Decision in professional life
My goal is to advance in my career as well as to maximize my remuneration. After completing my bachelor’s degree, I have a decision to make regarding whether to pursue further education or work experience.
Null hypothesis: there is no relationship between salaries and years of education.
Alternative hypothesis: there is a positive relationship between salaries paid to a worker and his/her years of education.
Type I error
Type I errors happen when a correct null hypothesis is rejected (Mendenhall, 2009). In this case, it may be true that the amount of salaries I will be paid will not depend on the years of education. If I make a decision to further my studies to increase my expected salaries, I will have rejected the null hypothesis when it is true. The correct decision would be to accept the null hypothesis.
Type II error
Type II errors occur when a false null hypothesis is wrongly accepted (Graham, 2011). If there is a relationship between the amount of salaries and the years of education a worker has gone through, then the null hypothesis, in this case, will be false. If I had accepted the null hypothesis and forgo further studies and pursue other avenues for increasing y salaries. It will turn out that my salaries will not increase since I have fewer years of education.
Both type I and type II errors will be costly since I will not achieve my goal of maximizing salaries. I can reduce the two types of errors by having a lower significance level as well as increasing the sample size (Graham, 2011). However, the possibility of making any of the two errors cannot be eliminated completely.
References
Graham, A. (2011). Statistics. London: Hodder Education.
Mendenhall, W. (2009). Introduction to probability and statistics. Belmont, Calif.:
Wadsworth Pub. Co.
