I used the book The Economics of Public Issues in my micro
classes. Chapter 1 is called "Death by Bureaucrat." It discusses how the
Food and Drug Administration can make either a Type I error or a Type
II error.
Type I error: The FDA approves a drug before enough testing is done and when people take it, there are harmful side effects.
Type II error: The FDA tests a drug longer than necessary to stay
on the safe side. But people might suffer because the drug is not yet
available. 80,000 people died waiting for Septra to be approved.
The FDA would usually rather make a Type II error because the public can
blame the FDA if a Type I error occurs. But in this case, they wanted
to get masks to people quickly. Not enough testing was done.
Something similar is happening with employee disability pay and mental-health leave. It may be hard for companies to know who really has been disabled by a mental-health issue and needs some leave time. They could accept all such claims to make sure all who deserve it will get it. But some claims might be fraudulent (Type I Error). Or, they could be very strict and only accept a few claims. Then some people who really have a mental-health issue might not get the leave time or help they deserve (Type II Error).
See The Battle Over Disability Pay and Mental-Health Leave: Requests for paid time off for mental-health conditions are denied at a higher rate than straight medical claims, data show by Lauren Weber of The WSJ. Excerpts:
"Companies say they take workers’ mental health seriously and that they want valid claims paid out. They also say there are legitimate reasons for questioning a medical provider’s conclusions about an employee’s ability to perform a job, because it can be more difficult to assess the effects of a mental condition than it is for a medical ailment such as a broken hip."
"Claims administrator Sedgwick says it turned down about 30% of mental-health claims in 2023, compared with 18% of all other claims.
The primary reason for the higher denials was that the medical documentation submitted was insufficient, said David Setzkorn, head of Sedgwick’s workforce absence and disability practice. Research on disability-benefit denials conducted in 2017 by an insurance-industry group found that claims of all types were most commonly denied because the claimant returned to work or the insurance firm determined the person wasn’t disabled.
Insurance-industry experts say mental-health claims are difficult to administer because diagnoses can seem subjective.
“How do you medically prove some of these things?” said Phil Lacy, head of the health and productivity practice at consulting firm Marsh McLennan Agency. “If I broke my arm, I’ve got an X-ray that shows a broken bone. But claims with subjective symptoms are very difficult, and it’s hard to get at the level of detail that helps you understand the severity.”"
Solar Panels, Tradeoffs and Type I & II Errors (2022)
Zombies might return and fighting them is art as well as science (2021)
Remdesivir and Type I & Type II errors (2020)
The Paycheck Protection Program and and Type I & Type II Errors (2020)
The FDA, Masks and Type I & Type II Errors (2020)
Do FAA drone regulations illustrate the tradeoff between Type I & Type II errors (2018)
Maker Of Thalidomide Apologizes (2012)
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