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Regression for Economics by Shahdad Naghshpour

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Chapter 7

Causality

Correlation Is Not Causality

Chicken or Egg?

Siblings usually have similar heights. Tall people are expected to have tall siblings, and short people are expected to have short siblings. At least this is the conventional wisdom. Which sibling’s height explains the height of the other siblings? Is it the first child’s height that sets the height expectations for the rest of the siblings or the last child’s height? The question is whose height causes the height of the other siblings? Although most people would agree that sibling heights are highly correlated, few people would expect one child’s height to explain a sibling’s height. The cause, or the explanatory variable that determines sibling heights, is the heights of parents. ...

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