We're not omniscient. That means making errors is unavoidable. Understanding the nature of errors is vital to our well-being. Let's look at it.
There are two types of errors, nicely named the type I error and the type II error. The type I error is when we reject a true hypothesis when we should accept it. The type II error is when we accept a false hypothesis when we should reject it. In decision-making, there's always a non-zero probability of making one error or the other. That means we're confronted with asking the question: Which error is least costly? Let's apply this concept to a couple of issues.
The stated reason for going to war with Iraq is that our intelligence agencies surmised Saddam Hussein had, or was near having, nuclear, biological and chemical weapons of mass destruction. Intelligence is never perfect. During World War II, our intelligence agencies thought that Germany was close to having an atomic bomb. That intelligence was later found to be flawed, but it played an important role in the conduct of the war.
Since intelligence is always less than perfect, we're forced to decide which error is least costly. Leading up to our war with Iraq, the potential errors confronting us were: Saddam Hussein had weapons of mass destruction and we incorrectly assumed he didn't. Or, he didn't have weapons of mass destruction and we incorrectly assumed he did. Both errors are costly, but which is more costly? It's my guess that it would have been more costly for us to make the first error: Saddam Hussein had weapons of mass destruction and we incorrectly assumed he didn't.
Another example of type I and type II errors hits closer to home. Food and Drug Administration (FDA) officials, in their drug approval process, can essentially make two errors. They can approve a drug that has unanticipated dangerous side effects (type II). Or, they can disapprove, or hold up approval of, a drug that's perfectly safe and effective (type I). In other words, they can err on the side of under-caution or err on the side of over-caution. Which error do FDA officials have the greater incentive to make?
If a FDA official errs by approving a drug that has unanticipated, dangerous side effects, he risks congressional hearings, disgrace and termination. Erring on the side of under-caution produces visible, sick victims who are represented by counsel and whose plight is hyped by the media.
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