An insurance company sets up a statistical test with a null hypothesis that the average time for processing a claim is 7 days, a
nd an alternative hypothesis that the average time for processing a claim is greater than 7 days. After completing the statistical test, it is concluded that the average time exceeds 7 days.
However, it is eventually learned that the mean process time is really 9 days.
What type of error occurred in the statistical test?
There are two types of statistical errors, the type 1 error and the type 2 error. In this case we refute the null hypothesis when the hypothesis is, in fact, false, because the mean process is 9 days instead of 7. Therefore we made no errors.
If the null hypothesis were True, a type 1 error would have ocurred. If the null hypothesis were false and we didnt refute it, then a type 2 error would have ocurred.
