Each of us is easily mislead. We are busy and often have too little time to consider all of the nuance of some idea or other. One trap we easily fall into is “Post hoc ergo propter hoc” Things that happen after are caused by the things that happened before.
Sometimes the early event caused the later one, but not always. If I hit the TV with a baseball bat because a referee made a bad call and harmed the Canadiens, the destruction occurred after and was caused by the primary action.
The trick is to not always accept some prior act as causing some later one. Controlling for variables is an important part of statistical analysis.
For example, pregnancies among unmarried teenagers increased substantially after the United States removed the Lord’s prayer from schools. Cause and effect? Maybe not. There was at least one other factor that might have had influence. Around the same time as the removal of the Lord’s Prayer, the government changed their policy and permitted unmarried teenaged mothers to be eligible for welfare.
Attributing cause and effect requires that you know the potential causative event in detail AND you can exclude any other cause.
Assessing stock price movement is another case where short term movement is touted as being “caused” by some event. That is almost never true. There are a huge number of factors affecting price. None is known to everyone and none is dominant. I suppose that the discovery that the CEO of a major bank has disappeared with all the money could be an exception, but there are few others of that magnitude.
People believe that past events cause the present and those people can be mislead. I am going to try it. Here is something to think about.
The Cold War began after World War II and ended with the dissolution of the USSR and the Warsaw Pact in the late 1980s. The scaling back of the arms race began with a conference in Geneva in 1985 and hostilities were publicly proclaimed as over in December 1989.
Man-made, carbon based global warming became a media issue with an article appearing in the New York Times, June 24th 1988, by Philip Shabecoff. It was followed soon by political rhetoric from George H.W. Bush in his 1988 election campaign. “Fight the greenhouse effect with the Whitehouse effect.”
Curious sequence. Cold war ends. Global warming begins.
Would another cold war reverse global warming?
Be cautious in attributing causation without careful effort to discover other factors that may be relevant.
Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.