A hypothetical study examines the operations of a couple of hundreds medical cli

Question

A hypothetical study examines the operations of a couple of hundreds medical clinics, with the data for the amount of expenses for new medical equipment relative to the total expenses in a particular year(s), and the amount of revenue per physician in subsequent years. The study finds that the more a dime spends for new equipment the more revenue the clinic generates in subsequent years Based on the finding, the principal analyst of the study concludes that a purchase of new medical equipment causes an increase in a clinic's revenue. Someone else who is not involved in the study, however, argues that the conclusion has a problem of 'reversed causality.' Provide a possible reason why study's conclusion could have a problem of 'reversed causality.'

Explanation / Answer

The given scenario is a case of reverse casuality, because in this case the purchase of new equipment ( call this as X ) is assumed to cause an increase in the subsequent revenues ( call this Y).

That is , here we are making a false conclusion that 'X causes Y', while the actual case here is that 'Y causes X'.

This is because only due to good revenues in the previous years was the clinic able to afford buying of new equipments, and not the other way around.

Purchase seems to have an effect on revenues, but actually it's the revenues which are making the purchase of equipments possible.

Just because X is unexpectedly occuring before Y, we are making a false conclusion that X is the cause of Y.

This case is also referred to as the cart before the horse bias.

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