#19 - Professor: Economists argue that buying lottery

[Administrator]

Complete Question Explanation

Weaken—#%. The correct answer choice is (E)

The author is trying to convince us that buying lottery tickets is a wise investment, just like purchasing insurance is. People purchase insurance even though the average amount of a payout is lower than the cost of a policy, so why not disregard the equivalent issue with lottery tickets, where the average payoff is lower than the cost of a ticket?

The argument/counterargument structure of this stimulus can be diagrammed as follows:

Economists’ argument:

• Premise: The average payoff for lottery tickets is much lower than the cost of a ticket.
  
  Conclusion: Buying lottery tickets is an unwise use of resources.

Professor’s counterargument:

• Premise: The average amount paid out on individual insurance policies is much lower than the average cost of a policy.
  
  Premise: Yet purchasing insurance is a wise use of resources.
  
  Conclusion: The economists’ reasoning is faulty (i.e. buying lottery tickets is a wise use of resources).

The professor’s reasoning relies heavily on the analogy between playing the lottery (i.e. gambling) and purchasing insurance. This analogy is false. In many ways, gambling is the exact opposite of insurance. Although in both cases the average payoff is less than the cost of entry, we purchase insurance to hedge against the risk of a calamitous event. We play the lottery, by contrast, in order to win: when we gamble, we are risk-seeking, not risk-averse. Furthermore, in the unlikely event of a calamity, the insurance policy protects us against an even greater calamity. But in the unlikely event of a windfall, we are simply better off than we were before. Winning the lottery is not necessary for our well-being; having insurance sometimes can be.

To weaken the argument, look for an answer choice that highlights a material difference between insurance and gambling, i.e. one that shows why spending money on insurance is wise, but buying lottery tickets is not.
Answer choice (A): The comparative amount of money spent on insurance and lottery tickets is not a material difference that weakens the analogy between the two. This answer choice is incorrect.

Answer choice (B): The comparative amount of revenue retained by insurance companies and lottery organizations is irrelevant to the question of whether either of them provides a product worth investing in. This answer choice is incorrect.

Answer choice (C): This is the Opposite answer. If taking small financial risks can greatly increase one’s chances of obtaining a larger benefit, then playing the lottery may be a wise decision: each ticket purchased is a small financial risk that increases one’s chances of obtaining a much larger benefit. This strengthens the proposition that buying lottery tickets is a wise use of resources, and is therefore incorrect.

Answer choice (D): At first glance, this answer choice seems attractive. However, just because the odds of winning the lottery are lower than the odds of collecting a settlement, that does not make playing the lottery particularly unwise. We already know that the average payoff for both is lower than the “cost of entry”: the average person is probably going to lose money either way. The analogy between insurance and gambling is not false because of a difference in our probability of incurring a benefit, but because the value (or importance) of that benefit is much greater in the event of a calamity than it is in the event of a windfall. The issue here is normative, not mathematical.

Answer choice (E): This is the correct answer choice. If the protection against loss that insurance provides is more important than is the possibility of a windfall gain, then purchasing insurance is wiser than playing the lottery. This answer choice describes a material difference between the gambling and insurance, because it compares the benefit of protection against loss to the benefit of striking gold. If one benefit is more important than the other, this would clearly affect our decision as to whether the cost of entry into is worth the expense.

[Barcelona10]

Hi, I narrowed the answer for this question to D and E. The goal here, I'm guessing is to weaken the analogy that the Professor makes between insurance policies and the lottery. Both have average payoffs that are lower than their costs. I thought the answer was D, because D shows how they're different, in that it is actually harder to win the lottery, and it is more likely you will use the insurance. I cannot see how this answer is wrong? Can someone help me please?

I didn't choose D because the issue of what is good for "well-being" I thought went beyond the scope of the argument.

Thank you very much!

[Steve Stein]

Hi Barcelona10,

The author starts with the presentation of the economic argument that lottery tickets are a bad bet, given that the cost is greater than the average payout.

The author points out that with insurance, the average payout is also lower than the average cost.

Based on this premise, the author says that insurance is basically an unwise bet as well.

If you respond with answer choice (D), you're basically saying that it's not as bad a bet as the lottery...but that does not respond to the issue that the average payout is still significantly less than the average cost.

Answer choice (E), on the other hand, points out a difference between buying insurance and playing the lottery, introducing a new consideration which helps to justify a losing-percentage bet in one instance (insurance), but not in the other (the lottery): it's more important to protect oneself against loss than it is to have a shot at a jackpot.


Good question! I hope that's helpful--please let me know whether this is clear--thanks!

~Steve

[agroves]

Hello,

How do we determine that E is a better choice than D? Both seem to weaken the argument significantly.

Thank you!

[KelseyWoods]

Hi Angela,

D doesn't actually weaken the Professor's argument because his argument isn't about the odds of winning the grand prize. The professor's argument is that economists are wrong to argue that buying lottery tickets is an unwise use of resources because the average payoff is less than the cost of a ticket. He makes a comparison to insurance because the average payoff on insurance is also less than the cost but no one considers buying insurance to be unwise. Even if the odds of winning the grand prize are significantly lower than the odds of collecting an insurance claim, that doesn't significantly hurt the Professor's contention that buying lottery tickets might not be an unwise use of resources. Odds aside, the average pay off for both is still less than the cost.

E is a better answer because it points out that you can't really compare buying lottery tickets to purchasing insurance. Even if the average payoff for both is less than the cost, insurance provides a benefit (protection) that is much more important to well-being than the slim chance of winning a large amount of money.

Hope that helps!

Kelsey

[Dianapoo]

Hi Angela,

D doesn't actually weaken the Professor's argument because his argument isn't about the odds of winning the grand prize. The professor's argument is that economists are wrong to argue that buying lottery tickets is an unwise use of resources because the average payoff is less than the cost of a ticket.

Hope that helps!

Kelsey

Hi!

In this case (and I agree with you), isn't the Administrator's explanation of D being incorrect faulty? My husband pointed the following out:

The professor actually doesn't care about the conclusion drawn by the economist. We as the reader have zero idea what the professor thinks about lottery tickets! We don't know if he's saying it's not unwise, or that it's wise, or anything of the sort. The professor has a big problem with the reasoning that the economist used to come to the conclusion - and it stops there!

D is a pretty useless answer because the professor isn't saying that lottery tickets not an unwise purchase. D can be true all you want, and the professor might agree with D and even go so far as to say "yep that's why buying lottery tickets are a terrible, horrible idea! But, Mr. Economist, reasoning you used in support of the conclusion is so bad - just look at my analogy."

As we see here, D did nothing to the soundness of the professors argument.


Please correct me if I'm wrong, but I see a common error among LSAT enthusiasts confusing the conclusion with the reasoning to support it.

[James Finch]

Hi Diana,

The real issue with (D) is that it's giving us irrelevant information: it's telling us that the distribution of lottery winners is different to that of insurance claims, in that it is skewed towards a lower proportion of winners versus claimants. But this is irrelevant, because we already know that in both cases, the average payout (average here meaning "mean" average) is less than the average cost, so "the house wins" in both cases, which means the analogy still holds. Instead, when we have analogical reasoning, the best way to show that the analogy doesn't work is to show how the two situations are fundamentally different and that the one does not necessarily apply to the other. (Incidentally, although not tested often on the LSAT, this is a crucial skill for practicing attorneys). Answer choice (E) does this by attacking the applicability of the analogy, making it the correct answer.

Hope this helps!

[Leela]

It seems to me that answer choice E relies on the assumption that it would be unwise to not choose something that is more important to one's well-being. Why is it that we make this assumption? I can think of many instances where people make choices that aren't the best option for their personal well-being, but I wouldn't necessarily consider those choices to be unwise. For example, a wealthy person might vote for a politician who is going to raise taxes on the wealthy and lower taxes on the poor versus another politician who proposes tax breaks on the wealthy. This choice clearly isn't the one that's more important for this individual's well-being, but I wouldn't consider this to necessarily be an unwise choice. The voter might have many other wise reasons for supporting this tax policy.

[Rachael Wilkenfeld]

Hi Leela,

We want to weaken the idea that the economist's position is wrong. So we want to weaken the idea that lottery tickets are not unwise. There's a lot of double negatives floating around, so it can get confusing, fast. The basic idea is that the professor is making it seem like the lottery and insurance are not meaningfully differently risky. Logically, we know that's fairly easy to weaken. Insurance is a common, reasonable expense. Lottery purchases are less so. But we need to find a fact that helps us to weaken it.

Answer choice (E) does so by showing that insurance is meaningfully different than a lottery because insurance protects against loss, while a lottery win is a financial windfall. One protects from harm, while the other provides a good. That's a meaningful distinction that would weaken professor's idea that the lottery and insurance are essentially equally wise.

Part of your concern seems to stem from a disagreement with the facts of answer choice (E). But weaken questions don't ask us to figure out which answer choice comes from the stimulus. Weaken questions ask us to think about which choice IF TRUE most weakens the argument. We don't then need to worry about if the choice is true or not. The question itself tells us we can make the assumptions needed to make the answer choice true.

Hope that helps!
Rachael

[snowy]

Part of your concern seems to stem from a disagreement with the facts of answer choice (E). But weaken questions don't ask us to figure out which answer choice comes from the stimulus. Weaken questions ask us to think about which choice IF TRUE most weakens the argument. We don't then need to worry about if the choice is true or not. The question itself tells us we can make the assumptions needed to make the answer choice true.
Rachael

I was hesitant about E for the same reason as Leela - it seemed to require the assumption that something being important for one’s well-being equates to being a wise use of resources, and I still don’t fully understand why the assumption isn’t a problem that would rule out E. The explanation above didn’t really answer that for me - I knew we were supposed to take the ACs as true but I didn’t think that means we should ignore assumptions they require in order to be the correct answer.


Thank you in advance!!