Saturday, May 19, 2007

"Correlation does not imply causation”

This elementary scientific concept certainly gets short shrift from the American mainstream media. To be fair, they are in the business of selling advertising, not accuracy. (If my writing seems distracted, I am singing nursery rhymes to my 3 month old as I write this.)

The following is a definition from

“Correlation does not imply causation” is a phrase used in the sciences and statistics to emphasize that correlation between two variables does not imply there is a cause-and-effect relationship between the two. Its converse, correlation implies causation, is a logical fallacy by which two events that occur together are prematurely claimed to have a cause-and-effect relationship. It is also known as cum hoc ergo propter hoc (Latin for "with this, therefore because of this") and false cause.”

Here is a perfect example from USA Today:

“The average American motorist is driving substantially fewer miles for the first time in 26 years because of high gas prices and demographic shifts, according to a USA TODAY analysis of federal highway data.

The growth in miles driven has leveled off dramatically in the past 18 months after 25 years of steady climbs despite the addition of more than 1 million drivers to the nation's streets and highways since 2005. Miles driven in February declined 1.9% from February 2006 before rebounding slightly for a 0.3% year-over-year gain in March, data from the Federal Highway Administration show. That's in sharp contrast to the average annual growth rate of 2.7% recorded from 1980 through 2005.”

Let’s start out with the salient fact – “The average American motorist is driving substantially fewer miles for the first time in 26 years” the explanation supplied by the journalist as to WHY is just an example of the media’s warm embrace of the written word and their abject terror of math.

If there is less fuel being provided to the system, but the number of; a) drivers and b) vehicles, increases; what must, by mathematical necessity, happen? Each person must drive less (provided no change in gas mileage, and there was none). The PRICE of gasoline CORRELATES, but is not the CAUSE. How did I come to this conclusion? There was less gasoline inventory at the end of the 12-month period. If prices were the cause of the drop, rather than the supply, inventories would have increased. In fact, they declined.

For arguments sake, let’s say that the 2.7% decline was to continue (the decline will accelerate), and that the average American drives 15,000 miles per year. At a decline rate of 2.7%, the average American will be down to driving 11408 miles per year in 2017.
Now let’s move to a range, applied to all liquid fuels, I think will be closer to reality: a 6 – 8 % per year decline. With a 6% decline, in 2012 the average American would be able to drive “only” 11009 miles per year, and 8,080 miles in 2017. With an 8% decline you are down to 9,886 miles driven in 2012 and 6,516 in 2017. In addition to being overly simplified, this assumes that the population stays constant, and that heating oil, shipping, and industrial use drops by a commensurate amount. This is extremely unlikely as, for example, a consumer is going to view his daughter’s social driving as having less importance than heating the family’s home, among other variables.

This is why I firmly believe that the new car you buy in 2007 will outlive its fuel supply.

Why, then, are we building new highways and improving the ones we have? Denial. What is to become of the Big 3, Honda, Toyota… the steel and glass companies that supply them, and the advertising agencies that represent them, and the networks that air their commercials? Good-bye, Nick (I am dating myself here). What effect does that have on your business, job, portfolio, home value..? but there’s more!

How, exactly, are you going to get to your home out in the suburbs? How are you going to shuttle the chachkas (knickknacks) you bought at Home Depot to that home? How are you going to get to Home Depot?

Now extrapolate this conundrum out to the food supply. Still want to keep digging that hole?

As Kurt Vonnegut would say: “Welcome to the Monkey House”

Mentatt (at) yahoo (dot) com

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