What is Statistical Confidence Intervals?
Mathematical Foundation
Laws & Principles
- Margin of Error (MOE): This is the 'plus or minus' value attached to polling data. The MOE is simply the Z-score multiplied by the Standard Error.
- Standard Z-Scores: For a 90% confidence level, Z ≈ 1.645. For the industry standard 95% confidence level, Z ≈ 1.960. For strict 99% confidence, Z ≈ 2.576.
- The Certainty Trade-off: Notice that as you demand a higher level of confidence (e.g., jumping from 95% to 99%), the Z-score increases. Because you multiply by a larger Z-score, the Margin of Error becomes larger. You are forced to trade precision for certainty.
Step-by-Step Example Walkthrough
" A pharmaceutical lab tests a new blood pressure medicine on 100 patients. The sample mean reduction in blood pressure is 15 mmHg, with a sample standard deviation of 5 mmHg. The FDA requires a 95% confidence interval. "
- 1. Identify Variables: x̄ = 15, s = 5, n = 100.
- 2. Find the Z-Score: The FDA requires 95% confidence, so the Z-score is 1.96.
- 3. Calculate Standard Error: s / √n = 5 / √100 = 5 / 10 = 0.5.
- 4. Calculate Margin of Error (MOE): Z × Standard Error = 1.96 × 0.5 = 0.98.
- 5. Apply Bounds: 15 ± 0.98. Lower bound is 14.02. Upper bound is 15.98.