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    Relationship Between the Amount of Money People Spend and Save

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    Give a plausible explanation for the following correlations:

    There is a strong relationship between the amount of money people spend and the amount people save (in other words, people who spend more tend to save more). Does this mean that you can improve your life savings by spending more money? Explain how this correlation is true.

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    Solution Preview

    We need to be careful in distinguishing between correlation and causation. The fact is those that spend more also save more. The ...

    Solution Summary

    The ideas of causation and correlation is compared using an example about the amount of money people spend and save.