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  • November 5, 2021
  • Article
  • Harvard Business Review Digital Articles

Leaders: Stop Confusing Correlation with Causation

By: Michael Luca
  • Format:Electronic
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Abstract

We’ve all been told that correlation does not imply causation. Yet many business leaders, elected officials, and media outlets still make causal claims based on misleading correlations. These claims are too often unscrutinized, amplified, and mistakenly used to guide decisions. It’s easy to see how these mistakes occur, as a large body of research in behavioral economics and psychology has highlighted systematic mistakes we can make when looking at data. This article explores avoidable mistakes that have occurred as a result of misinterpreted correlations, and lays out a path for business leaders to more effectively interpret empirical patterns and leverage data to guide decisions.

Keywords

Behavioral Economics; Data Analysis; Organizations; Decision Making; Analytics and Data Science; Analysis; Learning

Citation

Luca, Michael. "Leaders: Stop Confusing Correlation with Causation." Harvard Business Review Digital Articles (November 5, 2021).
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About The Author

Michael Luca

Negotiation, Organizations & Markets
→More Publications

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More from the Author
  • Shanty Real Estate: Teaching Note Supplement By: Michael Luca
  • Black Ownership Matters: Does Revealing Race Increase Demand for Minority-Owned Businesses? By: Abhay Aneja, Michael Luca and Oren Reshef
  • Digital Public Health Interventions at Scale: The Impact of Social Media Advertising on Beliefs and Outcomes Related to COVID Vaccines By: Susan Athey, Kristen Grabarz, Michael Luca and Nils Wernerfelt
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