85. What are Confidence Intervals.

High again in the previous lesson we learned about point estimators. But as you can guess they are not very reliable. Imagine visiting 5 percent of the restaurants in London and saying that the average meal is worth twenty two point five 0 pounds. You may be close but chances are that the true value isn’t really 20 to 50 but somewhere around it it’s much safer to say that the average meal in London is somewhere between 20 and 25 pounds isn’t it. In this way you have created a confidence interval around your point estimate of 20 to 50 a confidence interval is a much more accurate representation of reality. However there is still some uncertainty left which we measure in levels of confidence. So getting back to our example you may say that you are 95 percent confident that the population parameter lies between 20 and 25 quid. Keep in mind that you can never be 100 percent confident unless you go through the entire populatio