The government provides insurance for individuals' bank deposits, but requires the banks to pay the premiums for this...

AneeshU June 16, 2022

Question Regarding Phrasing

From this part of the stimulus, "Since it is depositors who primarily benefit from the security this insurance provides..." we know that (If) depositors benefit from the security of insurance -> (then) the government should take steps... This is kind of a weird argument to me. The justification for the conclusion is that if the depositors are paying the insurance through the bank already, then the government ought not to take any steps, i.e. the answer has no connection to 'the depositors still benefit from the security of insurance' How does this square up exactly? Even if depositors are not paying insurance through depressed rates of interest, they still primarily benefit from the security that the insurance provides, so 'the government should take steps... depositors pay the premiums for insuring their own accounts,' right? Could someone please break this down in terms of a diagram?

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jakennedy June 18, 2022

Hi Aneesh,

This question is not based on conditional logic, so a formal diagram is not required.

First, let’s examine the evidence.

Premise: It is depositors who primarily benefit from the security

Conclusion: The government should ensure that depositors bear the cost of the security by paying the premiums for insuring their own accounts

So the idea is that the insurance benefits the depositors so they should be the ones who have to pay for it. The author also wants us to believe that the government should get involved to make that happen.

Answer choice C is necessary because if banks DO always cover the cost by paying depositors lower interest rates, the depositor would already be covering the cost. Therefore, there would be no need for the government to get involved because their goal of passing the cost on to the depositor would have already been met.

AneeshU June 22, 2022

But isn't this statement a conditional?

"Since it is depositors who primarily benefit from the security this insurance provides, the government should take steps to ensure that depositors who want this security bear the cost of it and thus should make depositors pay the premiums for insuring their own accounts."

In your explanation, how come you have identified the two parts as premise and conclusion and not sufficient and necessary? My error was primarily based on this mischaracterization. Since is an indicator word, right? As in, 'Since I am a man, I am human' : man --> human

Emil-Kunkin July 11, 2022

Hi AneeshU,

This statement is not conditional- although it looks a lot like one. Conditional statements describe the world as it is. That is, we would have some sort of If X then Y. Here, however, we have a "because X, we should do Y.

I would be very cognizant of the word "should." Any time an author says X should do Y, we are dealing with a prescriptive statement, which is telling us what should happen, not describing what is. Note that we could have a conditional principle with the word "should" but it would look different than what we have here.

For example we could say "If a depositor benefits, then the government should ensure that they bear the costs" or maybe "If you make good money, you should give to charity." These are both conditional statements because they are universal- and they have the critical If X then Y statement. They describe the world as it is- in which people should do certain things in certain circumstances. We lack the "if" here.