School administrators sometimes implement the stupidest policies based on correlations of various strengths. But even a strong correlation might have nothing to do with causation.
E.g.: A school my wife used to work at is requiring all 8th graders to take algebra (normally a high-school-level class in the US) regardless of math aptitude because some study shows that 8th graders who take algebra have improved outcomes. Nevermind the fact that this is almost certainly because kids who are already good at math will both take algebra AND have improved outcomes.
Continuing with the logic of that school, most wildly successful people were bullied at school.....
And many of them lost a parent at an early age.
Both parents in an armed robbery is weakly correlated with successful outcomes.
Depending on what “algebra” as an entire class actually is (I don’t know of it in that form from my Australian upbringing or from elsewhere) I can see it possibly having real benefit: abstract reasoning is one of the major things that needs to be taught to kids and has huge benefits but too often isn’t particularly taught; and algebra with all its symbolic representations and logical reasoning is excellent for that.
From your single-paragraph anecdote I don’t know the full story, of course, but it’s plausible to me that it might be not solely a case of confusing correlation and causation, but at least partly because the described effect made sense to people making the decisions, based on their broad experience in education.
The point is that they're teaching algebra without ensuring that the students are proficient in the prerequisites, so those students who are behind are not actually learning anything. You might as well teach it in first grade for all the good it's doing.
honestly, teaching the concept of a variable in first grade might not be the worst idea in the world
Somewhere out there, an economist who has dedicated their life to causal inference is crying