Spurious regression, illustrated

Source:

There is a quadratic relationship between the percentage of males in a country who smoke and per capita health care spending. The relationship is statistically significant, as is shown in the table on the right.

The moral of the story? Don't conclude anything from regressions on country-level data.

The problem with analyses like this one is shown in the picture below. There is a very strong positive relationship between a country's income and the amount of money that is spent on health care: as income increases, health care spending increases. There is also a relationship - though a more complex one - between income and smoking. The poorest of the poor cannot afford cigarettes. As income increases, smoking rates increase. But in the most affluent countries, rates of smoking are lower again.