.S.INV() or
T.INV() to determine the critical value needed to calculate the
margin of error
• Use a formula to calculate the standard error
• Use the confidence interval formula to perform final
calculations

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