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Reversed Causality - Examining the Facts

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 clinic 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 the study's conclusion could have a problem of 'reversed causality.'

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When we examine reverse causality, we examine the facts to determine if the effect caused the issue. In this situation, it is presumed that the purchase of equipment caused an increase in revenue. Reverse causality would suggest that there is an increase in revenue that could be attributed ...

Solution Summary

This solution addresses the given scenario for reversed causality.