Regression Fallacy - Explanation

Explanation

Things like golf scores, the earth's temperature, and chronic back pain fluctuate naturally and usually regress towards the mean. The logical flaw is to make predictions that expect exceptional results to continue as if they were average (see Representativeness heuristic). People are most likely to take action when variance is at its peak. Then after results become more normal they believe that their action was the cause of the change when in fact it was not causal.

This use of the word "regression" was coined by Sir Francis Galton in a study from 1885 called "Regression Toward Mediocrity in Hereditary Stature". He showed that the height of children from very short or very tall parents would move towards the average. In fact, in any situation where two variables are less than perfectly correlated, an exceptional score on one variable may not be matched by an equally exceptional score on the other variable. The imperfect correlation between parents and children (height is not entirely heritable) means that the distribution of heights of their children will be centered somewhere between the average of the parents and the average of the population as whole. Thus, any single child can be more extreme than the parents, but the odds are against it.