AP Micro & MacroEconomic Indicators & Data
Regression to the Mean
Regression to the mean is the statistical tendency for extreme measurements to be followed by ones closer to the average, due to chance.
When an outcome partly reflects luck, an unusually high or low reading tends to move back toward the mean on the next measurement, with no real cause needed. In economics this can fool analysts into crediting a policy for improvement that was just a rebound from a bad year. Ignoring it causes the 'we punished the worst performers and they improved' illusion.