Monday, May 23, 2011

Type II Error Bias and the Response to Hurricane Katrina

Type II error bias is not limited to just the FDA. In the April 2006 journal Public Choice Russel Sobell and Peter Leeson explain that type II error bias played a role in the delayed response of the federal government after hurricane Katrina.

Let’s say our government leader finds themself in the following predicament. After the destruction and the levees have broken someone has to make the decision to send in relief workers. However there are risks. Disease infested water, collapsing buildings and roads, roaming bandits, toxic chemical exposure etc. If our leader sends in workers and they meet a terrible fate, the consequences are on his shoulders. Later the media would crucify him over sending our brave heroes in harms way.

Given limited information, here is the model in the context of hypothesis testing:

Ho: X= Xo ‘it is too harmful to send in relief ASAP’
Ha: X= Xa: ‘the harm is trivial, and justified to send in relief ASAP’

Type I Error: sending relief workers into unnecessary danger

If on the other hand, our government official decides to wait, until he has better information he could avoid this. The consequences may be the lives of hurricane victims, but the blame can be shared with nature.

Type II Error: Over cautiousness that prevents a quick response by relief authorities

In general this is one of the explanations given in the Public Choice article explaining the federal government’s response to Hurricane Katrina. It is also one of the reasons in general that many of our leaders at the federal, state, local, levels fail to make timely decisions or provide leadership when needed.

See: Russell Sobel & Peter Leeson, 2006.
"Government's response to Hurricane Katrina: A public choice analysis," Public Choice, Springer, vol. 127(1), pages 55-73, April.