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In the description of the statistical models that relate one variable to the other we used terms that suggest a causality relation. One variable was called the "explanatory variable" and the other was called the "response". One may get the impression that the explanatory variable is the cause for the statistical behavior of the response. In negation to this interpretation, some say that all that statistics does is to examine the joint distribution of the variables, but casuality cannot be inferred from the fact that two variables are statistically related.
What do you think? Can statistical reasoning be used in the determination of causality?
As part of your answer in may be useful to consider a specific situation where the determination of casuality is required. Can any of the tools that were discussed in the book be used in a meaningful way to aid in the process of such determination?
Notice that the last 3 chapters dealt with statistical models that related an explanatory variable to a response. We considered tools that can be used when both variable are factors and when both are numeric. Other tools may be used when one of the variables is a factor and the other is numeric. An analysis that involves one variable as the response and the other as explanatory variable can be reversed, possibly using a different statistical tool, with the roles of the variables exchanged. Usually, a significant statistical finding will be still significant when the roles of a response and an explanatory variable are reversed.
Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..
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