Causal thinking is at the heart of experimental design. To make sound decisions, you must understand the critical distinction between correlation and causation. Correlation means that two variables move together in some way—when one changes, the other tends to change too. But causation goes further: it means one variable actually produces a change in the other.

Imagine ice cream sales and drowning incidents. During summer, both increase. Does eating ice cream cause drowning? Of course not. The real reason is a third factor: hot weather. People buy more ice cream and also swim more, which unfortunately raises the risk of drowning incidents. This is a classic example where correlation does not mean causation.

Experiments are needed to make credible causal claims. Without an experiment — such as randomly assigning some people to eat ice cream and others not, then measuring outcomes — you cannot rule out other explanations for the observed relationship. Observational data alone only shows you patterns, not the underlying mechanism.

To build your visual intuition, consider this table summarizing the possible relationships between two variables, A and B:

This table highlights why you must look deeper than surface patterns. Only with careful experimental design can you untangle which of these relationships is actually present.

A light mathematical intuition for causality comes from counterfactual reasoning. The core idea is: what would have happened to the same unit (person, company, etc.) if, contrary to fact, it had received a different treatment? In practice, you can only observe one outcome for each unit—the outcome under the treatment it actually received. The unobserved outcome is called the counterfactual.

This leads to the potential outcomes framework: for each unit, you imagine two possible outcomes — one if treated, one if not. The causal effect is the difference between these two. Experiments, especially randomized ones, try to make the groups comparable so the observed difference in outcomes reflects the true causal effect, not just a correlation.