Understanding point estimates

Recall that, in the previous chapter, we mentioned how difficult it is to obtain a population parameter; so, we had to use sample data to calculate a statistic that was an estimate of a parameter. When we make these estimates, we call them point estimates.

A point estimate is an estimate of a population parameter based on sample data.

We use point estimates to estimate things such as population means, variances, and other statistics. To obtain these estimates, we simply apply the function that we wish to measure for our population to a sample of the data. For example, suppose there is a company of 9,000 employees and we are interested in ascertaining the average length of breaks taken by employees in a single day. As we probably cannot ask every single person, we will take a sample of the 9,000 people and take a mean of the sample. This sample mean will be our point estimate. We will use the probability distribution, known as the Poisson distribution...