Confidence interval

A confidence interval is a measure of uncertainty in the estimated value due to sample error, quantifying the imprecision. It provides an estimated range of values around a measured value that is likely to contain the true value of the parameter in the overall population. Calculated from sample data, the width of the confidence interval is influenced by the natural variability of the parameter within the population and the size of the sample. A key property is that if numerous independent samples were drawn from the same population, a specified percentage (the confidence level) of the calculated intervals would include the true population parameter. While 95% confidence intervals are most commonly reported (meaning 95 out of 100 such intervals are expected to contain the true value), 99% and 90% intervals are also used. In economic modeling, confidence intervals are used to define plausible ranges for input parameter values, reflecting the uncertainty around those estimates.