Let’s consider the statistical relationship collected over 50 USA startups: between R&D cost and the profit (data taken from 50_Startups.csv):
Note: values in both x-axis and y-axis are in units of 1000$
The Pearson correlation coefficient is 0.97, very strong relationship between R&D and Profit.
What’s about the causation? Does High Cost of R&D cause High Profit or Higher Profit cause a company to spend more on R&D? Similarly, there is a strong relationship between rainy weather and position of the barometer’s needle. Does low position of your home barometer cause a rainy weather?
So, statistics reveals the relationship between events, but it can’t reveal the causation’s arrow.
23+ years’ programming and theoretical experience in the computer science fields such as video compression, media streaming and artificial intelligence (co-author of several papers and patents).
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