Positive correlation

Indian Economy glossary

Topic: Economic Data: Census, NSS, Surveys and Statistical Tools · NCERT: Class 11, Ch 6 "Correlation"

Meaning

Positive correlation means two variables move in the same direction. When one rises, the other tends to rise, and when one falls, the other tends to fall. In Karl Pearson's coefficient, it shows up as a value of r above zero, up to +1. The closer r is to +1, the stronger the link. On a scatter diagram, the points slope upward from left to right.

Example

When households earn more income, they spend more on consumption. In summer, higher temperatures go with higher ice-cream sales. In NCERT, farmers' years of schooling and their yield per acre give r = 0.644.

Don't confuse with

  • Spurious correlation: two variables can rise together without any real link. The cause may be coincidence or a third variable. For example, ice-cream sales and drownings both rise with temperature.

Related concepts

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