Robert recently purchased a Volkswagen Beetle, and was told by his insurance company he would have to pay higher premiums because it was red in colour. When asked to explain, the insurance agent said the company had accident history data that demonstrated red cars were involved in three times as many accidents. Robert analyzed the data and found that the red cars were predominantly high-speed sports cars. When he pointed this out, the insurance company readdressed its pricing policy. What did Robert discover?

Question

Quizplus · Accepted Answer

Robert discovered a spurious relationship, where the high accident rate was not directly caused by the car's color but rather by the type of cars that were predominantly red (high-speed sports cars).

Robert Recently Purchased a Volkswagen Beetle, and Was Told by His