What is a confidence interval?

A confidence interval is a statistical tool used to estimate a range of values that is likely to contain the true value of an unknown population parameter, such as a mean or proportion, with a specified level of confidence. For example, a 95% confidence interval suggests that if we were to take many samples and build an interval from each of them, approximately 95% of those intervals would contain the true population parameter.

This concept is crucial in statistics, as it provides not just a single estimate but a range that accounts for variability and uncertainty in the estimation process. By specifying the level of confidence, researchers can communicate how certain they are about the results derived from their sample data. This range of values thus gives a more comprehensive understanding than a point estimate alone, which could misrepresent the accuracy of the estimator.

Understanding confidence intervals is essential for making informed decisions based on sample data, especially in fields like business and social sciences, where decisions often hinge on uncertain information about larger populations.