Download - Consistency vs Unbiasedness

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Consistency and Unbiasedness are two very different concepts- Never use them interchangeably.To define the two terms without using too much technical language: An estimator isconsistentif, as the sample size increases, the estimator "converges" to the true value of the parameter being estimated. To be slightly more precise - consistency means that, as the sample size increases, the sampling distribution of the estimator becomes increasingly concentrated at the true parameter value. An estimator isunbiasedif, on average, it hits the true parameter value. That is, the mean of the sampling distribution of the estimator is equal to the true parameter value. The two are not equivalent:Unbiasednessis a statement about the expected value of the sampling distribution of the estimator.Consistencyis a statement about "where the sampling distribution of the estimator is going" as the sample size increases.

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