Question

Please give one example where (and/or why) would or could a prediction interval be used in practice or in your own professional or interest area? What would be the benefit of using a prediction interval over other possible statistical methods?

Answer 1

Generally in statistics we use prediction intervals regression statistics.

Let's consider the equation, (Based on sample data of students salary and education from a college class)

Salary = 9500 + 10*Education

Here the slope is Education

Here, we construct prediction intervals for Salary which gives us say an approximate 95% range for the Salary based on the data.

Benefits of using this over confidence intervals or regression statistics is that it gives us a possible range between which the salary lies. From regression we can just find single points based on the dataset.