Estimating Population Mean with Unknown Standard Deviation

In practice, we rarely know the population standard deviation. In the past, when the sample size was large, this did not present a problem to statisticians. They used the sample standard deviation s as an estimate for σ and proceeded as before to calculate a confidence interval with close enough results. However, statisticians ran into problems when the sample size was small. A small sample size caused inaccuracies in the confidence interval.

William S. Gosset (1876–1937) of the Guinness brewery in Dublin, Ireland ran into this problem. His experiments with hops and barley produced very few samples. Just replacing σ with s did not produce accurate results when he tried to calculate a confidence interval. He realized that he could not use a normal distribution for the calculation; he found that the actual distribution depends on the sample size. This problem led him to "discover" what is called the Student's t distribution. The name comes from the fact that Gosset wrote under the pen name "Student."

Up until the mid-1970s, some statisticians used the normal distribution approximation for large sample sizes and used the Student's t distribution only for sample sizes of at most 30. With graphing calculators and computers, the practice now is to use the Student's t distribution whenever s is used as an estimate for σ.

If you draw a simple random sample of size n from a population that has an approximately normal distribution with mean μ and unknown population standard deviation σ and calculate the t score using the sample SD.

Properties of the Student's t Distribution

• The graph for the Student's t distribution is similar to the standard normal curve.
• The mean for the Student's t distribution is zero and the distribution is symmetric about zero.
• The Student's t distribution has more probability in its tails than the standard normal distribution because the spread of the t distribution is greater than the spread of the standard normal. So the graph of the Student's t-distribution will be thicker in the tails and shorter in the center than the graph of the standard normal distribution.
• The exact shape of the Student's t distribution depends on the degrees of freedom. As the degrees of freedom increases, the graph of Student's t distribution becomes more like the graph of the standard normal distribution.
• The underlying population of individual observations is assumed to be normally distributed with unknown population mean μ and unknown population standard deviation σ. The size of the underlying population is generally not relevant unless it is very small. If it is bell shaped (normal) then the assumption is met and doesn't need discussion. Random sampling is assumed, but that is a completely separate assumption from normality.

Calculators and computers can easily calculate any Student's t probabilities. A probability table for the Student's t distribution can also be used. The table gives t scores that correspond to the confidence level (column) and degrees of freedom (row). When using a t table, note that some tables are formatted to show the confidence level in the column headings, while the column headings in some tables may show only corresponding area in one or both tails.

A Student's t table gives t scores given the degrees of freedom and the right-tailed probability. The table is very limited. Calculators and computers can easily calculate any Student's t-probabilities.

The notation for the Student's t distribution (using T as the random variable) is:

• T ~ tdf where df = n – 1.
• For example, if we have a sample of size n = 20 items, then we calculate the degrees of freedom as df = n – 1 = 20 – 1 = 19 and we write the distribution as T ~ t19.

If the population standard deviation is not known, the error bound for a population mean is calculated using sample SD.

This text is adapted from Openstax, Introductory Statistics, Section 8.2 A single population mean using Student’s t distribution.