Comparing Observational Studies vs Experiments
Observational studies and experiments are two standard research methods for understanding the world. Both research designs collect data and use statistical analysis to understand relationships between variables. Beyond that commonality, they are vastly different and have dissimilar sets of pros and cons.

Experiments are controlled investigations where researchers actively manipulate one or more variables to observe the effect on another variable, all within a carefully controlled environment. Researchers must be able to control the treatment condition each subject experiences. Experiments typically use randomization to equalize the experimental groups at the start of the study to control potential confounders.
In this post, we’ll compare an observational study vs experiment, highlighting their definitions, strengths, and when to use them effectively. I work through an example showing how a study can use either approach to answer the same research question.
Learn more about Experimental Design: Definition and Types and Confounding Variable Bias.
Strengths of Observational Studies
Real-World Insights: Observational studies reflect real-world scenarios, providing valuable insights into how things naturally occur. Well-designed observational studies have high external validity, specifically ecological validity.
Does Not Require Randomization: Observational studies shine when researchers can’t manipulate treatment conditions or ethical constraints prevent randomization. For example, studying the long-term effects of smoking requires an observational approach because we can’t ethically assign people to smoke or abstain from smoking.
Cost-Effective: Observational studies are generally less expensive and time-consuming than experiments.
Longitudinal Research: They are well-suited for long-term studies or those tracking trends over time.
Strengths of Experiments
Causality: Experiments are the gold standard for establishing causality. By controlling variables and randomly assigning treatment conditions to participants, researchers can confidently attribute changes to the manipulated factor. Well-designed experiments have high internal validity. Learn more about Correlation vs. Causation: Understanding the Differences.
Controlled Environment: Experiments offer a controlled environment, reducing the influence of confounding variables and enhancing the reliability of results.
Replicability: Well-designed experiments are often easier to replicate, increasing researchers’ ability to compare and confirm results.
Randomization: Random assignment in experiments minimizes bias, ensuring all groups are comparable. Learn more about Random Assignment in Experiments.
When to Choose Observational Studies vs Experiments
Observational studies vs experiments are two vital tools in the statistician’s arsenal, each offering unique advantages.
Experiments excel in establishing causality, controlling variables, and minimizing the impact of confounders. However, they are more expensive and randomly assigning subjects to the treatment groups is impossible in some settings. Learn more about Randomized Controlled Trials.
Meanwhile, observational studies provide real-world insights, are less expensive, and do not require randomization but are more susceptible to the effects of confounders. Identifying causal relationships is problematic in these studies. Learn more about Observational Studies: Definition & Examples and Correlational Studies.
Observational studies can be prospective or retrospective studies. On the other hand, randomized experiments must be prospective studies.
The choice between an observational study vs experiment hinges on your research objectives, the context in which you’re working, available time and resources, and your ability to assign subjects to the experimental groups and control other variables.
If you’re looking for a middle ground choice between observational studies vs experiments, consider using a quasi-experimental design. These methods don’t require you to randomly assign participants to the experimental groups and still allow you to draw better causal conclusions about an intervention than an observational study. Learn more about Quasi-Experimental Design Overview & Examples.
Understanding their strengths and differences will help you make the right choice for your statistical endeavors.
Observational Study vs Experiment Example
Suppose you want to assess the health benefits of consuming a daily multivitamin. Let’s explore how an observational study vs experiment would evaluate this research question and their pros and cons.
An observational study will recruit subjects and have them record their vitamin consumption, various health outcomes, and, ideally, record confounding variables. The participants choose whether or not to take vitamins during the study based on their existing habits. Some medical measurements might occur in a lab setting, but researchers are not administering treatments (vitamins). Then, using statistical models, researchers can evaluate the relationship between vitamin consumption and health outcomes while controlling for potential confounders they measured.
An experiment will recruit subjects and then randomly assign them to the treatment group that takes daily vitamins or the control group taking a placebo. Randomization controls all confounders whether the researchers know of them or not. Finally, the researchers compare the treatment to the control group. Learn more about Control Groups in Experiments.
Most vitamin studies are observational because the randomization process would be challenging to implement, and it raises ethical concerns in this context. The random assignment process would override the participants’ preferences for taking vitamins by randomly forcing subjects to consume vitamins or placebos for decades. That’s how long it takes for the differences in health outcomes to manifest. Consequently, enforcing the rigid protocol for so long would be difficult and unethical.
For an observational study, a critical downside is that the pre-existing differences between those who do and do not take vitamins daily comprise a pretty long list of health-related habits and medical measures. Any of them can potentially explain the difference in outcomes instead of the vitamin consumption!
As you can see, using an observational study vs experiment involves many tradeoffs! Let’s close with a table that summarizes the differences.
Differences between an Observational Study and Experiment
| Aspect | Observational Study | Experiment |
| Causality | Hard to establish | Strongly supports causality |
| Control of Variables | Limited or no control | High control |
| Real-World Insights | Strong | Limited |
| Cost and Time Efficiency | Cost-effective and less time-consuming | Expensive and time-intensive |
| Confounding Variables | Highly susceptible | Low susceptibility |
| Randomization | Not used | Standard practice |
| Longitudinal Research | Well-suited | Possible but often challenging |

Hi Jim
I mostly work with observational studies and I have a general question around comparing something we believe might be unusual with the expected pattern. In its simplest terms when we try to estimate the expected pattern should I include or exclude the data that I think is unusual.
Here is a problem concerning the number of customers entering a shop in a week.
Monday 4
Tuesday 4
Wednesday 9
Thursday 8
Friday 4
Saturday 2
Total 31 (average 5.16 per day)
I think this type of data suits the Poission Distribution and I want to know if the Wednesday and Thursday figures are unusual. If I take lamda as 5.16 (i.e. the average of all my data) then the distribution suggests that the chances of more than 7 customers turning up in a day as part of the natural variation would be just over 13% (nothing to see here).
However if I exclude Wednesday and Thursday results from my estimate of lamba I get lamba of 3.5 and the probability of seeing more than 7 on a given day by chance falls to 2.67%.
This type of issue crops up for many scenarios where the subject of interest forms part of a wider group and I want to work out whether that subject is different in some way from the wider group. Should the comparison be between the subject performance/measurement and the wider group including the subject or the wider groups excluding the subject of interest.
Rob
Hi Robert,
It sounds like you would need to perform a goodness-of-fit test. In this case, you’d need one for discrete variables. I’ve written a blog post about this exact topic including a Poisson example. This test will indicate whether your data as a whole fit the distribution in question. You could also see where the biggest discrepancies are located.
Goodness-of-fit Tests for Discrete Distributions
I performed the Poisson Goodness-of-Fit Test on your data. The data do not fit the Poisson distribution (p = 0.027). Although, one of the cells has too few observations to ensure a valid test. From the results, it appears that having too few days with between 5 – 7 customers is the culprit behind not fitting the Poisson distribution. You’d expect 2 – 3 days in that range (2.6) but you have zero.
As for the Wednesday and Thursday numbers. You’d expect about 1 day (0.9) to have at least 8 customers. So, having one of those days isn’t unusual, but having two is. That fact contributes to the discrepancy from the Poisson distribution but not by as much as the aforementioned 5 – 7 customers category.
Thanks Jim
That other post was really helpful and I managed to replicate most of your goodness of fit for the poisson example (accidents) in Excel. I was curious why the degress of freedom shown was 3 and not 4 given that there was 5 buckets of observations and excel gave me the p-value for the chisq stat assuming 4df (p = 0.64)
Going back to my example and doing something similar in excel. I assume that your buckets of observations were 4 or fewer (obs = 4), 5-7 (obs = 0 ) and 8+ (obs =2). I can replicate your expectation for 5-7 and 8+ using the excel function for the poisson distribution where the mean is 5.16. My expectation for the 4 or fewer category is 2.47, the total chisq stat seems to be 4.88 and p-value higher than yours at 0.087. Your p-value is consistent with df of 1
Would it be possible to share your expected value for 4 or fewer, the chisq stat and the df produced in your test. I think the df is where it is going wrong.
Hi Robert,
I’m using Minitab and it iteratively determines the optimal number of categories (K) based on the number of expected values. For your data, it uses three categories (K = 3). For the Poisson Goodness of Fit test, you calculate the degrees of freedom as K – 1 for the number of categories. Then you subtract another DF for the one parameter of the Poisson distribution. Hence, DF = K – 2. For your data, 3 – 2 = 1 DF, which, as you note, is consistent with your findings.
Below is the output from the test. Notice that even with optimizing the categories, it doesn’t quite avoid problems of cells having too few values for a valid test. We should use Fisher’s Exact test but my software doesn’t extend it beyond 2X2 tables. But, in the output you’ll see why your data doesn’t fit the Poisson distribution. There are too few observations (zero!) in the middle of the distribution and too many at both ends.
Well stated: ” Both research designs collect data and use statistical analysis to understand relationships between variables” I was not familiar with the terms research designs. 😀
PS, I am already receiving all your wonderful mailing. I binge-read them every few weeks. I am planning on getting your other two books when I can. Thanks, and Cheers!