Understanding Poisson to Normal Approximation

In summary, Poisson to Normal Approximation is a mathematical concept used to approximate a Poisson distribution with a normal distribution. It is typically used when the sample size is larger than 30 and the mean of the Poisson distribution is greater than 5. The formula for this approximation is Z = (X - μ) / √(σ²). While it is a good approximation when the conditions are met, it may not be as accurate when the mean is close to 0 or the sample size is small. Some real-world applications of Poisson to Normal Approximation include modeling rare events in finance, economics, and engineering, as well as estimating probabilities in quality control and reliability analysis.
  • #1
big man
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1

Homework Statement


I'm trying to understand the poisson to normal approximation. I've got this book that says the poisson distribution approximates the normal distribution well when the mean is greater than 100.


2. understanding/interpretation
Let's call N the number of counts observed when observing a star for example.
Let's also say that I observe this star 300 times getting N counts over t seconds each time.

So if we apply the above "poisson to normal approximation" statement to the situation I just outlined then is this right:

If the mean number of counts observed from the 300 trials is greater than 100, then the poisson distribution will approximate a normal distribution pretty well.

Is this correct? I would really appreciate any confirmation/rejection of this because I'm studying for my exam for tomorrow and this is a small thing I'm not too sure about.

Thanks in advance
 
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  • #2


I can confirm that the statement about the Poisson distribution approximating the normal distribution well when the mean is greater than 100 is correct. In your example, if the mean number of counts observed from the 300 trials is greater than 100, then the Poisson distribution can be used as an approximation for the normal distribution. However, it is important to note that this is not a perfect approximation and there may be some discrepancies between the two distributions. This approximation is often used in cases where the sample size is large and the mean is relatively large, as it simplifies calculations and makes them more manageable. I hope this helps and good luck on your exam!
 

FAQ: Understanding Poisson to Normal Approximation

What is Poisson to Normal Approximation?

Poisson to Normal Approximation is a mathematical concept that allows us to approximate a Poisson distribution with a normal distribution. This is useful because the normal distribution is easier to work with and has more well-known properties.

When is Poisson to Normal Approximation used?

Poisson to Normal Approximation is typically used when the sample size is larger than 30 and the mean of the Poisson distribution is greater than 5. These conditions ensure that the Poisson distribution is well-approximated by the normal distribution.

What is the formula for Poisson to Normal Approximation?

The formula for Poisson to Normal Approximation is:
Z = (X - μ) / √(σ²)
where X is the observed value, μ is the mean of the Poisson distribution, and σ² is the variance of the Poisson distribution.

How accurate is Poisson to Normal Approximation?

Poisson to Normal Approximation is a good approximation when the conditions for its use are met. However, it may not be as accurate when the mean of the Poisson distribution is close to 0 or when the sample size is small. It is always important to check the conditions and the accuracy of the approximation before using it.

What are some real-world applications of Poisson to Normal Approximation?

Poisson to Normal Approximation is commonly used in fields such as finance, economics, and engineering to model rare events such as stock market crashes, natural disasters, or equipment failures. It is also used in quality control and reliability analysis to estimate the probability of defects or failures in a product or process.

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