Type I and Type II Errors
A Type I error occurs when a true null
hypothesis is rejected. The probability of a Type I error is denoted by α, and is the significance level of the hypothesis test, with 0.05 being a common value for α. On the
other hand, a Type II error occurs when the null hypothesis is false and it is not rejected. A Type II error is denoted by β and is often set to 0.20.
Statistical Power
The power of a significance test is the probability of rejecting a false null hypothesis, and is equal to 1 - β. If β is set to 0.20, the power = 0.80.
The power of a test is related to the magnitude of the difference between the null and alternative hypotheses, the sample size, standard deviation, and α, the significance level of the test. Knowing the effect size, power, and α, the sample size can be calculated. Since sample size and power are related, a small sample size results in less power, or reduced probability of rejecting a false null hypothesis.
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