The ecological fallacy consists in thinking that relationships observed for groups necessarily hold for individuals. Thus, while the (aggregate) observation is made that US states with a high proportion of foreign-born residents are also states with high literacy in American English, it does not follow that foreign-born people are more literate than the rest. For one thing, there may be a large variance to which the use of an average gives no clue; for another, there may be many other determinants (confounders); for yet another, to observe a correlation is not to observe cause and effect or the direction of cause and effect. For that one needs a hypothesis. In fact studies at the individual level have shown that the 'ecological correlation' of foreign-born and literacy rates arises because foreign-born people tend to settle in states that already have high literacy. At the individual level, the correlation between being foreign-born and ability in American English is (as one may expect) in fact negative. See Aggregation Problem.
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