There are two types of errors in hypothesis testing: Type I and Type II errors. A Type I error occurs when the null hypothesis is rejected when it is actually true. A Type II error occurs when the null hypothesis is not rejected even when it is false. To minimize Type I errors, the significance level should be decreased, while to minimize Type II errors, the significance level should be increased or the sample size improved. The tradeoff is that minimizing one error type tends to increase the other, so the costs of each error must be considered.

1. Type I and Type II Errors
Types of Errors in Hypothesis Testing

2. About Neha
❏ Assistant Consultant at Tata Consultancy Services
❏ Microsoft Certified Azure Data Scientist Associate
❏ Alumni Udacity Data Analyst Nanodegree program
❏ 13+ years in IT/Software Industry

3. Jury Trial
● Scenario 1: Person is guilty but the jury finds them
innocent. Type I Error.
● Scenario 2: Person is innocent but the jury finds them
guilty. Type II Error.
Types of Error in Hypothesis testing

4. What are Type I and Type II Errors?
● Type I error: Null rejected when True
● Type II error: Null not rejected when False.
● Minimize probability of Type I : Decrease Alpha
(significance level)
● Minimize probability of Type II :
○ Increase Alpha
○ Good sample size

5. What is worse?
● Trade off between Type I and Type II
● Some cases Type I is worse - wastage of
resources to implement unnecessary
changes.
● Other cases Type II is worse : missed
opportunities to innovate

6. References:
● Types of Errors.. Statistics by Jim. https://statisticsbyjim.com/hypothesis-testing/types-
errors-hypothesis-testing/
● Hypothesis tests. Statistics by Jim. https://statisticsbyjim.com/glossary/hypothesis-tests/
● Type I and Type II errors. https://www.scribbr.com/statistics/type-i-and-type-ii-
errors/#:~:text=In%20statistics%2C%20a%20Type%20I%20error%20means%20rejecting%2
0the%20null,hypothesis%20when%20it's%20actually%20false.&text=of%20a%20test.-
,Power%20is%20the%20extent%20to%20which%20a%20test%20can%20correctly,effect%2
0when%20there%20is%20one.
● https://www.csus.edu/indiv/j/jgehrman/courses/stat1/misc/hyptests/8hyptest1.htm
● McLeod, S. A. (2019, July 04). What are type I and type II errors? Simply psychology:
https://www.simplypsychology.org/type_I_and_type_II_errors.html