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Magical thinking is a term used by historians of religion to describe one kind of non-scientific causal reasoning. Scholars like James George Frazer and Bronislaw K. Malinowski emphasized that magic is more like science than religion, and that societies with magical beliefs often had separate religious beliefs and practices. Like science, magic is concerned with causal relations, but unlike science, magic often attributes correlation to causation. For example, someone may believe a shirt is lucky if he had won a bowling competition in it. He will continue to wear the shirt to bowling competitions, and though he continues to win some and lose some, he will chalk up every win to his lucky shirt.

According to Frazer, magical thinking depends on two laws: the law of similarity (an effect resembles its cause), and the law of contagion (things which were once in physical contact maintain a connection even after physical contact has been broken). Others have described these two laws as examples of "analogical reasoning" (rather than logical reasoning).

Typically, people use magic to attempt to explain things that science has not yet explained, or to attempt to control things that science cannot. The classic example is of the collapsing roof, described in E. E. Evans-Pritchard's Witchcraft, Magic, and Oracles Among the Azande, in which the Azande claimed that a roof fell on a particular person because of a magical spell cast by another person. The Azande did understand a scientific explanation for the collapsing room (that termites had eaten through the supporting posts), but pointed out that this scientific explanation could not explain why the roof happened to collapse at precisely the same moment that the particular man was resting beneath it. Thus, from the point of view of the practitioners, magic explains what scientists would call "coincidences" or "contingency". From the point of view of outside observers, magic is a way of making coincidences meaningful in social terms. Carl Jung coined the word synchronicity for experiences of this type.

Adherents of magical belief systems often do not see their beliefs as being magical. In Asia, many coincidences and contingencies are explained in terms of karma in which a person's actions in a past life affects current events.

A common form of magical thinking is that one's own thoughts can influence events, either beneficially, by creating good luck, or for the worse, as in divine punishment for "bad thoughts". Freud reflected on these phenomena in his essay, "The Uncanny". Some categorize the belief that prayer influences a deity to alter the course of events, as an example of this kind of thinking.[citation needed]

Another form of magical thinking occurs when people believe that words can directly affect the world. This can mean avoiding talking about certain subjects ("speak of the devil and he'll appear"), using euphemisms instead of certain words, or believing that to know the "true name" of something gives one power over it, or that certain chants, prayers or mystical phrases will change things.

Noting the great similarity of magical thinking in all types of human societies and eras of recorded history, some cognitive scientists suggest that these ways of thinking are intrinsic to humanity. Many articles in neuroscience have shown that the human brain excels at pattern matching, but that humans do not have a good filter for distinguishing between perceived patterns and actual patterns. Thus, people often are led to see "relationships" between actions that don't actually exist, creating a magical belief.

There is much current scientific research in cognitive science that supports this view. For example, people tend to seek confirmation of their hypotheses, rather than seeking refutation as in the scientific method. This is another example of confirmation bias. People are also reluctant to change their beliefs, even when presented with evidence, and often prefer to believe contradictory things rather than change pre-existing beliefs. This phenomenon is known as cognitive dissonance.

Members of the general public rarely have a deep understanding of statistics. For instance, statistically, it is unavoidable that there will be one day in a year when the most car accidents happen. There will also be a day in the year when the least accidents happen. People, however, may focus on the day the most accidents happen and conclude it must be 'jinxed'. Probability, or chance, is also generally poorly understood. It can be calculated that if 23 people are chosen randomly, the chance that two have their birthday on the same day is about 50%. Yet this "birthday paradox" seems counter-intuitive to most people.

Magical thinking is often intensified in mental illnesses such as obsessive-compulsive disorder or clinical depression. In each it can take a different form peculiar to the particular illness. In OCD, it is often used in ritual fashion to ameliorate the dread and risk of various dangerous possibilities, regardless of whether it has real effects on the object of fear. It contributes more to peace of mind, in that the person now feels they can engage in a risky activity more safely. This is not unlike magical thinking in non-afflicted individuals; lucky garments and activities are common in the sports world. It begins to interfere with life when those activities deemed risky are routine and everyday, such as meeting others, using a public toilet, crossing a busy intersection, or eating. It is important to note, however, that not all people with OCD engage in a strict form of magical thinking, as many are fully conscious that the rationalizations with which they justify their obsessions or compulsions to themselves and others are not 'reasonable' in an ordinary sense of that word.

In depression, examples are generally more of the good luck charm variety, where the magical thinking is used to create confidence. Self-confidence is one of the first casualties in depression, so a surrogate object is invoked to bolster confidence. Additionally, a more aggressive associative magic can be used to curse others, often to vent frustration and give the individual some feeling that they have acted against a perceived aggressor.

Magical thinking is especially common in children, which is consistent with the explanation that it represents the uncritical recognition of patterns, since critical thinking develops later than the ability to recognize patterns. In the management and treatment of long-term disorders in children such as diabetes, magical thinking by young patients must be understood and addressed by physicians. In adolescent psychiatry, assisting the adolescent patient in outgrowing magical thinking is sometimes a therapeutic focus.