The two words you should always treat with caution in business
Any time I read a sentence which begins “Studies show...” my heart sinks. It’s often followed by a description of a correlation which is then interpreted as if it were a causal relationship.
There’s a saying in economics: “correlation isn’t causation.” Just because two things tend to move closely in the same direction doesn’t mean that one of them causes the other to move.
Here are some correlations. United States spending on science, space, and technology correlates with suicides by hanging, strangulation and suffocation, with a correlation coefficient of 0.992082.
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Richard Holden is Scientia Professor of Economics at UNSW Business School. Connect with Richard on Twitter.
