Reasons for Correlation
- Causality x → y
- Reverse causality y → x
- Simultaneity x → y and y → x
- Omitted variable bias z → x and z → y, but x !→ y
Easy Examples
Ice Cream and Sharks
- ice cream is often eaten at beaches
- ice cream consumption is higher on hotter days
- swimming has higher rates on hotter days
- higher swimming rate and higher shark attack rate on hot days
- ice cream consumption is correlated to shark attacks
- BUUUUUT ice cream consumption does not cause shark attacks
- when eating ice cream in Vienna there is no shark attack risk
- example for omitted variable bias
Science and Suicide
Do Storks deliver Babies?
- storks and fertility rate are correlated
- add in km^2 of country and the correlation changes dramatically → Data Dredging if not done properly
