Earlier quoted context omitted.
Arg! I'm on my phone and I meant to upvote! Apologies, this was a very insightful comment. I had never thought of it this way before but this is an instance of Bayes's rule. If the false negative rate goes too high and the percentage of good programmers is small then yes, the process could actually increase the odds of a bad hire.
Actually, it happens as long as your "stricter hiring practices" increase your false negative percentage by a lot more than they decrease your false positive percentage. Try it out with some numbers. 10100 candidates, 100 are "good". Suppose you have 2% false positives and 1% false negatives. You hire 99 good candidates and 200 bad candidates. Suppose now you have 0.5% false positives and 90% false negatives. (You de…
What you're attempting to do works well for hypothetical drug testing[1] or terrorists but not for hiring developers (or anyone else). With the numbers you used you're proposing that less than 1% of all candidates are "good" - nobody would reasonably set the "good" threshold to include only the top 1% of developers.
[1] https://en.wikipedia.org/wiki/Bayes%27_theorem#Drug_testing