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Actuarial statistics uses probability theory and statistical inference to quantify insurance claims, premiums, and the uncertainty of future losses. Aggregate claims model describes portfolios, reinsurance redistributes losses, and the Bühlmann model combines experience with population information.

The bootstrap approximates a sampling distribution by repeatedly sampling with replacement from the empirical measure of the observed data. In the ordinary nonparametric version, observations are assumed independent and identically distributed; a bootstrap sample has the same size as the original statistical sample. A statistic, such as a sample mean or sample median, is recomputed on each resample. Its variation across resamples estimates how the original statistic would vary across repeated sampling from the unknown probability distribution.^[ref]

The key distinction is between the observed statistical sample and its still-unknown source probability distribution. Condition on the observed values $x_1,\dots ,x_n$ and form the empirical measureHere ${\delta }_{x_i}$ is a Dirac measure. Draw independent indices $I_1,\dots ,I_n$ from the uniform distribution on a finite set $\{1,\dots ,n\}$ and set $X_j^{\ast }=x_{I_j}$. Each observed slot has probability $1/n$ on every draw. If equal values occupy several slots, their total probability is the sum of those slot probabilities; distinct observed values need not be equally likely. A star denotes this conditional resampling experiment. There are $n^n$ equally likely ordered index sequences, although bootstrap count vectors and statistics can combine many such sequences.

A complicated sampling distribution need not stop statistical inference when recomputing the statistic is easy. The bootstrap reuses that calculation on simulated datasets. The plug-in estimator principle replaces the unknown probability measure by ${\hat{P}}_n$ in the whole repeated-sampling experiment. Whether that substitution approximates the target sampling distribution needs an appropriate bootstrap consistency theorem for the sample mean or a result for the particular statistic. A larger number of resamples reduces Monte Carlo error; it cannot repair the bootstrap failure for a uniform endpoint, an unrepresentative statistical sample or ignored statistical dependence.^[ref]

A capture-recapture model is a statistical model for repeated observations of identifiable individuals, including those missed on some occasions. A closed-population capture-recapture model estimates a fixed population cardinality; models allowing individuals to enter or leave can instead describe survival and recruitment. The sampling assumptions determine which likelihood function is appropriate.

For the two-sample closed-population capture-recapture model, condition on the sample sizes $M$ and $C$. If the second sample selects $C$ distinct individuals from $N$ by simple random sampling, then the overlap $R$ has the hypergeometric distribution:Here $r$ is an integer and the probability mass function is zero outside these bounds. The binomial coefficients count choices of $r$ marked and $C-r$ unmarked individuals, divided by all equally likely size-$C$ subsets. The hypergeometric distribution has expected valueEquating the observed overlap with this expected value gives the Lincoln-Petersen estimator. The underlying sampling without replacement, probability mass function, and expected value are developed in Raymond P. Guiteras, MIT 14.30 hypergeometric distribution handout, §§1–4 and 8.

For the toy counts $M=20$, $C=25$, and $R=5$, hold the observations fixed and vary the unknown integer $N$. The likelihood function isValues below forty cannot contain the observed set union. Exact comparison of consecutive likelihoods gives two tied maximum-likelihood estimates, $N=99$ and $N=100$. The Lincoln-Petersen estimator returns $100$; the Chapman estimator returns $90$ and is a different rule for estimation.

The vertical scale is $L(N)/{\max }_{n\ge 40}L(n)$. This relative likelihood compares how well candidate statistical parameters explain the same observations; it is not a posterior probability. The displayed range $40\le N\le 300$ is only a plotting window. The likelihood function remains positive for every integer $N\ge 40$ and tends to zero as $N$ increases, so the curve has a continuing right tail. The data do not justify truncating statistical inference at three hundred. The conditional hypergeometric distribution formulation also appears in Louis-Paul Rivest and Mamadou Yauck, Small Sample Estimators for Two-way Capture Recapture Experiments, §3, equation (5).

Zero recaptures require care. With $R=0$ and positive $M,C$, the Lincoln-Petersen estimator has no finite ratio, but the capture-recapture model still gives a valid likelihood function:This likelihood function increases toward one as $N$ grows, so there is no finite maximum-likelihood estimate. For the same sample sizes twenty and twenty-five with zero overlap, forty-five distinct individuals would be observed. Lack of overlap supplies a lower bound but very weak information about large population cardinalities.

In more elaborate capture-recapture models, a first-recapture array $m_{ij}$ counts individuals released at occasion $i$ and next observed at $j$. A probability of survival ${\varphi }_j$ and a probability of detection $P_{j+1}$ contribute a no-observation continuation factor ${\varphi }_j(1-P_{j+1})$. The resulting likelihood function depends on both survival and detection; these probabilities need not be separately identifiable at the last observation interval. Missing-count EM for capture-recapture describes one way to fit such a model, and identifiability remains a separate issue from computing an estimator output.

The empirical distribution function counts the fraction of observations at or below a threshold. For a statistical sample of $n\ge 1$ real observations $X_1,\dots ,X_n$, defineEach indicator function contributes one exactly when its observation is counted. Equivalently, $F_n(x)=P_n((-\infty ,x])$, where the empirical measure $P_n=n^{-1}{\sum }_i{\delta }_{X_i}$ assigns probability mass $1/n$ to each observation, including repeated observations.^[ref]

Choose the illustrative statistical sample $[1,1,2,4,6]$. Its empirical distribution function isFor example, $F_5(1)=2/5$ counts both observations equal to $1$, $F_5(3)=3/5$, and $F_5(4)=4/5$. There is no observation at $3$, so there is no jump there. The five observations produce only four distinct jump locations.

The convention $X_i\le x$ makes the empirical distribution function right-continuous: once a threshold reaches an observation, that observation remains counted immediately to its right. For a finite statistical sample, the count is constant from any $x$ up to the next larger observed value, proving right continuity. Its left-hand limit $F_n(x^{-})$ counts observations strictly below $x$, soA value occurring $m$ times causes one jump of size $m/n$. At $1$ the jump is $2/5$; at $2$, $4$, and $6$ each jump is $1/5$. All jumps sum to one. Thus the empirical distribution function is a nondecreasing step function with limits zero and one, and is itself a valid cumulative distribution function.

This turns many questions about data into simple cumulative distribution function operations. The observed fraction in $(a,b]$ is $F_n(b)-F_n(a)$: for $(1,4]$ it is $4/5-2/5=2/5$, counting $2$ and $4$ but excluding both $1$s. Including the left endpoint gives $F_n(4)-F_n(1^{-})=4/5$. A sample quantile reads the same staircase in reverse: the smallest threshold reaching $1/2$ is $2$. Unlike a histogram, this representation requires no choice of bins; its jumps retain every observation and its multiplicity.

The exact description of a finite statistical sample must be distinguished from a statistical model for how it was obtained. The empirical distribution function is defined for any finite list, with no independence assumption. Once the list is observed, its counts are fixed. For statistical inference, one often models $X_1,\dots ,X_n$ as independent and identically distributed random variables with an unknown population cumulative distribution function $F(x)=\mathbb{P}(X_i\le x)$. Then $F$ describes the sampling law, while $F_n$ varies across repeated statistical samples. The value $F_5(1)=0.4$ is an observed fraction and an estimate of $F(1)$; it does not establish that the population probability is $0.4$. Even when $F$ is continuous, every finite $F_n$ is discrete.

For any threshold $x$ fixed before sampling, the indicator functions are independent Bernoulli random variables with success probability $F(x)$. Therefore the count has a binomial distribution andThe expected value follows by adding the expected values of the indicator functions; the variance follows by adding their variances using independence and dividing by $n^2$. Thus $F_n(x)$ is an unbiased estimator of $F(x)$ at a fixed threshold. Controlling the error at every threshold at once requires more than a fixed-threshold calculation: the DKW inequality supplies such control, and the Glivenko-Cantelli theorem describes its uniform convergence almost surely as $n$ grows.

Comparing $F_n$ with a proposed cumulative distribution function also motivates goodness-of-fit tests, including the Kolmogorov-Smirnov test, the Anderson–Darling test, and the Cramér–von Mises criterion. A standard Kolmogorov-Smirnov test calibration assumes a fully specified continuous population law; fitting its statistical parameters from the same statistical sample changes that calibration.^[ref]

GW150914 is the first directly detected gravitational wave, interpreted as a binary black hole inspiral, merger and ringdown. Its discovery paper reports a peak projected gravitational wave strain of approximately $10^{-21}$ and a combined matched filter signal-to-noise ratio of 24. The inferred source-frame component masses were $36_{-4}^{+5}$ and $29_{-4}^{+4}$ solar masses, with 90 percent credible intervals. These are model-dependent estimates from a detector network.^[ref]

The interesting measurement is a chain: curvature changes relative light travel times, wave interference turns those changes into a photodetector signal, calibrated records from separate sites constrain a common source, and statistical inference tests competing explanations. The following original models explain that chain; the plotted time series are stipulated calculations, never measured GW150914 data.

William Sealy Gosset worked at Guinness as a chemist and brewer and developed methods of statistical inference for small samples. He published under the pseudonym "Student". His employment as a chemist is independently recorded by MacTutor; the Dictionary of Irish Biography identifies him as an applied statistician and brewer and explains the pseudonym policy. ^{[ref] [ref]}

The 1908 paper The Probable Error of a Mean appeared in Biometrika 6(1), pages 1–25, with the byline "Student". Its introduction identifies the uncertainty introduced by estimating a standard deviation from few observations and explicitly assumes a normal distribution. Sections II and III develop the relation between sample spread and the standardized sample mean. Its notation uses a sample spread with divisor $n$ and calls the ratio $z$; with that convention, the modern $T$ equals $\sqrt{n-1}z$. The modern exact independence argument is given under studentized normal sample mean. ^[ref]

Section VI describes a physical sampling check: 3,000 cards carrying existing paired measurements were shuffled, then divided into 750 groups of four. He compared observed frequencies of sample spread and standardized sample mean with theoretical frequencies. This was a check using finite, grouped, approximately normal distribution data; it did not prove exact calibration for arbitrary populations. ^[ref]

Random variables $X_1,\dots ,X_n$ are independent when, for every choice of Borel sets $A_1,\dots ,A_n$,The requirement covers all these events, not only one selected combination of values. Equivalently, the generated sigma-algebras are independent sigma-algebras, or the joint probability distribution is the product measure of the marginal distributions. For an infinite family, the same condition must hold for every finite subfamily. For random elements, replace Borel sets by measurable sets in their specified target spaces.

For discrete random variables, checking every entry of the joint probability mass function is enough:Summing this identity over the desired sets proves the event formulation. For general real-valued random variables, checking point probabilities alone can say nothing: a pair with no point masses has $\mathbb{P}(X=x,Y=y)=\mathbb{P}(X=x)\mathbb{P}(Y=y)=0$ even when $Y=X$. The all-set definition avoids that trap. See Gautam Iyer, Conditional Probability and Independence, definitions 12, 16 and 18 and proposition 19, with the continuous case treated in his ^[ref].

For a concrete comparison, let $X,Y$ be independent fair bits: each has a Bernoulli distribution with parameter $1/2$. Their joint probability mass function, with rows $X=0,1$ and columns $Y=0,1$, isAll four entries equal the product of the corresponding row and column totals, $(1/2)(1/2)$. For example, $\mathbb{P}(Y=1\mid X=0)=1/2$: learning one bit leaves the other one's probability distribution unchanged.

Now keep a fair $X$ but set $Y=X$. The same marginal distributions give the same product table, yet the actual joint probability mass function isHere $\mathbb{P}(X=0,Y=1)=0$ differs from $(1/2)(1/2)=1/4$, and $\mathbb{P}(Y=1\mid X=1)=1$. Thus matching marginal distributions does not establish independence. Grinstead and Snell formulate the discrete product criterion in Introduction to Probability, section 4.1, definition 4.4, printed page 143.

Independence is stronger than zero covariance. For square-integrable independent random variables, $\mathbb{E}[XY]=\mathbb{E}[X]\mathbb{E}[Y]$, so they are uncorrelated random variables. The converse fails: take $X$ with a discrete uniform distribution on $\{-1,0,1\}$ and $Y=X^2$. Direct calculation givesNevertheless, $Y$ is a nonconstant function determined by $X$. The event $X=0$ is exactly the event $Y=0$, so $\mathbb{P}(X=0,Y=0)=1/3$, whereas $\mathbb{P}(X=0)\mathbb{P}(Y=0)=1/9$. The positive and negative contributions to the covariance cancel without erasing the statistical dependence.

The usefulness of independence is that a large joint probability distribution can be assembled from small pieces. For $n$ fair independent bits, each of the $2^n$ patterns has probability $2^{-n}$. Products also simplify expected values, and vanishing cross covariances simplify the variance of a sum. Separate measurable functions of independent random variables remain independent: each output event is already an input event, so the defining product rule still applies. These are consequences of a model's independence assumption; whether the assumption describes actual observations is a question for statistical inference.

Mathematical epidemiology uses mathematical models and statistical inference to study the occurrence, transmission, and control of disease in populations.

Official course description.

Five core modules: applied statistics; foundations of statistical inference; statistical programming; computational statistics; statistical machine learning. Four option units are also required. The central page labels its option examples as 2025–26, so they are not presented here as a guaranteed current list. Compulsory dissertation, with the main work taking place from June to September.

Nonparametric statistics studies statistical inference without restricting the unknown probability distribution or target function to a fixed finite-dimensional parametric statistical model. In density estimation and nonparametric regression, the number of features that an estimator can represent may grow with the sample size. Rank tests offer another approach: the probability distribution of their test statistic under the null hypothesis can be obtained without specifying the common continuous probability distribution.

"Nonparametric" does not mean free of assumptions or tuning choices. A kernel density estimator still requires a kernel for density estimation and a smoothing bandwidth, and its interpretation depends on assumptions about the statistical sample. The freedom is useful when a prescribed shape, such as a single normal distribution, would hide features that the observations might reveal.

Response-adaptive randomization can assign a larger proportion of later participants to the treatment currently estimated to be better, improving outcomes for participants within the trial. Its allocation probabilities depend on earlier outcomes, which complicates statistical inference; delayed responses and calendar-time trends can also make adaptation ineffective or biased, and an allocation aimed at patient benefit need not maximize power.

A power law is a relation $f(x)=C{x}^p$, with fixed constants $C$ and $p$. For positive $x$, any real number $p$ is allowed. Its useful feature is a simple scaling rule:The same proportional change of input produces the same proportional change of output, independently of the starting value. The exponent controls that response; the coefficient fixes the magnitude.

For example, the area of a circle is $A(r)=\pi r^2$. Doubling the radius multiplies its area by four, and tripling it multiplies the area by nine. The volume of a sphere is $V(r)=4\pi r^3/3$: the same changes multiply its volume by eight and twenty-seven. The distinction explains why similarly shaped objects do not preserve their ratio of surface area to volume when their size changes.

When the output is positive, a logarithm turns the power law into a straight-line relation. Using positive reference values $x_0$ and $f_0=f(x_0)$,These ratios are dimensionless quantities, so the formula also applies to physical measurements with units. Plotting both ratios on a logarithmic scale gives a line of slope $p$. Changing a unit changes the numerical coefficient, while the exponent stays the same. Positive $p$ describes increasing values; negative $p$ describes decreasing values; $p=0$ gives a constant. The zero coefficient is a degenerate case with no useful logarithmic slope.

Exact scaling is stronger than regular variation. The function $x^2\log x$ has a doubling ratio tending to four, but its logarithmic correction keeps growing. The diagram contrasts it with the exact power law $x^2$.

A power law for a probability density and a power law for a tail probability have different exponents. For a Pareto distribution with $\alpha >0$ and lower endpoint one,The tail probability has exponent $-\alpha$; differentiating it and changing sign gives the probability density exponent $-\alpha -1$. Confusing them changes the interpretation of a fitted exponent. The normalizing coefficient and lower endpoint also matter: a decreasing power law is not automatically a valid probability density over the entire positive real line.

The appearance of a line over a finite logarithmic range is evidence to investigate, rather than a proof of an exact power law or its mechanism. In their study of power-law distributions, Clauset, Shalizi and Newman combine maximum likelihood estimation, goodness-of-fit tests and comparisons with alternative models; their abstract explains why ordinary least-squares fitting can give misleading results for tail data. See Aaron Clauset, Cosma Rohilla Shalizi and M. E. J. Newman, Power-law distributions in empirical data, SIAM Review 51 (2009), 661–703. The scaling rule is mathematically exact when it defines a model; whether a dataset supports that model is a question of statistical inference.

Prior probability describes uncertainty before the current observations are incorporated. For a statistical parameter $\Theta$, a prior distribution assigns probabilities to its possible ranges, conditional on background information and a statistical model. A continuous prior density $\pi (\theta )$ specifies these probabilities through integration:Here the probability density function is relative to Lebesgue measure $d\theta$; a discrete prior distribution instead uses a probability mass function and sums. Density at one point is not the probability of that point. A nonnegative kernel with infinite total mass is an improper prior, whose use requires a separate check of posterior propriety.

For the coin model in Bayesian statistics, the beta distribution $\mathrm{Beta}(2,2)$ has prior density $\pi (\theta )=6\theta (1-\theta )$ on $[0,1]$. Its mean is $1/2$ and its variance is $1/20$. It favors moderate heads probabilities without ruling out values near zero or one. For example,The prior curve in Bayesian posterior makes this preference visible; moment matching for a beta prior explains how to choose a beta distribution from a desired mean and variance.

A prior distribution lets earlier evidence or elicited knowledge contribute to statistical inference when the current sample size is limited. It also exposes assumptions that can be checked by prior elicitation and a prior predictive check. Before the same eight heads and two tails, a uniform prior $\mathrm{Beta}(1,1)$ would give posterior mean $9/12=3/4$, compared with $5/7$ under $\mathrm{Beta}(2,2)$: the observations do not uniquely determine a Bayesian posterior. Even a uniform prior makes a choice of parameter coordinates; its child article explains why changing coordinates can destroy uniformity.

Probability theory describes uncertainty through a probability space: possible outcomes form a sample space, observable questions are events, and a probability measure assigns them numbers between zero and one. The Kolmogorov axioms make those assignments consistent. They let us combine information about several events, update it through conditional probability, and study random variables without listing every possible outcome separately.

For example, roll two dice whose results are independent random variables, each with a discrete uniform distribution on $\{1,\dots ,6\}$. There are 36 equally likely ordered outcomes. Only $(1,6),(2,5),\dots ,(6,1)$ have sum seven, so that event has probability $6/36=1/6$. The sum itself is not uniformly distributed: sum two has only one outcome. Choosing a probability distribution for the elementary outcomes is part of the model; equal likelihood does not follow merely from counting the named possibilities.

The subject becomes especially useful when complete outcome lists are enormous or infinite. Independence turns a joint calculation into simpler pieces, expected value summarizes a random variable, and the law of large numbers explains how averages can become predictable even when individual observations are uncertain. The central limit theorem describes the scale and shape of many remaining fluctuations. These are distinct claims: a small variance of an average does not make every observation close to its expected value.

There is a satisfying unity here: dice, hidden causes, and Brownian motion all use the same rules for events and conditional probability. A model still needs justification. Its exact deductions describe what its assumptions imply; comparison with observations belongs to statistical inference.

For causal inference, a before-and-after change among units selected by an extreme baseline reading combines any causal effect with the change expected from selection. In the synthetic model the selected-group mean falls by about $0.610$ with no intervention at all. Calling that entire fall an intervention effect would attribute a predictable measurement error contribution to a change in the signal.

One comparison design selects all eligible units by the same rule, then uses randomization to assign an intervention or a comparison condition, with the same measurement times and instrument in both groups. To see the principle algebraically, let assignment $A\in \{0,1\}$ be independent of $(T,{\epsilon }_1,{\epsilon }_2)$ within the selected population, and let the intervention add a constant $\delta$ to the second reading: $Y=T+{\epsilon }_2+\delta A$. ThenSubtracting the two expected changes isolates $\delta$ under these assumptions. Both groups experience the same selection tendency in expectation. A finite experiment still has sampling uncertainty; randomization does not guarantee identical realized groups. Without randomization, the same threshold alone does not establish comparable latent signals or error processes. Different selection rules, selective follow-up, changing instruments, or common temporal changes also require explicit assumptions. This is a statistical inference principle about comparisons, not evidence that any particular intervention works.

Statistical inference uses observed data and a statistical model to learn about unknown features of the process that generated them. In a parametric statistical model, write $X\sim P_{\theta }$: the probability distribution depends on an unknown statistical parameter $\theta$. An estimand specifies the target, such as a mean or a difference of means. A statistic is a function of the observations; an estimator is a statistic used to estimate the target. Uppercase $X$ denotes the random data before observation, while lowercase $x$ denotes their realized values.

Three questions lead to different outputs. Statistical estimation asks which target value the observations suggest. A confidence interval asks for a range produced by a procedure with calibrated coverage probability. A hypothesis test asks whether the observations depart sufficiently from a specified null hypothesis to enter its rejection region. These outputs complement one another: an estimated effect size describes magnitude, while a standard error describes the sampling distribution of an estimator. A p-value describes a tail probability under the null hypothesis.

The appeal of statistical inference is that it turns variable observations into reproducible uncertainty statements. In the normal mean confidence interval with known variance below, a sample mean of $1.2$ has standard error $0.5$: both the estimated shift and its precision matter. The calibration depends on the statistical model, including independence and the specified probability distribution. Increasing sample size improves precision under those assumptions; it does not repair a systematically misleading sampling procedure. Bayesian inference provides another framework, using a prior distribution and a likelihood function to obtain a posterior distribution.