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June 27, 2022 

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ACTUAL INVESTMENT: Investment expenditures that the business sector actual undertakes during a given time period, including both planned investment and any unplanned inventory changes. This is a critical component of Keynesian economics and the analysis of macroeconomic equilibrium, which occurs when actual investment is equal to planned investment. The difference between planned and actual investment is unplanned investment, which is inventory changes caused by a difference between aggregate expenditures and aggregate output. Should actual and planned investment differ, then aggregate expenditures are not equal to aggregate output, and the macroeconomy is not in equilibrium.

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FALLACY OF FALSE CAUSE:

The logical fallacy of arguing that two events have a causal connection because they are correlated (that is, happen at about the same time). In other words, one event is erroneously assumed to cause the other. This fallacy is the nemesis of the ongoing scientific pursuit to discover the laws of cause and effect.
The fallacy of false cause was one of the more common fallacies committed by ancient ancestors, and it persists to modern times. Lacking sophisticated scientific analysis, the correlation of events, the near simultaneous occurrence of two unrelated phenomena, inevitably lead ancient folk to develop an erroneous causal connection.

Suppose, for example that a wolf howls in the distance, and then someone dies. A few days later, another wolf howls, then someone else breaks a leg. Once again a wolf howls, and then a third person falls sick. "Obviously" the howling wolf is causing bad things to transpire. While this howling-wolf explanation might seem reasonable to people spending their lives eating mastodon meat and sleeping in caves, correlation does not mean cause. These cave-dwelling folk are committing the fallacy of false cause.

Retrieving obvious (even ridiculous) examples of less enlightened human ancestors who perpetually committed this fallacy of false cause is exceedingly easy.

  • The movement of the sun is caused by a god carrying a ball of fire across the sky.

  • Warts can be cured by burying potato skins under an oak tree in the light of a full moon.

  • The configuration of stars in the sky determines personality.
Modern humans know better. Modern humans are now enlightened. Modern humans know that howling wolves do not cause bad things to happen, that the movement of the sun is guided by gravity, that warts are a virus, that the stars do not affect personality.

However, until cause-and-effect relations are verified using the scientific method, the fallacy of false cause is actually quite easy to commit, even among the best and the brightest. In fact, scientists (economists included) regularly commit this fallacy as they sort through numerous potential causes of an event to find the one "true" cause. Before a "false" cause has been undeniably proven as false and then discarded for further consideration, it is likely to be promoted as the "true" cause. Advocates truly believe that they are promoting the "true" cause.

Unfortunately, they are acting out of ignorance. They simply do not know. No one does. In fact, the promotion of "false" cause in search of "true" cause is what the scientific method is all about.

<= FALLACY OF FALSE AUTHORITYFALLACY OF MASS APPEAL =>


Recommended Citation:

FALLACY OF FALSE CAUSE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: June 27, 2022].


Check Out These Related Terms...

     | fallacies | fallacy of false authority | fallacy of personal attack | fallacy of mass appeal | fallacy of division | fallacy of composition |


Or For A Little Background...

     | scientific method | economic thinking | economic science | cause and effect | verification | hypothesis | principle |


And For Further Study...

     | seven economic rules | four estates | sixth rule of ignorance | normative economics |


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