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Correlation — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsCorrelation6 Marks
Question
How is correlation different from causation?
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Answer

Difference between correlation and causation is given below:
  1. Definition: "Correlation is a statistical measure (expressed as a number) that describes the size and direction of a relationship between two or more variables. A correlation between variables, however, does not automatically mean that the change in one variable is the cause of the change in the values of the other variable". "Causation indicates that one event is the result of the occurrence of the other event; i.e. there is a causal relationship between the two events. This is also referred to as cause and effect."
  2. Mutual dependence: Theoretically, the difference between the two types of relationships are easy to identify - an action or occurrence can cause another (e.g. smoking causes an increase in the risk of developing lung cancer), or it can correlate with another (e.g. smoking is correlated with alcoholism, but it does not cause alcoholism). In practice, however, it remains difficult to clearly establish cause and effect, compared with establishing correlation.
  3. Pure Chance: The correlation between the two variables may be due to pure chance or co-incidence. But in causation, it is not coincidental but logical.

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