A false etymology is any assumed or postulated etymology that is incorrect.
Folk etymology, in its basic sense, refers to popularly held (and often false) beliefs about the origins of specific words, especially where these originate in "common-sense" assumptions rather than serious research (compare folk science, folk psychology etc.). In historical linguistics, the term is most often used in a more technical sense, to refer to a change in the pronunciation, meaning, or spelling of a word under the influence of such folk beliefs about its origins.
The two terms have not always been clearly distinguished, however, even by linguists.
Erroneous etymologies can exist for many reasons. Some are reasonable interpretations of the evidence that happen to be false. For a given word there may often have been many serious attempts by scholars to propose etymologies based on the best information available at the time, and these can be later modified or rejected as linguistic scholarship advances. The results of medieval etymology, for example, were plausible given the insights available at the time, but have mostly been rejected by modern linguists. The etymologies of humanist scholars in the early modern period began to produce more reliable results, but many of their hypotheses have been superseded. Even today, knowledge in the field advances so rapidly that many of the etymologies in contemporary dictionaries are outdated.
Some etymologies are part of urban legends, and seem to respond to a general taste for the surprising, counterintuitive and even scandalous. One common example has to do with the phrase rule of thumb, meaning a rough measurement. An urban legend has it that the phrase refers to an old English law under which a man could legally beat his wife with a stick no thicker than his thumb (though no such law ever existed).
In the United States, many of these scandalous legends have had to do with racism and slavery. Common words such as picnic, buck, and crowbar have been alleged to stem from derogatory terms or racist practices. The "discovery" of these alleged etymologies is often believed by those who circulate them to draw attention to racist attitudes embedded in ordinary discourse. On one occasion, the use of the word niggardly led to the resignation of a U.S. public official because it sounded similar to the word nigger, despite the two words being unrelated etymologically.
The term "folk etymology", as referring both to erroneous beliefs about derivation and the consequent changes to words, is derived from the German Volksetymologie. Similar terms are found in other languages, e.g. volksetymologie in Dutch, Afrikaans volksetymologie, Danish folkeetymologi, Swedish folketymologi, and full parallels in non-Germanic languages, e.g. Hungarian népetimológia, French étymologie populaire and Israeli Hebrew etimológya amamít (popular etymology). Examples of alternative names are Italian pseudoetimologia and paretimologia (<paraetimologia), as well as English etymythology. The phenomenon becomes especially interesting when it feeds back into the development of the word and thus becomes a part of the true etymology. Because a population wrongly believes a word to have a certain origin, they begin to pronounce, spell, or otherwise use the word in a manner appropriate to that perceived origin, in a kind of misplaced pedantry. Thus a new standard form of the word appears which has been influenced by the misconception. In such cases it is often said that the form of the word has been "altered by folk etymology". (Less commonly, but found in the etymological sections of the OED, one might read that the word was altered by pseudo-etymology, or false etymology.) Pyles and Algeo give the example of "chester drawers" for "chest of drawers"; similarly, "chaise lounge" for "chaise longue".
The term "folk etymology" is thus used to refer to the change itself, and knowledge of the popular etymology is necessary to understand the (more complex) true etymology of the resulting word. Other misconceptions which leave the word unchanged may of course be ignored, but are generally not called popular etymology.
False etymologies are a consequence of the longstanding interest in putatively original, and therefore normative, meanings of words, a characteristic of logocentrism. Until academic linguistics developed the comparative study of philology and the development of the laws underlying sound changes, the derivation of words was a matter mostly of guess-work, sometimes right but more often wrong, based on superficial resemblances of form and the like. This popular etymology has had a powerful influence on the forms which words take (e.g., crawfish or crayfish, from the French crevis, modern crevisse, or sand-blind, from samblind, i.e. semi-, half-blind), and has frequently been the occasion of homonyms resulting from different etymologies for what appears a single word, with the original meaning(s) reflecting the true etymology and the new meaning(s) reflecting the 'incorrect' popular etymology.
In linguistic change caused by folk etymology, the form of a word changes so that it better matches its popular rationalisation. For example:
Other changes due to folk etymology include:
When a back-formation rests on a misunderstanding of the morphology of the original word, it may be regarded as a kind of folk etymology.
In heraldry, a rebus coat-of-arms (which expresses a name by one or more elements only significant by virtue of the supposed etymology) may reinforce a folk etymology for a noun proper, usually of a place.
The same process sometimes influences the spelling of proper names. The name Antony/Anthony is often spelled with an <h> because of the Elizabethan belief that it is derived from Greek ανθος (flower). In fact it is a Roman family name, probably meaning something like 'ancient'.
See the following articles that discuss folk etymologies for their subjects:
The French verb savoir (to know) was formerly spelled sçavoir, in order to link it with the Latin scire (to know). In fact it is derived from sapere (to be wise).
Medieval Latin has a word, bachelarius (bachelor), of uncertain origin, referring to a junior knight, and by extension to the holder of a University degree inferior to Master or Doctor. This was later re-spelled baccalaureus to reflect a false derivation from bacca laurea (laurel berry), alluding to the possible laurel crown of a poet or conqueror.
In Southern Italy in the Greek period there was a city Maloeis (gen. Maloentos), meaning "fruitful". This was rendered in Latin as Maleventum, "ill come" or "ill wind", and renamed Beneventum ("welcome" or "good wind") after the Roman conquest.
The Dutch word for "hammock" is hangmat, ("hanging mat") formed as a folk etymology of Spanish hamaca. A similar story goes for the Swedish word hängmatta, Finnish riippumatto and the German Hängematte.
In the Alexandrian period, and in the Renaissance, many (wrongly) explained the name of the god Kronos as being derived from chronos (time), and interpreted the myth of his swallowing his children as an allegory meaning that Time consumes all things.
The Mandarin word for "crisis", wēijī, is often said to be "composed of two characters, one represent[ing] danger, and the other represent[ing] opportunity." The character jī, however, does not mean "opportunity," and linguists generally dismiss this folk etymology as fanciful. False etymologies for individual Chinese characters are also common.
The question of whether the resulting usage is "correct" or "incorrect" is subjective and is at any rate a separate issue from the question of whether the assumed etymology is correct. When a word changes in form or meaning owing to folk etymology, there is typically resistance to the change on the part of those who are aware of the true etymology. Many words altered through folk etymology survive beyond such resistance however, to the point where they entirely replace the original form in the language. Chaise lounge and Welsh rarebit are still often disparaged, for example, but shamefaced and buttonhole are universally accepted. See prescription and description.