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Correlation Doesn’t Equal Causation

There is More Than One Pathway

The fact that event A repeatedly occurs right before event B doesn’t prove that event A causes event B. Maybe they’re connected, or maybe it’s just coincidence. This is the same for both economic and public policy questions. Consumers, businesses and governments decide to do X because they believe Y will follow. But maybe it won’t, because X has nothing to do with Y. This sounds like a Maths lesson but it’s not. Read on:

Many US analysts worry about a Superannuation fund crisis. Can their State pay for the upcoming group of retirees? A big part of the problem is that taxpayers in the US can and do move states. High-tax states that desperately need the revenue to fund Superannuation obligations may see their wealthiest residents move to lower-tax states. For years, the populations of high-tax states have been shrinking while low-tax states have been gaining residents. In his 2017 book, The Myth of Millionaire Tax Flight: How Place Still Matters for the Rich, Stanford University sociologist Cristobal Young questioned whether wealthy people are really so mobile.

Young’s research, based on 13 years of tax data for every US millionaire, says the opposite is more accurate. Only about 2.5% of millionaires moved to new states each year, and not all went to lower-tax states. One reason is that millionaires tend to be older people with deep roots in their communities. They have family and business ties and like living where they do. Yet clearly, somebody has been moving.

Who is it?

Answer: Mostly young people, particularly recent college graduates. They are four times as likely as millionaires to move, and taxes aren’t the reason.


Answer: They follow job and educational opportunities.

Another example closer to home is our employment prospects in the next decade. Correlation doesn’t equal causation, over different time periods either. The current thinking is that the better futures for our students is via a straight tertiary pathway, choosing high ranking subjects to gain suitable OP scores and then progressing to university and onto a well-recognised career path.

But is that still true for the future?

There is a ground swell of thinking that this approach is under serious threat despite four in five parents in Victoria preferring their children to go to university after leaving school rather than undertake a vocational training course.

But does the majority vote necessarily choose the better option?

Nicholas Wyman, CEO of Skilling Australia Foundation beleives ‘Australia‟s VET sector, far from preparing students for low-skilled, low-paid or low-future work, produces highly skilled graduates with remuneration and employment outcomes comparable to – and sometimes surpassing – those of university graduates.’

This article from the Victorian Government provides food for thought and I encourage you to read further, for your son’s benefit as much as yours.

Greg Quinn
Assistant Dean of Learning