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Finding standard error of variation when z-score and population are known?

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    Finding standard error of variation when z-score and population are known?

    Hi all, this is probably more a maths/statistics question rather than Excel, however I'm using Excel so I hope I will get the answer here.

    I am currently running an A/B Test to determine which web page has the best conversion rate and the statistical significance of that test. My data and formulas are as follows:

    Web Page A
    Unique Visits = 6000
    Conversions = 37
    Conversion Rate = 37 / 6000 = 0.62%
    Standard Error = SQRT((0.62% x (1-0.62%)/6000)) = 0.0010

    Web Page B
    Unique Visits = 2000
    Conversions = 21
    Conversion Rate = 21 / 2000 = 1.05%
    Standard Error = SQRT((1.05% x (1-1.05%)/2000)) = 0.0023

    Therefore
    Z-Score = (0.62%-1.05%)/SQRT(POWER(0.0010,2)+POWER(0.0023,2)) = -1.738
    P Value = NORMSDIST(-1.738) = 0.0411
    Confidence Level = 1-0.0411 = 0.9589 = 95.89%

    I think I am doing everything right up to this point. What I want to do now is reverse the formula, and find out the required conversions, conversion rate and standard error of web page B, when the z-score and individual sample sizes are both known, in other words:

    Web Page A
    Unique Visits = 6000
    Conversions = 37
    Conversion Rate = 37 / 6000 = 0.62%
    Standard Error = SQRT((0.62% x (1-0.62%)/6000)) = 0.0010

    Other 'knowns'
    P-Value = 0.05
    Z-Score = -1.64

    Web Page B
    Unique Visits = 2000
    Conversions = ?Formula?
    Conversion Rate = ?Formula?
    Standard Error = ?Formula?

    Can anyone help?

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    Forum Expert ben_hensel's Avatar
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    Re: Finding standard error of variation when z-score and population are known?

    UA = page views A, UB = page views B
    CA = number conversions A, CB = number conversions B
    Rn = Conversion rate for any Page n = Cn / Un
    EA = Standard Error A, EB = Standard Error B
    En = f(Rn, Un)
    Z = Z score of the two

    Functionally, you've got 1 formula and 1 unknown:
    En = f(Rn, Un) => Rn = f(Cn, Un) therefore En = f(Cn, Un)
    So
    Zboth = f(CA, UA, CB, UB)
    you have the value of Zboth, and all three variables except CB.
    So it's one formula, one unknown; the scenario is theoreticaly solvable.

    Well, solving it algebraically would be annoying, but fortunately we're doing this numerically, so just use the SOLVER add-in, start with a guess of like UB / 100, and let the computer turn the crank until it converges on the solution.

    Once you've done that and found the Conversions for page B, finding the rate and the error is straightforward.

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    Re: Finding standard error of variation when z-score and population are known?

    @ben

    Thanks for the reply... I hadn't used SOLVER before. What it seems to do though is just give me the result. I'm looking for the actual formula; then I can apply that formula to other situations.

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    Forum Expert ben_hensel's Avatar
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    Re: Finding standard error of variation when z-score and population are known?

    If you're looking for the formula, then you need to take the function you have with the unknown you want, which is

    Zboth = f(CA, UA, CB, UB)

    and reorganize it to output what you don't know based on what you do:

    CB = g(Zboth, CA, UA, CB)

    The way to do that is,

    close excel,
    and take out a pad of paper and a pencil,
    and do algebra to re-arrange the equation until it looks the way you want.

    Well, just on inspection I think that way will be a hassle, so my suggestion was to just "cheat" and use algorythmic iteration to solve it without rearraging it. Give the computer a guess, and let it see if the result matches the answer, and then it will change the guess, and after doing that a hundred times it will converge on the answer.

    But if you want the general case formula, well...

    that's not an excel problem, that's an algebra problem.

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    Re: Finding standard error of variation when z-score and population are known?

    I will agree with ben -- at this point this looks more like an algebra problem than an Excel problem. A couple of additional observations:

    1) It looks like you will have three equations (formulas for conversion rate B, standard error B, and Z) in three unkowns (conversions, conversion rate B, and standard error B). With the square's and square roots, the algebra will probably become "complex". Here's a reasonable tutorial for solving systems of equations. http://www.purplemath.com/modules/syseqgen.htm The more complex examples from page 4 on of this tutorial might be instructive. Using this method of substitution, I would probably start by substituting the expression for standard error B into the expression for Z.
    2) If my hunch is correct, you will end up with a 2nd order polynomial, meaning you will probably end up using some form of the quadratic formula to get the solutions. (A refresher for solving quadratic equations: http://www.purplemath.com/modules/solvquad.htm) Recognize that this means there will likely be two possible solutions, and you will need to think through and understand how to determine which solution is the correct solution. Hopefully it will be as easy one of the solutions will always be completely unreasonable (such as giving a negative result when all solutions should be positive). You will need to give some thought to this as you develop your final spreadsheet.
    Quote Originally Posted by shg
    Mathematics is the native language of the natural world. Just trying to become literate.

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    Re: Finding standard error of variation when z-score and population are known?

    @ben and @mrshorty

    Thanks for your replies. I think you are both correct, it is more of an algebra problem rather than Excel. I wasn't sure if there was maybe a built in function that I was missing.

    I also asked the same question on a Mathematics forum and the answer that came back was very similar to yours, MrShorty. I guess I need to start learning about quadratic equations.

    Thanks for taking the time to help out guys.

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    Re: Finding standard error of variation when z-score and population are known?

    Based on your last post in this thread, its apparent that you are satisfied with the solution(s) you've received and have solved your question, but you haven't marked your thread as "SOLVED". I will do it for you this time.

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