Can you think of an example where you may want to try harder to avoid one type o

Question

Can you think of an example where you may want to try harder to avoid one type or another?

My example would be the underwriter at a mortgage company.

Can you think of a health related policy (or political, social, economic, etc. policy) that pushes people toward avoiding one type or another?

Most mortgage companies follow a policy of Equal Opportunity Lending. An underwriter must ensure that they process the applicants information correctly or else they could inadvertently shatter a person's/family's dreams.

What are the repercussions of such policies?

An error during the processing could cause an unqualified person to get approved for a home loan that they cannot truly afford. This would place the person/family into a situation that they could not financially handle. However, if the underwriter made an error that denied a qualified person/family for a home loan, then it could leave the applicant in a less than desirable living situation along with causing stress and frustration from being denied.   

The Conclusion of the underwriter concering a loan applicant. Population Condition (Underwriter at a mortgage company) H0: Approved for a loan Ha: Denied a loan Fail to Reject H0 (Person can financially handle a loan) Correct conclusion Incorrect Conclusion: Type 2 Error (Person is denied a loan and is stuck in a bad living situation) Reject H0: (Person can not handle the loan) Incorrect Conclusion: Type 1 error (Person loses new home due to inability to make payments and winds up homeless) Correct conclusion

Explanation / Answer

Type 1 error

when you reject ho but actually Ho is true

Type 2 error

when you accept Ho but actually Ho is false

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