Over the past decade, there has been a strong positive correlation between teacher salaries and prescription drug cost.

Question

(a) Do you think paying teachers more causes prescription drugs to cost more? Explain.

(b) What lurking variable might be causing the increase in one or both of the variables? Explain.

Answer 1

A) Correlation is not causation. Obviously there is no direct connection between teachers’ salaries and prescription drug costs; increasing teachers' pay did not cause the drug prices to rise.

B) The strong positive correlation between teacher salaries and drug cost is likely due to the lurking variable of inflation that caused both to increase at the same time.