Confidence and Prediction Intervals

Introduction

Confidence interval is use to describe the amount of confidence / uncertainty related to

sample estimate of a population parameter (“Stat Trek.com”, n.d.). Furthermore, confidence

level shows the proportion of potential confidence intervals that include the true value of the

unknown population parameters. As stated by the Kalla (2009), statisticians use sample to

predict the behaviour of the whole population, hence it is reasonable to expect certain degree of

error. This error can be captured through confidence interval.

Statisticians use prediction interval to predict future data based on the known population

data. This provides series of values that is probable to contain either a future occurrence of an

event or the value of an additional data sample (Bruner, n.d.). Furthermore, we use existing data

to calculate the prediction interval. This is often use with the recreation analysis to determine the

future trends.