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Advanced · 3 min

Testing an economic claim

Correlation means that quantities move together; causation means one change produces another. A third factor or reverse causation may explain an observed relationship. Comparing a credible control group, checking pre-existing trends, and understanding how a policy was assigned can strengthen an evaluation. No method removes the need to examine assumptions.

Practice

Wages rise after training, but trainees also gained experience. What limits a simple before-and-after claim?