Q19 - Professor: Economists argue that

[agersh144]

Can a moderator please explain how E is right and D is wrong. This is perplexing to me -- how is well-being germane to this argument? D says in essence if you buy life insurance it's far more likely you'll recoup some of your money from the policy whereas the lottery is significantly less likely. E talks about what's important to well-being which is completely out of scope about the wisdom of using resources based upon long-shot odds. Please help!

[rinagoldfield]

Hi, agersh144, thanks for your post!

The professor tries to prove his point with an analogy. What’s so bad about getting lottery tickets? he asks. Some economists say it’s bad because the average lottery payout is less than the average cost of a ticket. But that can’t be why, says the professor. After all, the average payout on insurance is less than the average cost of insurance, and people think it’s wise to get insurance.

So how good is the professor’s analogy? Well, he’s right that both buying insurance and buying lottery tickets usually mean putting lots of money in, and not getting lots of money back. But the parallels stop there. The risk of not buying into health insurance is unnecessary death and suffering. The risk of not buying into the the lottery is, well... nothing.
People buy insurance to protect against calamities, not to "win" some fantasy extra cash. That’s a very different reason than why people buy lottery tickets.

(E) gets at this big flaw. It points out that people buy insurance to protect themselves, not to land on some windfall gain. It weakens the argument by pointing out that insurance and the lottery aren’t really analogous.

(D) doesn’t weaken, although I see why it’s temping. Note that (D) compares the grand prize in lottery to the typical insurance settlement. That’s different than the professor’s original comparison between the average lottery payout and the average insurance payout. So what if not many people win the grand prize ? What’s the typical lottery payout?

(C) is irrelevant"”small financial risks? What are those? And if we interpret these small financial risks as "buying lottery tickets," then this answer choice strengthens rather than weakens the professor’s conclusion.

(B) is irrelevant. We want to know about consumers’ buyouts, not sellers’ revenue.

(A) is irrelevant. Does the logic behind the wisdom of buying insurance apply to lotteries or not?

[agersh144]

Thanks, it makes sense now!

[wgutx08]

I couldn't decide between D and E while doing this PT, but now I realized that D is wrong.

I'm not sure if I can agree with Rinagoldfield though; I don't think questions like "what if not many people win the grand prize ? What’s the typical lottery payout?" are irrelevant. The probability of getting money in both cases directly affects the "wiseness" of the action. HOWEVER, the frequency is already reflected in the "average amount paid out" or "the average payoff" that were compared in the stimulus, so it cannot function as an additional factor to weaken the argument.

[agutman]

Here's my explanation!

PT69, S4, Q19 (Weaken)

This argument starts with a structure that we should be familiar with: Economists argue that... This is most likely an opposing point, and the author’s conclusion is probably going to go against the economists. Can you find it? But this reasoning is faulty. There’s our conclusion! Note that the author doesn’t give a straightforward explanation for why he thinks the economists’ reasoning is faulty. He talks about insurance policies (describes how they are similar to lottery tickets) and says nobody would make the economists’ argument about insurance policies. In other words, if no-one makes a certain argument about insurance policies, then one would suffer from faulty reasoning if one made that argument about lottery tickets.
How could we weaken this argument? Perhaps there is a relevant difference between insurance policies and lottery tickets. Let’s diagram the core:

Nobody would argue that purchasing insurance is an unwise use of resources + insurance policies are like lottery tickets in that the average payout is much lower than the average cost --> Economists’ reasoning is faulty when they claim that buying lottery tickets is an unwise use of resources.

As we consider the answer choices, let’s remember to make things easier by really focusing on how they relate to the core. The correct answer must help us assist the economists in the face of the author’s attack.

(A) is out of scope; this argument deals with a qualitative issue (wise vs. unwise use of resources), not a quantitative issue.

(B) is tempting because we may know from real life that it’s true _ most government lotteries’ profits go to charity... But it doesn’t help the economists’ case (if anything, one could argue that if you wanted to donate to charity then lottery tickets are in fact a wise use of resources, in which case this answer strengthens the argument).

(C) is another tempting answer choice because it seems like a reasonable thing to say in real life. However, it has nothing to do with our core.

(D) is out of scope, for the same reason as (A).

(E) Aha! This gives us a relevant difference between lottery tickets and insurance policies! Just what we were looking for. Pick it and move on.

[hernandayoleary]

Despite the above explanations, I am struggling to see why D doesn't weaken more than E? If the odds of being paid out insurance are higher than lottery. Doesn't that show how lottery and insurance are different (lottery bad and insurance good)? Therefore weakening. This is a comparison flaw, D is saying they are not alike in a crucial aspect (payout). E does that in a different but weaker way. Its grossly unclear to me how E could be the better choice.

[ahm]

I think if we were to use "D" the author would probably respond: The payout is much lower from an insurance policy as compared to the lottery. Although the lottery has lower odds than an insurance policy, the rewards of winning are greater. So, it doesn't really counter his reasoning.

However, with E. We get at the heart of the issue. That the two subjects (insurance policies and the lottery) are not quite as analogous as they seem E hints at a more plausible reason why purchasing insurance is not an unwise use of resources. As people above have already stated, an insurance policy, unlike the lottery, protects as from the possibility of future harm.

In my experience, whenever we have arguments that use analogies, crucial differences among them tend to be good weakeners.

[zen]

Despite the above explanations, I am struggling to see why D doesn't weaken more than E? If the odds of being paid out insurance are higher than lottery. Doesn't that show how lottery and insurance are different (lottery bad and insurance good)? Therefore weakening. This is a comparison flaw, D is saying they are not alike in a crucial aspect (payout). E does that in a different but weaker way. Its grossly unclear to me how E could be the better choice.

I originally chose D and was stumped but I think the Professor can even accept (D) without weakening his argument.
Think about it this way: Just because the odds are lower in winning the lottery, does that hurt the argument that it isn't an unwise use of resources because we buy insurance?

It does not matter if the odds are lower; that can be assumed to be factored into the original statement in the stimulus! That would not change the fact that for lottery tickets, the payouts are smaller than the cost of the ticket, on average. If you countered the Professor's argument with (D), he might even agree with you and say "So What? The odds may be lower for the lottery BUT we buy insurance and that's does not pay out as much as the price of the policy, despite the difference in odds; you have failed to show me why my comparison does not entail that it is not unwise to buy lottery tickets."

This is a question where it is helpful to get back to the fundamentals. What's the core? What's the conclusion, and how is he supporting it? By attacking his support-- the 'analogous' comparison in which we think it's wise to buy insurance, so we'd think the same for lottery tickets- we can weaken his argument.

[jm.kahn]

There have been many unanswered questions here about choice D and those appear to be reasonable questions. I did this PT as retake recently and still found D very attractive. So I will write down the reasoning why D is actually wrong.

Premise-1: average payoff in much lower than cost of ticket in lottery. that is, ratio of average payoff/ cost of ticket is much less than 1.

Premise-2: the same ratio is much lesser for insurance than for lottery.

premise-3: insurance is not unwise

Conclusion: buying lottery ticket is not unwise

it's easy to see that why the argument would conclude that buying lottery is not unwise as the premises say that we know buying insurance is not unwise and insurance has much worse average payoff than lottery. in this way, based on one important factor, namely ratio of average payoff to the ticket cost, the argument has concluded that buying lottery is not unwise.

how could one weaken this argument? by introducing additional/new information that shows that buying lottery is really unwise.
It could be done in several ways. In a different universe buying lottery may destroy one's health which could make it very dangerous and unwise use of resources. In a yet another universe, buying lottery may cause one to gamble away their finances and therefore could be an unwise use of resources. and so on.

If the odds of winning the lottery are much worse than insurance, then that is also a disadvantage of buying lottery compared to insurance. So that should weaken too. But note that D doesn't say that.

Choice D: Odds of winning the grand prize in lottery is significantly worse than odds of getting a typical settlement from insurance.

it compares grand prize with typical settlement which is unfair comparison, and therefore this choice D doesn't add any information that could be seen as hurting the notion that buying lottery is wise. that is the reason choice D, as it is provided to us, definitely doesn't weaken.

Now consider if there were a choice D-modified as show below:

Choice D-modified: Odds of winning a typical prize in lottery is significantly worse than odds of getting a typical settlement from insurance.

This D-modified makes a fair comparison between odds of winning lottery versus settlement from insurance. This shows a disadvantage of buying lottery compared to buying insurance. So this hurts the conclusion that buying lottery is not unwise. This D-modified choice definitely weakens the argument.

[maria487]

I'd love further clarification on D, please. I am having trouble eliminating it because the way I see it, D is giving us a reason why lottery and insurance are different, hence why the author is wrong in assuming that what applies to insurance must also apply to lottery.

[ohthatpatrick]

I will basically be re-hashing the explanations you've already read.

You're correct that this is an argument by analogy so we will weaken it by showing a meaningful difference.

(A), (B), (D), and (E) all point out a difference between insurance and lottery.

So we can't pick (D) that bluntly. We have to figure out why this difference would matter to the conclusion. Why would any of these allow you to argue that insurance IS a sound idea, even though lottery isn't?

(D) isn't saying anything interesting. Because it's comparing the odds of winning the GRAND prize to the odds of collecting ANY settlement, it's a boring truism.

It's essentially saying, "the odds of being the biggest outlier are lower than the odds of being an average data point."

Of course that's true. That's always true.

More importantly, the numbers being discussed in (D) are already involved in calculating the average payoffs discussed in the stimulus.

The average payoff for a lottery ticket is calculated by adding up all the money that gets awarded (grand prize, 2nd prize, 3rd prize .. all the way to last prize) and dividing by the number of tickets purchased.

The average payoff for an insurance policy is calculated the same way.

The professor isn't saying that buying a lotto ticket or an insurance policy is a SURE loss. SOME people will come out on top. They will get more out than they put in.

She's just saying that, on average, people lose in both situations. (D) is irrelevant, because it doesn't matter what odds are of collecting an insurance settlement. We already know that no matter what the odds are, on average, you put more money into the system than you get out.

We cannot change that. We need to find a way of saying, "even though people, on average, will lose money by buying insurance policies, it's still a good idea."

How does (D) accomplish that objective?

(E) accomplishes it by saying, "Yes, you'll lose money on average, but it's worth losing a little money to protect your well-being against the possibility of (while uninsured) losing a lot of money."

It's actually a (recently) well-documented fact of human psychology that we care more about losses than gains. The sting of losing $100 is more pronounced than the joy of gaining $100. So this correct answer choice is really leaning on that fact of human nature.

[donghai819]

So I guess the pattern we may learn from this particular question is that we can weaken an argument by directly pointing out the difference within the analogy, which might be less recognizable in original argument.

[ohthatpatrick]

You said:
So I guess the pattern we may learn from this particular question is that we can weaken an argument by directly pointing out the difference within the analogy, which might be less recognizable in original argument.

Yes, 1000 times, yes to the bold. That is THE move when you're judging an argument by analogy. It will always be that pressure point.

Strengthen by showing more relevant similarity.
Weaken by showing meaningful differences.

But I got a little confused with your final clause. It sounded like you were saying "a certain issue in the analogous case" is also present in the original case, but just not as obvious.

That's not quite right. If the certain issue was present in both cases, then that would be a similarity, not a difference.

You're weakening an analogy by saying, "Even though I grant you X and Y are similar on the level you discussed, they are NOT similar in this other regard, and THAT is why I don't want to draw the conclusion you're drawing."

Argument by analogy:
LSATs and Marathons both require a lot of endurance. Since marathon runners don't run a full 26-mile marathon in the week leading up to their race, LSAT test takers shouldn't take a full 5-section test in the week leading up to their test.

We grant that LSAT and Marathon are similar on one level (require endurance).

But if we were trying to object to the conclusion, and say that "it IS okay to take a full practice test in the week leading up to an LSAT", we would want to point out a meaningful difference.

for example
"The damage done to one's body from running a full marathon requires a much longer recovery period than the damage done to one's thinking from taking a full LSAT."

We've weakened the argument by saying "the two things are similar in terms of requiring endurance but DIFFERENT in terms of the recovery period. Thus we should NOT draw the same conclusion about how one should / shouldn't practice for them."