Estimation: Click To Edit Master Subtitle Style

ESTIMATION
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Meaning
An estimation is a statistical technique of estimating unknown
population parameters from the corresponding sample statistic. A population parameter can be estimated in two ways:
1. 2.
Point Estimation Interval Estimation
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Point Estimation
Meaning:- It provides a single value of a statistic that is used to
estimate an unknown population parameter.

Estimator:- The statistic which is used to obtain a point estimate
is called estimator.
Estimate:- The value of statistic is the estimate.
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Criteria for a Good Estimator

Unbiasedness Consistency Efficiency Sufficiency
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Unbiasedness
A statistic is said to be an unbiased estimator of a parameter if its expected value is equal to the value of the parameter. The expected value of the statistics expressed as E is the arithmetic mean of the sampling distribution of the statistics.
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Cond..
1.
The sample mean is an unbiased estimator of the population mean because mean of the sampling distribution of several means is equal to population mean.
2.
The sample variance is a biased estimator of the population variance because the expected value of sample variance is not equal to population variance.
3.
An unbiased estimator of the population variance is given by:

n n S 2 = ( x1 x ) 2 n 1 n 1
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Consistency
A statistic is said to be a consistent estimator of a parameter if it comes closer to the value of parameter as the sample size (n) tends to infinity. Example:- In random sampling from a Normal population, both the sample mean and the sample median are consistent estimators of population mean.
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Efficiency
A consistent statistic is said to be Most efficient estimator of a parameter if its sampling variance is less than that of any other consistent estimator. Example:- Sample mean is more efficient then median in estimating the population mean since the variance of mean is smaller than variance of median.
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A statistic which
has the minimum all estimators is called of the
variance population
among
parameter
Minimum Variance estimator (MV).

A statistic which is unbiased and has also
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Sufficiency
A statistic is said to be a sufficient estimator of a parameter if it contains all information in the sample about the population parameter. Example:- In random sampling from a normal population, the sample mean is a sufficient estimator of the population mean.
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Methods of Point Estimation

1. 2.
Method of Maximum Likelihood Method of Moments
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Method of Maximum Likelihood

It is a process of choosing as an estimator of population parameter, ( ) that statistic which when substituted for population parameter ( ), maximises the likelihood function L.
The statistic which maximises the likelihood function L is called a Maximum Likelihood Estimator(MLE).
L = f ( x1 , ) f ( x 2 , )......... f ( x n , )
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Properties of MLE
It is consistent, most efficient and also sufficient provided a
sufficient estimator exists.

It tends to be distributed normally for large samples. It is not necessarily unbiased. A biased MLE can be converted
into an unbiased estimator by a slight modification.

It is invariant under functional transformations.
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Methods of Moments
It is a process of equating the first few moments of the population with the corresponding moments of the sample .
Condition:- This method is applicable only when the population moments exit. Utility:- This method is generally applied for fitting distribution to observed data.
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theoretical
Limitation of Point Estimation

It provides a single value of estimator which cannot be expected to coincide with the true value of the parameter and in some cases differ widely from it.
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Interval Estimation
Meaning:- It provides an interval of finite width centered at the point estimate of the parameter, within which unknown parameter is expected to lie with a specified probability. Such an interval is called a confidence interval for population parameter.
Confidence Limits:- The lower and upper limits of the confidence interval are called confidence limits.
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Confidence Coefficient:- The probability with which the confidence
interval will include the true value of the parameter is known as confidence coefficient of the interval. The range of confidence limits varies with confidence coefficient.
Significance of Confidence Limits:- The significance of confidence limits is
that if many independent random samples are drawn from the same population and the confidence interval is calculated from each sample, then the parameter will actually be included in the intervals in probable proportion of cases in the long run.
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Calculation of Confidence Limits

It is based on the knowledge of sampling distribution of an appropriate statistic. If the population is normal or the sample size (n) is large (> 30), percentage of area under the standard normal curve may be used to find confidence limits corresponding to any specified percentage of confidence.
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ESTIMATION

Click to edit Master subtitle style

Point Estimation Interval Estimation

estimate an unknown population parameter.

Criteria for a Good Estimator

An unbiased estimator of the population variance is given by:

has the minimum all estimators is called of the

Minimum Variance estimator (MV).

Methods of Point Estimation

Method of Maximum Likelihood Method of Moments

Method of Maximum Likelihood

sufficient estimator exists.

into an unbiased estimator by a slight modification.

Limitation of Point Estimation

Confidence Coefficient:- The probability with which the confidence

Calculation of Confidence Limits

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