The Dangers of Misinterpreting Causation and Correlation

Just Because Two Things Happen at the Same Time Doesn't Mean One Is Caused by the Other

You've probably heard the saying, "correlation does not imply causation." But what does that actually mean? And why is it important to understand the difference between correlation and causation? Let's take a closer look.

Causation vs. Correlation: What's the Difference?

Causation means that one thing caused another. For example, if you stay up all night studying for a test, you might do poorly on the test because you're tired. This is an example of causation because the cause (staying up all night) led to the effect (a poor test score).

Correlation just means that two things are related. For example, you might notice that every time there's a full moon, you tend to sleep poorly. In this case, there's a correlation between the full moon and poor sleep. However, that doesn't necessarily mean that the full moon is causing you to sleep poorly. There could be other factors at play, such as heightened anxiety levels or changes in your daily routine during a full moon.

Why Does It Matter?

Why does understanding the difference between causation and correlation matter? Because when you're trying to solve a problem or achieve a goal, it's important to identify the root cause of the issue—not just a related event.

For example, let's say your goal is to increase sales by 20% over the next quarter and you're trying to decide whether to invest in Facebook ads. You look at your data and notice that whenever you run Facebook ads, there is an increase in website traffic. But this doesn't mean that Facebook ads cause an increase in website traffic. It could be that people who are interested in your product or service are just generally more likely to be active on Facebook than other social media platforms. In other words, there is a correlation between Facebook ads and website traffic, but not necessarily a causation.

You would want to establish causation—not just correlation—before moving forward with your plan. To do that, you would need to look at other factors that might have affected sales in previous quarters, such as changes in your marketing efforts or variations in customer demand. Only then would you be able to say for sure whether running a Facebook campaign is likely to increase sales by 20%.

Summary

The next time you find yourself wondering whether two things are related or not, take a step back and ask yourself if there might be another explanation for why they're happening at the same time. Just because two things are related doesn't necessarily mean that one is caused by the other. By understanding the difference between causation and correlation, you can avoid making false assumptions about cause and effect—and make better decisions for your business as a result.