Correlation vs. Causation

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Five years from now, and for the rest of my life for that matter, I will be incorporating the concept of correlation and causation into my everyday life. As I have matured as a psychologist, I have discovered the importance to identify when correlation does not necessarily mean causation. You do not have to look hard in your day-to-day adventures to find an event where just because two things may appear to be related to one another, it does not mean one caused the other to occur.

Five years from now I am hoping to be working in finance at a large corporation or in the midst of starting my own business, both of which will require many difficult decisions regarding how to spend money. For example, I cannot simply assume that because my company or the company I am working for has a good month of June that the month of June is directly correlated with good profits and therefor we should increase spending and inventory during all June months. There are many third variables that may have come into play. Maybe a new product was released, or maybe the economy was on a rise, neither of which has to do with the month of June. Because of my psychology class I realize this, and I will now be more careful and aware of this common fallacy.

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This page contains a single entry by larwa002 published on November 30, 2011 8:29 AM.

Psychology In My Life was the previous entry in this blog.

Psychology for Me in the Future is the next entry in this blog.

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