Method of moments :
The method of moments is a statistical technique that uses sample data to estimate the parameters of a population distribution. It is a useful tool for researchers and analysts who want to make inferences about a population based on a sample.
To understand the method of moments, it is helpful to first understand the concept of moments in statistics. Moments are numerical summaries of a dataset that can be used to describe its shape, spread, and center. The first moment is the mean, which describes the center of the data, and the second moment is the variance, which describes the spread of the data. Higher order moments can also be calculated, but for the purposes of this explanation, we will focus on the first two moments.
The method of moments uses sample data to calculate the sample moments, and then uses these sample moments to estimate the population moments. This is done by equating the sample moments to the population moments, and then solving for the population parameters.
For example, suppose we have a sample of 10 observations from a normal distribution with unknown mean and variance. To estimate the population mean and variance using the method of moments, we first calculate the sample mean and variance. The sample mean is simply the average of the observations, and the sample variance is the sum of the squared differences between each observation and the sample mean, divided by the number of observations minus one.
Once we have calculated the sample moments, we can use these values to estimate the population moments. For a normal distribution, the population mean is equal to the sample mean, and the population variance is equal to the sample variance times a correction factor of n/(n-1), where n is the number of observations in the sample. Thus, our estimated population mean and variance are simply the sample mean and variance multiplied by this correction factor.
Another example of the method of moments is estimating the parameters of a Bernoulli distribution. Suppose we have a sample of 10 observations from a Bernoulli distribution with unknown probability of success p. To estimate p using the method of moments, we first calculate the sample mean, which is simply the proportion of observations that were successes.
Once we have calculated the sample mean, we can use this value to estimate the population mean. For a Bernoulli distribution, the population mean is equal to the probability of success p. Thus, our estimated value of p is simply the sample mean.
In both of these examples, the method of moments allows us to make inferences about the population based on the sample data. It is a simple and intuitive method that can be used to estimate the parameters of many different types of distributions.