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CONFIDENCE Interval?!

Hmm what? Confidence Interval? Really!!


Confidence means to have faith on someone or something.

How can we have faith on INTERVAL?! It sounds a bit weird na! Nevertheless we can have faith on Intervals too…


But, but ,but… why do we need to know all these terms, concepts. Uhh! so much to remember

 Why can’t we just settle for less concepts? 


Because the quest for discovering new concept is never over😊

Hence keep on learning until we reach our maximum point.

Confidence Interval: A confidence interval is how much uncertainty there is with any particular statistic. Again uncertainty! I think probability is associated with each and every thing in this world.


Anyways ,it tells you how confident you can be that the results from a poll or survey reflect what you would expect to find if it were possible to survey the entire population


Confidence intervals are intrinsically connected to confidence levels. Now Confidence Intervals and Confidence Levels have different notions? It’s getting more complex,uhh! Now let’s take a look on this aspect as well.


Confidence levels are expressed as a percentage (for example, a 95% confidence level). What? It is just a percentage??

Yes, it is just a percentage which means that should you repeat an experiment or survey over and over again, 95 percent of the time your results will match the results you get from a population (in other words, your statistics would be sound!). 


Confidence intervals are your results and they are usually numbers. For example, you survey a group of pet owners to see how many cans of dog food they purchase a year. You test your statistics at the 99 percent confidence level and get a confidence interval of (200,300). That means you think they buy between 200 and 300 cans a year. 


You’re super confident (99% is a very high level!) that your results are sound, statistically.


Let’s see CI through a graph to get a clear view of your understanding:




As we all know it is a symmetric graph, so the area under the curve is 100%. The shaded region is 95% and the unshaded region is the remaining 5%. Why? 


Because we are asked to calculate 95% CI, so we subtract 95% from 100%, the remaining 5% is in the tails of the curve, which is further divided into half, coz we have two tails, hurrayyy!!!! 

So 2.5% is in each of the two-tails. Now depending on the distribution we will calculate the value of the 95%CI. 


The same approach is applied for 99% CI, 90% CI and so on. Now what we have to focus on is if we the question asks for two-tailed or one-tailed.


I hope this explanation is clear. It will get more clear after we start doing sums. Let’s catch up with the sums in our next content:)





Written by Shreya Golchha ( Graduate in B.com (finance) from St. Xaviers College and 3 Actuarial Papers passed from IFOA and IAI )

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