Newsflash: Correlation is Not a Cause!

Just about every data scientist and statistician knows that correlation doesn’t necessarily confirm causation. However, popular business and social literature often confuse the two concepts. By understanding the maxim of “correlation is not a cause” more clearly, it’s possible to let loose creativity and imagination of the questioning mind.

Humans like to think and speak in declarative terms. For a sampling, imagine statements bandied about by pundits such as; “global warming is caused by humans”, or “the Financial Crisis of 2008 was caused by greedy bankers” or “Republicans lost the 2008 election because they didn’t pay enough attention to immigration issues.”

Psychologist and author Sue Blackmore says the simple reminder that “correlation is not a cause” (CINAC), would improve just about everyone’s mental toolkit. Case in point, in an Edge.org article, she gives an example of people filling up a railway station as a scheduled train approaches.  She asks, “Did the people cause the train to arrive (A causes B)? Or did the train cause people to arrive (B causes A)?” The answer she says is they both depended on a railway timetable (C caused both A and B)!

In linear systems, cause and effect is much easier to pinpoint. However, the world around us is considered a complex system where there are often multiple variables pushing an outcome to occur. Nigel Goldenfeld, a professor of physics at University Illinois, sums it up best: “For every event that occurs, there are a multitude of possible causes, and the extent to which each contributes to the event is not clear. One might say there is a web of causation.”

And author Richard Bookstaber says that it’s a difficult search to pinpoint cause in complex systems especially because, “a change in one component can propagate through the system to lead to surprising and apparently disproportionate effect elsewhere, e.g. the famous “butterfly effect””.

The concept that in complex systems there is a “web of causation” may not sit right with some individuals, especially since newscasters, publishers, and even a fair portion of scientists prefer to insist on simple declarations of true and false.  However, the very nature of complex systems is that every object is in some way linked to another with either weak or strong ties and often connections are opaque and mysterious. So even a correlation of one, may not necessarily mean A causes B.

Freeing ourselves from the shackles of CINAC thinking means we have the possibility to let loose our imaginations says psychologist Sue Blackmore. Each definitive report should be greeted with skepticism. And when “A causes B” is held up as the answer, Blackmore cautions, then the critical mind automatically gets to work thinking; “Maybe instead, B actually causes A! And if not, what are the other opportunities?”

It’s human nature to try and explain the world around us. However, when it comes to complexity, we should lead discussions with a measure of humility to include questions and possibilities rather than declarations of certainty.

Questions:

  • How does our “aim to explain” end up stifling innovation and creativity?
  • The US Securities and Exchange Commission posited an explanation for the May 6, 2010 “Flash Crash”, but experts are not buying their simplistic explanation of a single “trigger event”. What are your thoughts?
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6 comments

  1. Paul,

    Great post, and this is the reason that I dismiss a lot of what is said in the news. The value of deeper thought is pushed aside in order to provide a crisp message. When something interesting is said it may drive me to dig deeper into the issue and try to determine what type of correlations exist.

    The unfortunate thing is that communications has expanded beyond our capacity to truly understand all the issues. At times we have to rely on trusted third parties to lay out the arguments. However, every third party also has their own agenda.

    It comes down to focus versus noise and our personal judgement to differentiate those items.

    • Hey NWGuy, thanks for dropping by. I liked your comment regarding how there’s too much content to absorb and understand all the issues. It’s really relegating us to be more broad than narrow and nichy (is that a word?) in what we truly do know. There’s just not enough hours in the day to live a life and absorb everything is there? You also make a good point that the questioning mind looks for the agenda behind each broadcast, news item, or storyline. There’s always an agenda.

      Thanks for commenting!

  2. Marketing efforts, is many instances, want us to belive that correlation is a cause.
    “Use our toothpaste and your teeth will shine”
    Questioning is not expected. Actually we can see less and less questioning minds. That’s not what is needed from us. Unfortunately.

    Further, all your examples (“the Financial Crisis of 2008 was caused by greedy bankers” etc) are used to actually distract attention from the real subject requiring action, by pointing to the scapegoat of the failure.

    Think of markets and credit rating agencies. Does deviation in performance cause resetting of rating? Does resetting of rating causes deviation in performance? Or is there some “C” who wanted all this vicious (virtuous for “C”) circle to happen to specific extent?

    • Eugeny, you’ve made some good points. The questioning mind is all to un-common these days – it seems we simply don’t have the time to think so we adopt heuristics, or simply believe what we’re told. And some problems (financial crisis 2008) for example are just too complex to tag them too simple causes.

      As to your example on credit rating agencies – I will say their liberal use of triple A ratings for CDOs that they never even bothered reviewing in depth (especially equity and mezzanine tranches), leads me to believe that they in fact share much of the blame for the Great Recession.

      Thanks for commenting!

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