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Individual differences psychology focuses on this second level of study. It is also sometimes called Differential Psychology because researchers in this area study the ways in which individual people differ in their behavior. This is distinguished from other aspects of psychology in that although psychology is ostensibly a study of individuals, modern psychologists often study groups or biological underpinnings of cognition.

For example, in evaluating the effectiveness of a new therapy, the mean performance of the therapy in one group might be compared to the mean effectiveness of a placebo (or a well-known therapy) in a second, control group. In this context, differences between individuals in their reaction to the experimental and control manipulations are actually treated as errors rather than as interesting phenomena to study.

This is because psychological research depends upon statistical controls that are only defined upon groups of people. Individual difference psychologists usually express their interest in individuals while studying groups by seeking dimensions shared by all individuals but upon which individuals differ.