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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; Data and Data Sets; 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

More from the Author

    • September 1, 2021
    • Wall Street Journal

    <i>The Family Firm</i> Review: Data-Driven Parenting

    By: Michael Luca
    • September 2021
    • Journal of Regional Science

    Learning from Deregulation: The Asymmetric Impact of Lockdown and Reopening on Risky Behavior During COVID-19

    By: Edward L. Glaeser, Ginger Zhe Jin, Michael Luca and Benjamin T. Leyden
    • July 2021
    • Management Science

    The Effect of Price on Firm Reputation

    By: Michael Luca and Oren Reshef
More from the Author
  • <i>The Family Firm</i> Review: Data-Driven Parenting By: Michael Luca
  • Learning from Deregulation: The Asymmetric Impact of Lockdown and Reopening on Risky Behavior During COVID-19 By: Edward L. Glaeser, Ginger Zhe Jin, Michael Luca and Benjamin T. Leyden
  • The Effect of Price on Firm Reputation By: Michael Luca and Oren Reshef
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