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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
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More from the Author
  • Experimenting with Algorithm Resume Screening By: Michael Luca, Jesse M. Shapiro, Adrian Obleton, Evelyn Ramirez and Nathan Sun
  • Gentrification and Retail Churn: Theory and Evidence By: Edward L. Glaeser, Michael Luca and Erica Moszkowski
  • Which Firms Gain from Digital Advertising? Evidence from a Field Experiment By: Weijia Dai, Hyunjin Kim and Michael Luca
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