Some of the most prosperous nations in the world have experienced a pronounced drop in national savings rates—the per...

on May 17, 2018

Correct Answer Explanation (Errors in Reasoning)

I do not understand the answer choices and why the correct answer is correct. Could someone please explain the breakdown of this question?

2 Replies

Allison on January 19 at 01:35AM

I am also very confused! I could not find a single answer choice that seemed like it even made sense to answer the question

Ravi on January 20 at 06:11AM

@babushki and @Allie,

Great questions. The stimulus tells us that some really prosperous
nations have seen drops in national savings rates. The stimulus then
states that if the average age of the nations' populations continues
to go up, the trend will undoubtedly continue. The reasoning provided
is that older people have fewer reasons to save than do younger
people.

But so what? What if, despite the fact that they have fewer reasons to
save than younger people, their reasons for saving are stronger/more
important? If this were true, the argument the conclusion wouldn't
necessarily follow. This is the flaw in the argument—the argument is
assuming that all reasons for saving are weighed equally by both
groups. This isn't necessarily true.

As an example, let's say young people have the following reasons for
saving: education, children, buying a house, and traveling.

Older people have the following reasons for saving: retiring and
traveling. This is consistent with the premise of the argument. Yet
it's also entirely possible that the older people could be
incentivized to save more because they feel more pressure to as a
result of their impending retirement.

For this question, it's really important to see the flaw before going
into the answers. It sounds like you guys didn't catch the flaw right
away, which makes selecting which answer is correct much more
difficult.

Now that we have an idea of what the flaw is, let's find the answer
choice that best matches our prediction.

(A) is incorrect because it's not necessary that the argument specify
the reasons younger people have for saving money, nor is it necessary
that it identifies which of those reasons is strongest. We can get rid
of this choice.

(B) is incorrect because the argument never discusses negative savings
rate. This is an idea that was not mentioned, so it's not a flaw of
the argument.

(C) is incorrect because although it's true that the argument doesn't
cite statistics showing the age of the population going up, the
conclusion of the argument is conditional. The conclusion of the
argument only follows if the age is actually going up, so (C) does not
capture the argument's flaw.

(D) is correct because it matches the flaw we described above. The
argument supports its conclusion with the fact that older people have
fewer reasons to save than younger people. This is the only support
provided. Even if this is true, as discussed above, older people could
have stronger reasons for saving than someone has during their youth
(e.g. retirement being a stronger motivator than saving for
education).

(E) is incorrect because the distinction between after-tax and
before-tax income is not pertinent to the argument in the stimulus.
This does not capture the flaw of the argument that we identified
above.

Does this make sense? Let us know if you have any more questions!