Improved central confidence intervals for the ratio of Poisson means

The problem of confidence intervals for the ratio of two unknown Poisson means was “solved” decades ago, but a closer examination reveals that the standard solution is far from optimal from the frequentist point of view. We construct a more powerful set of central confidence intervals, each of which is a (typically proper) subinterval of the corresponding standard interval. They also provide upper and lower confidence limits which are more restrictive than the standard limits. The construction follows Neyman’s original prescription, though discreteness of the Poisson distribution and the presence of a nuisance parameter (one of the unknown means) lead to slightly conservative intervals. Philosophically, the issue of the appropriateness of the construction method is similar to the issue of conditioning on the margins in 2×2 contingency tables. From a frequentist point of view, the new set maintains (over) coverage of the unknown true value of the ratio of means at each stated confidence level, even though the new intervals are shorter than the old intervals by any measure (except for two cases where they are identical). As an example, when the number 2 is drawn from each Poisson population, the 90% CL central confidence interval on the ratio of means is (0.169, 5.196), rather than (0.108, 9.245). In the cited literature, such confidence intervals have applications in numerous branches of pure and applied science, including agriculture, wildlife studies, manufacturing, medicine, reliability theory, and elementary particle physics.