CAUSES OF CORRELATION

The nature of dependence of one variable on another is different in different cases.

There can be correlation between two variables due to any one or more of the following reasons:
1. Cause and effect
For example: (i) When anything is heated --- the temperature rises.
(ii) More spending on advertisement --- increase in sales.
(iii) Increase in radius --- increase in circumference.
Some special cases: For example:
(i) Increase in demand for goods --- price rise.
(ii) Inflation in goods --- price rise.
(iii) Too much export of goods --- price rise (within the country).

If all the combination of factors operate together --- it is impossible to find out which factor is
the actual cause of price rise.
Thus, in social sciences, correlation rarely indicates cause and effect relationship.
2. Effect of third variable
Sometimes, both the correlated variables are affected by a third variable or more .
For example:
high yield in rice ---due to--- (1) rainfall; (2) fertilizers; (3) quality of seeds (4) irrigation facilities.

High yield in wheat –due to-- same factors as stated above

In such a case, there is no real correlation between rice and wheat.
3. One cause affecting two variables
When increase or decrease together in two variables is related to a common cause.
For example:
(i) When rainfall is low --- yield of rice is low.
(common cause) --- yield of wheat is also low.
(ii) When petrol prices increase --- air fares increase