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A correlation fallacy

The fallacy that I am going to discuss here had actually happened during the days of Prof Mahalanobis. I learned about this from a lecture by Dr C R Rao. I do not have the original data set. So the discussion will only provide the basic idea.

Allegedly, there is a claim in astrology that the ratio of the life line and the wrist width can predict one's life span. The life line is the length of the diagonal across the palm ending at the base of the index finger. There was a paper where the authors visited various burning ghats and crematoria, and collected data on this ratio and the age at death for different dead bodies. The computed Pearson's correlation and found a value as high as 0.8. So they claimed that astrology has some scientific justification, after all.

The paper had attracted the attenstion of Prof Mahalanobis, who was particularly intrigued by the fact that the authors had not provided a scatterplot. Merely quoting the correlation without showing the full data (graphically) opens up the hell of data misintrepretation. He contacted the authors, and managed to get the raw data, which contained also the genders of the dead persons. The scatterplot looked something like this:
The red points correspond to the males, while the females are shown by blue points. Notice that the cloud of points for the males show no strong correlation. Neither does the female cloud. Yet the two clouds being located at two different centres create the correlation. In fact, here the male correlation is about $-0.2$ while the female correlation is about $-0.01$. Yet the pooled correlation is $0.8$.

Such a high correlation is an example of a spurious correlation, meaning that it is really not there.

The interpretation of the data is that men tend to have more squarish hands than women, and so have higher values of the ratio. Also, during that time, a large number of women used to die during child birth. So their life spans were shorter than those for men.

In fact, you could have obtained a more striking paradox by replacing the ratio with length of hair!

Latent variable

We can visualise the cause of the fallacy as the following diagram:
The two variables Ratio and Lifespan are not directly connected at all, but both are influenced by a common variable Gender. When this common variable is not mentioned (as in the original paper), the two other variables appear to have a correlation.

Such variables that influence other vsriables from behind the scene, are called latent variables, and are at the centre of much attention.

Is it safe to pool data?

Statistics is all about aggregate overall behaviour. So we often pool smaller samples with similar behaviours into a larger sample, and expect to see that common behaviour more strongly in the pooled data. For instance, if the mean of two univariate samples are both between 3 and 4, then the pooled mean will also lie in the ame interval.

However, thanks to latent variables, pooling may give rise to wierd artefacts. The astrology fallacy is one such example. The following problem outlies another.

EXERCISE:  We have two bivariate data sets $(X_i,Y_i)$ for $i=1,...,50$ and for $i=51,...,100$ such that each has correlation equal to 1. Show that the pooled correlation can be anything in $(-1,1]$.