It can create a false positive which would result in unnecessary treatment or a false negative which would withhold necessary treatment.
For example, if OLS is performed on a heteroscedactic data set, yielding biased standard error estimation, a researcher might fail to reject a null hypothesis at a given significance level, when that null hypothesis was actually uncharacteristic of the actual population (making a type II error).
Type I errors which consist of rejecting a null hypothesis that is true; this amounts to a false positive result.
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Type II errors which consist of failing to reject a null hypothesis that is false; this amounts to a false negative result.
In fact, the type I error rate tends to be lower than the nominal level when outliers are present, and there is often a dramatic increase in the type II error rate.
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Although it is sometimes claimed that least squares (or classical statistical methods in general) are robust, they are only robust in the sense that the type I error rate does not increase under violations of the model.
The WGA program can produce false positives (incorrectly identifying a genuine copy of Windows as "not genuine").
type species | type | Type (biology) | Diabetes mellitus type 1 | Type O Negative | The Comedy of Errors | Diabetes mellitus type 2 | Volkswagen Type 2 | Type I and type II errors | Type 56 assault rifle | type (biology) | Type 38 | Bugatti Type 57 | Type II supernova | Type Directors Club | Type 38 rifle | type genus | Type 59 | Type 45 destroyer | Jaguar S-Type | Handley Page Type O | Geranylgeranyltransferase type 1 | errors | Blood type | Word (data type) | urban-type settlement | Type species | Type O' Negative | Type 21 frigate | Type 212 submarine |