Mike -
Regarding the explanation of the CONFIDENCE worksheet function in Excel's
Help, what don't you understand?
CONFIDENCE gives the half-width of a confidence interval. It is based on the
normal distribution, and it is appropriate when the population standard
deviation is known, i.e., when the standard deviation does not have to be
estimated from the sample data.
If sample data are used to estimate standard deviation, the confidence
interval should be computed using the t distribution, not the normal
distribution. According to the book "Data Analysis Using Microsoft Excel:
Updated for Office XP" by Michael R Middleton, the half-width is
=TINV(1-Conf_Level,n-1)*STDEV(Data)/SQRT(n)
For your example, that would be
=TINV(0.01,163)*STDEV(Data)/SQRT(164)
What does it mean?
The half-width and the sample mean are used to construct a confidence
interval from (mean - half-width) to (mean + half-width). Referring to the
Middleton book, here are two interpretations.
Subjective Probability Interpretation: Based on the sample there is a 99%
chance that the population mean is between (mean - half-width) and (mean +
half-width).
Relative Frequency (classical statistics) Interpretation: If we repeatedly
selected random samples of size 164 from this population and constructed a
confidence interval for each sample, approximately 99% of the confidence
intervals would contain the true population mean.
- Mike
www.mikemiddleton.com