Significance Level
The significance level α is the predetermined probability threshold for making a Type I error (rejecting a true null hypothesis). If p-value < α, the result is statistically significant and H₀ is rejected. Common values are α = 0.05, 0.01, or 0.10. The choice of α should be made before analysing data.
Real World
Medical researchers testing a cancer screening tool use α = 0.01 rather than 0.05 because a false positive (wrongly diagnosing cancer) carries serious psychological and financial consequences for patients.
Exam Focus
Always state α before drawing conclusions; examiners expect you to justify 'reject H₀' by explicitly comparing p-value to the given significance level.
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