Question

List the type of correlation and casual relationship that you would expect to find for each of the following pairs of variables. a) the price of gasoline at the pump, the current world price of crude oil b) the fish population in a lake, the number of cottages around the lake c) the humidex rating (an index based on air temperature and humidity), the number of respiratory ailments reported d) the stock price of a telephone company, the cost of car insurance e) parents’ educational level, their children’s success in school?

Answer 1

A causal relation between two events exists if the occurrence of the first causes the other. I.e The first event is called the cause and the second event is called the effect. Whereas A correlation between two variables does not imply causation. On the other hand, if there is a causal relationship between two variables, they must be correlated.

A) the price of gasoline at the pump, the current world price of crude oil :

This is a causal relationship.

Cause : The current world price of crude oil

Effect : increase or decrease in the price of gasoline at the pump (increase in world price of oil will increase price of gasoline at pump)

So there is a positive correlation.

B) The fish population in a lake, the number of cottages around the lake :

The number of cottages around a lake does not affect fish population in the lake. As long as the fishes get enough water, fish population will increase irrespective of number of cottages around.

So there is zero correlation.

C) the humidex rating (an index based on air temperature and humidity), the number of respiratory ailments reported :

It has been found that low humidity are associated with increased occurrence of respiratory tract infections.

Hence increase in the humidex rating may result in decrease respiratory ailment. So there is negative correlation. Also one is the cause (humidity) other is the effect (respiratory illness). So this is also a causal relation.

D) the stock price of a telephone company, the cost of car insurance :

The stock price of a telephone company is independent of car insurance. i.e it does not depend whether there is any cost of car insurance.

So there is zero correlation.

E) parents’ educational level, their children’s success in school :

In most of the cases many studies show that higher the qualification of the parent, higher is the children's success in school. i.e child's success (effect) depends on parent's level of qualification(cause) maybe in terms of guidance

Hence there is causal relationship as well as a positive correlation.