Sampling Error

calender iconUpdated on February 06, 2023
corporate finance and accounting
financial analysis

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Sampling error is the error that results from selecting a sample that does not accurately represent the population from which it was drawn.

Causes of Sampling Error:

  • Selection bias: The way in which samples are selected can lead to biased results, as certain individuals or groups may be more likely to be selected than others.
  • Sample size: A small sample size can increase the likelihood of sampling error.
  • Random variation: The randomness of sample selection can cause the sample to differ from the population in unexpected ways.
  • Non-response: Some individuals in the population may not respond to the survey, which can introduce bias.
  • Data collection errors: Errors during data collection or processing can introduce sampling error.

Examples of Sampling Error:

  • A survey of college students that overestimates the percentage of students who are satisfied with their education.
  • A poll that underestimates the number of people who support a particular candidate.
  • A sample of bacteria that does not accurately represent the entire population of bacteria.

Measures to Reduce Sampling Error:

  • Random selection: Using random sampling methods to select individuals for the sample.
  • Large sample size: Selecting a large sample size to reduce the impact of random variation.
  • Elimination of bias: Taking steps to minimize selection bias, such as using stratified sampling methods or balancing the sample to match the known population proportions.
  • Non-response follow-up: Reaching out to non-respondents to ensure their voices are included.
  • Data validation: Checking for data collection errors and using data validation techniques to ensure accuracy.

Key Points:

  • Sampling error is the error that results from selecting a sample that does not accurately represent the population.
  • Causes of sampling error include selection bias, sample size, random variation, non-response, and data collection errors.
  • Measures to reduce sampling error include random selection, large sample size, elimination of bias, non-response follow-up, and data validation.

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