Confidence level

In statistics, a confidence interval (CI) is a type of interval estimate of a population parameter. It is an observed interval (i.e., it is calculated from the observations), in principle different from sample to sample, that potentially includes the unobservable true parameter of interest. How frequently the observed interval contains the true parameter if the experiment is repeated is called the confidence level. In other words, if confidence intervals are constructed in separate experiments on the same population following the same process, the proportion of such intervals that contain the true value of the parameter will match the given confidence level. Whereas two-sided confidence limits form a confidence interval, and one-sided limits are referred to as lower/upper confidence bounds (or limits).

Confidence intervals consist of a range of values (interval) that act as good estimates of the unknown population parameter. However, the interval computed from a particular sample does not necessarily include the true value of the parameter. When we say, "we are 99% confident that the true value of the parameter is in our confidence interval", we express that 99% of the hypothetically observed confidence intervals will hold the true value of the parameter. After any particular sample is taken, the population parameter is either in the interval, or not. Since the observed data are random samples from the true population, the confidence interval obtained from the data is also random. The 99% confidence level means that 99% of the intervals obtained from such samples will contain the true parameter. The desired level of confidence is set by the researcher (not determined by data). If a corresponding hypothesis test is performed, the confidence level is the complement of the level of significance, i.e. a 95% confidence interval reflects a significance level of 0.05. The confidence interval contains the parameter values that, when tested, should not be rejected with the same sample. Confidence intervals of difference parameters not containing 0 imply that there is a statistically significant difference between the populations.

In applied practice, confidence intervals are typically stated at the 95% confidence level. However, when presented graphically, confidence intervals can be shown at several confidence levels, for example 90%, 95% and 99%.

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