Sampling Distribution Overview

Sampling distribution refers to the distribution of a sample statistic (such as the mean or proportion)
computed from random samples drawn from a population. It provides a way to understand the
variability of sample statistics from sample to sample.

Key Concepts

1. Parameter: A fixed characteristic of a population, such as the population mean (μ) or population
variance (σ²).

2. Statistic: A numerical value calculated from a sample, like the sample mean (x̄) or sample
variance (s²).

o Notations:

 μ= Population mean

 σ = Population standard deviation

 x́ = Sample mean

 s= Sample standard deviation

 p= Population proportion

 ^p= Sample proportion

 n = Sample size

 N = Population size

Sampling Distribution of the Mean

 Definition: The sampling distribution of the mean is the distribution of sample means, calculated
from random samples of the same size, taken from a population.

 Sampling Process: A population's mean (μ) is used to calculate the mean of multiple random
samples.

 Formula for Sampling Distribution:

o Expected Value (mean of sample means) is the population mean:

E( X )=μ
 o Variance of Sample Mean:
2
σ
V ( X)=
n

o Standard Error of the Mean (Standard Deviation of Sample Mean):

σ
SE=
√n
What σ is the population standard deviation and n is the sample size.

 Example: Given four business firms with incomes 100,200,300,400 (in Lakhs), we select a
sample size of n=2. There are C (4 ,2)=6 possible samples. The probability of selecting each
sample is 1/6 , and the standard error is calculated to understand estimation errors.

When Population Has Normal Distribution

1. If Population Standard Deviation is Known:

o Mean of Sample Means μ= Population Mean μ

Standard Error of the Mean:In statistical analysis, understanding the concepts of population
standard deviation and sample size is fundamental for accurate data interpretation and
inference. The population standard deviation, denoted as σ, measures the dispersion or
variability of data points within the entire population. It provides insight into how much
individual data points deviate from the population mean μ. On the other hand, the sample size,
represented as n, indicates the number of observations or data points selected from the
population for analysis. The sample size influences the precision of the estimates and the
reliability of statistical inferences.

Consider an example involving four business firms with incomes of 100, 200, 300, and 400
Lakhs. If a sample size of n=2 is chosen, the total number of possible samples can be calculated
using combinations: C(4,2)=6. Each of these samples has an equal probability of 1/6 of being
selected. The standard error, which measures the variability of the sample mean estimates, is
crucial for understanding the potential estimation errors when inferring the population mean
from the sample data.
When the Population Has a Normal Distribution
If the Population Standard Deviation is Known

 The mean of the sample means, denoted as μ̄ , equals the population mean μ, reflecting the
unbiased nature of the sample mean as an estimator.
 The variance of the sample means is given by σ²/n, where σ² is the population variance, and n is
the sample size. This relationship indicates that increasing the sample size reduces the variability
of the sample mean.
 The standard error of the mean (SEM) is calculated as σ/√n. It quantifies the expected deviation
of the sample mean from the true population mean, serving as a measure of the precision of the
sample estimate.

o Understanding these concepts is essential for designing studies, analyzing data, and
making informed decisions based on statistical evidence. Proper application of the
formulas and principles ensures accurate estimation and reliable inference in various
fields such as business, healthcare, social sciences, and engineering.

σ
SE=
√n
2. If Population Standard Deviation is Not Known:

o Use Student’s t-distribution instead of the Z-distribution when the sample standard
deviation (s) is used instead of population standard deviation (σ).

o t-statistic formula:

( x́ − μ )
t=
s / √n

Sampling Distribution of Proportions

 Definition: A sample proportion is the fraction of individuals in a sample sharing a certain trait,
x
calculated as p= , where x is the number of individuals with the trait and n is the sample size.
n

 Population Proportion ( π ) is the proportion of individuals with the trait in the entire population,
defined as:

X
π=
N

where X is the number of items with the attribute and N is the population size.

 Standard Error of Sample Proportion:

where π is the population proportion and n is the sample size.

 Confidence Interval for Proportions:

CI =^p ± Z × SE

where ^pis the sample proportion, Z is the Z-score for the desired confidence level, and SEis the standard
error.

Sampling Distribution of the Difference Between Two Proportions

 Formula (When Population is Normal or n ≥ 30):

(^ p2)
p1 − ^
Z=

√ p 1 (1− p1 ) p 2 (1− p2 )
n1
+
n2

where ^p1and ^
p2are sample proportions, n1 and n2 are the sample sizes, and p1and p2are the population
proportions.

 Formula (When Population is Not Normal or n<30 ):

t=¿ ¿
2 2
where s x and s x are the variances of the two samples.
1 2

Important Formulas for Confidence Intervals

1. For Proportions:

SE=
√ p (1− p)
n
CI =^p ± Z × SE

2. For Means:

σ
SE= CI =x́ ± Z × SE
√n
Finite Population Correction Factor (FPC)

 Use: When the sample is drawn from a finite population, the finite population correction factor
is used to adjust the standard error. The correction factor reduces the error as the sample size
increases.

 Formula:

FPC=
√ N−n
N−1

where N is the population size and n is the sample size.