Confounding Variables
Sometimes a perceived relationship between two variables may be proven partially false or entirely false because a confounding variable has been omitted (often because it has been overlooked).
"It could be that different populations are collected or reported differently or by different people, a causal variable that affects the behavior of each population, or an inherent quality that leads to autocorrelation," said Metrocosm's Max Galka.
Schleicher once worked on a survey that asked respondents which credit card brands they would consider. Over a three-year period, the data indicated that the consideration numbers for one credit card company nearly doubled, while those of several other companies remained flat. The obvious conclusion turned out to be the wrong conclusion.
"A confounding variable is cardholders have higher consideration for their current credit card companies than people who are not customers," said CenturyLink's Schleicher. "The company had gone through several M&As, and their portfolio had grown enormously over that three-year period. They hadn't improved their consideration, or customer experience, or how their customers valued them. They just acquired more customers through portfolio mergers.
"If you exploded it out by customers and non-customers, you'd see that non-customer considerations were flat and the only thing that had changed was their marketshare. It's easy to look at a couple of variables together. You're looking at correlations, you plot things, you see a pattern that looks promising, and you have to ask yourself whether it's the relationship or something else explaining it."
(Image: ChadoNihi via Pixabay)
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