## Tuesday, May 21, 2013

### Statistics 101: Central Limit Theorem Simulation in Excel

Understanding Central Limit Theorem is of EXTREME importance in statistics. This concept usually sets the boundary line between people who understand statistics and people who don’t.

What is confusing about this topic is usually terminology – mean of sampling distribution of the mean, standard deviation of the sampling distribution of the mean – you get the point. What I wanted to do is to make this thing easier to comprehend by using Will Hopkins approach by using simulations. Will Hopkins created great and must read series of spreadsheet designed to help out lost souls (like me) comprehend basic statistic concepts. You can find those spreadsheets and description HERE.

What was lacking in Hopkins spreadsheets was simulation of central limit theorem. Thus I have created this spreadsheet using his famous template. I suggest watching lectures by Khan Academy and then playing with the spreadsheet. Modifying various numbers and seeing how that affects the output might give you deeper understanding of this fundamental concept behind all inferential statistics. I believe I still lack some of the nuts and bolts to get, so I might listen to my own advice and check the Khan videos.

If you find any errors please be free to notify me.