What are the Consequences of Incorrect Significance Level?
Setting an incorrect significance level can lead to several issues:
- False Positives: A higher significance level (e.g., 0.1) increases the risk of false positives, leading you to implement changes based on faulty assumptions. - False Negatives: A lower significance level (e.g., 0.01) increases the risk of false negatives, causing you to miss out on beneficial changes. - Resource Wastage: Incorrect decisions based on faulty significance levels can result in wasted resources and opportunity costs.