Approximate circuit design has gained significance in recent years targeting error-tolerant applications. In the literature, there have been several attempts at optimizing the number of approximate bits of each approximate adder in a system for a given accuracy constraint. For computational efficiency, the error models used in these routines are simple expressions obtained using regression or by assuming inputs or the error is uniformly distributed. In this article, we first demonstrate that for many approximate adders, these assumptions lead to an inaccurate prediction of error statistics for multi-level circuits. We show that mean error and mean square error can be computed accurately if static probabilities of adders at all stages are taken into account. Therefore, in a system with a certain type of approximate adder, any optimization framework needs to take into account not just the functionality of the adder but also its position in the circuit, functionality of its parents, and the number of approximate bits in the parent blocks. We propose a method to derive parameterized error models for various types of approximate adders. We incorporate these models within an optimization framework and demonstrate that the noise power is computed accurately. © 2021 ACM.