Correlation, Causation, and Oracle Retail

The following press release from Oracle caught my attention today:

Oracle today announced that leading global retailers who use Oracle(R) Retail solutions outperform their peers with 49.7 percent higher operating profits and 61.5 percent higher return on invested capital. The internally conducted study is based upon publicly available financial data provided by Stratascope Inc. The study population included 258 retailers with annual revenues in excess of $500 million.

Really? Wow! Those Oracle(R) Retail Solutions must be great!

But waitaminute, isn’t it possible that Oracle(R) Retail Solutions are so darn expensive that you have to be a highly profitable retailer to buy them? Ah, once again the difference between correlation and causation rears its head.

Related posts:

  1. Ellison’s Audible at Oracle
  2. Lane: Oracle Should Stop Selling Apps
  3. Correlation, Causation, & Video Games
  4. Spinal Tap, Oracle CFOs, and Rick Sherlund
  5. NatPost Column: Oracle Antitrust Decision

Comments

  1. David B. says:

    Paul, you’ve hit the mark on one of my pet peeves: correlation simply doesn’t imply causation. I wish more people understood the difference.
    http://www.genuinevc.com/archives/2005/05/my_pet_peeve_co.htm

  2. Scott says:

    Paul:
    Yes, me too. Here is a article just chock full of errors and misrepresentations. There should be laws against this.
    -Scott
    “According to statistics compiled by the Federal Reserve, the average homeowner is 34 times richer than the average renter. If you’re not a homeowner, this may depress you.”
    http://finance.yahoo.com/columnist/article/millionaire/2585