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?The Least Surprising Correlation Of All Time?

Greg Mankiw, Harvard economist, finds the inference often made (such as by the New York Times Economix Blog) from the correlation shown on a graph between parental income and SAT scores ?The Least Surprising Correlation of All Time.? It tells us nothing, he says, ?about the causal impact of income on test scores.?

The faulty inference, he writes, is a good example of ?omitted variable bias.?

The key omitted variable here is parents? IQ. Smart parents make more money and pass those good genes on to their offspring.

Suppose we were to graph average SAT scores by the number of bathrooms a student has in his or her family home. That curve would also likely slope upward. (After all, people with more money buy larger homes with more bathrooms.) But it would be a mistake to conclude that installing an extra toilet raises yours kids? SAT scores.

It would be interesting to see the above graph reproduced for adopted children only. I bet that the curve would be a lot flatter.

There is extensive data on the other side of that coin, identical twins raised in different families, and even Nicholas Kristof begrudgingly recognizes that

a series of studies seemed to indicate that I.Q. is largely inherited. Identical twins raised apart, for example, have I.Q.?s that are remarkably similar. They are even closer on average than those of fraternal twins who grow up together.

No doubt there is also data showing that the SAT scores of twins raised apart are remarkably similar, but I don?t have time to look for it now.

Full post as published by Discriminations on August 28, 2009 (boomark / email).