CONCEPT OF STANDARD ERROR - Research Methodology

Explain the concept of Standard error in Research

Standard error is the standard deviation of sampling distribution of a statistic (S.E) and is considered the key to sampling theory. The utility of the concept of standard error in statistical induction arises on account of the following reasons.

The standard error helps in testing whether the difference between observed and expected frequencies could arise due to chance. The criterion usually adopted is that if a difference is less than 3 times the S.E., the difference is supposed to exist as a matter of chance and if the difference is equal to or more than 3 times the S.E., chance fails to account for it, and we conclude the difference as significant difference. This criterion is based on the fact that at X ± 3 (S.E.) the normal curve covers an area of 99.73 per cent. Sometimes the criterion of 2 S.E. is also used in place of 3 S.E. Thus the standard error is an important measure in significance tests or in examining hypotheses. If the estimated parameter differs from the calculated statistic by more than 1.96 times the S.E., the difference is taken as significant at 5 per cent level of significance. This, in other words, means that the difference is outside the limits i.e., it lies in the 5 per cent area (2.5 per cent on both sides) outside the 95 per cent area of the sampling distribution. Hence we can say with 95 per cent confidence that the said difference is not due to fluctuations of sampling. In such a situation our hypothesis that there is no difference is rejected at 5 per cent level of significance. But if the difference is less than 1.96 times the S.E., then it is considered not significant at 5 per cent level and we can say with 95 per cent confidence that it is because of the fluctuations of sampling. In such a situation our null hypothesis stands true. 1.96 is the critical value at 5 per cent level. The product of the critical value at a certain level of significance and the S.E. is often described as ‘Sampling Error’ at that particular level of significance. We can test the difference at certain other levels of significance as well depending upon our requirement. The following table gives some idea about the criteria at various levels for judging the significance of the difference between observed and expected values:

1. The standard error gives an idea about the reliability and precision of a sample. The smaller the S.E., the greater the uniformity of sampling distribution and hence, greater is the reliability of sample. Conversely, the greater the S.E., the greater the difference between observed and expected frequencies. In such a situation the unreliability of the sample is greater. The size of S.E., depends upon the sample size to a great extent and it varies inversely with the size of the sample. If double reliability is required i.e., reducing S.E. to 1/2 of its existing magnitude, the sample size should be increased four-fold.
2. The standard error enables us to specify the limits within which the parameters of the population are expected to lie with a specified degree of confidence. Such an interval is usually known as confidence interval. The following table gives the percentage of samples having their mean values within a range of population mean.
   
   
3. Important formulae for computing the standard errors concerning various measures based on samples are as under: In case of sampling of attributes.