Economics, 3rd Edition

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h S

ti

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FIGURE 2A.9

Violent cr

imes

(per 1,000 people)

0

Police officers (per 1,000 people)

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40  PART 1  INTRODUCTION TO ECONOMICS

in response to a change in their expectations of future conditions. A city that expects a major crime wave 

in the future, for instance, might well hire more police now. This problem is even easier to see in the case 

of babies and baby cots. Couples often buy a baby cot in anticipation of the birth of a child. The cot comes 

before the baby, but we wouldn’t want to conclude that the sale of cots causes the population to grow!

There is no complete set of rules that says when it is appropriate to draw causal conclusions from 

graphs. Yet just keeping in mind that cigarette lighters don’t cause cancer (omitted variable) and baby 

cots do not cause larger families (reverse causality) will keep you from falling for many faulty economic 

arguments.