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Prompt:

The following appeared as part of the business plan of an investment and financial consulting firm:

“Studies suggest that an average coffee drinker’s consumption of coffee increases with age, from age 10 through age 60. Even after age 60, coffee consumption remains high. The average cola drinker’s consumption of cola, however, declines with increasing age. Both of these trends have remained stable for the past 40 years. Given that the number of older adults will significantly increase as the population ages over the next 20 years, it follows that the demand for coffee will increase and the demand for cola will decrease during this period. We should, therefore, consider transferring our investments from Cola Loca to Early Bird Coffee.”

Discuss how well reasoned you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counter examples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.


Answer:

This argument from an investment and financial consulting firm explains that since the consumption of cola decreases with age whereas the consumption of coffee increases with age and because the number of older adults will increase in the next twenty years, it is logical to transfer their funds from a cola company to a coffee company. This argument is flawed. In particular, we will discuss the assumption regarding the increase in elders, the unsupported idea that the consumption patterns of coffee and cola will remain stable over the next two decades, as well as the way the author has picked the companies in the passage.

Firstly, the author of the excerpt argues that the fact that there will be more older adults in the next twenty years implies that “the demand for coffee will increase and the demand for cola will decrease.” This is unsupported. Indeed, the increase in the number of older adults is not the same as an increase in the share of the population that older adults will represent in the future. There may be more elderly in the future but the proportion by which this part of the population will increase may be the same as the proportion by which the rest of the population will increase. Thus, there would be the same increase in the younger part of the population: the part in which the consumption of cola is the highest. Therefore, there is no implication that the demand for coffee will increase nor that the demand for cola will decrease.

Secondly, the argument states that the trends of consumption of cola and coffee have been steady for the past four decades. This is not sufficient statistical evidence to imply that the consumption patterns for both coffee and cola will remain stable for the next twenty years. For instance, there could be research in the next five years showing that the consumption of coffee increases the risk of cancers. This could drive down the consumption of coffee for the remaining fifteen years in that twenty-year sequence. Hence, there is no reason to assume that the consumption of coffee or cola will remain the same over the future years.

Lastly, there is no explanation for picking specifically Cola Loca and Early Bird Coffee as companies to respectively remove funds from and add funds to. The argument presented is that there will be an increase in the demand for coffee and a decrease in the demand for cola. However, nothing is said about the two companies presented here. For example, it is a non-trivial possibility that Cola Loca is a very strong company that despite the decrease in the demand for cola will manage to diversify its positions and business model in order to give a profit to its investors whereas Early Bird Coffee will do poorly and end up in bankruptcy in the next five years. Thus, this transfer of investment might be a mistake.

To conclude, the argument presented is poorly supported by its evidence. The author mistakenly mixes up the growth of a part of a population with the growth of the proportion within the total population of that same class. Moreover, it is unsupportedly assumed that because there was no change in consumption patterns for cola and coffee in the last fourty years that there will be no change in the next twenty years. In addition, the writer makes an unsupported decision by wanting to transfer investment funds from a specific cola company to a specific coffee firm. In order to strengthen or refute the argument, the author needs to model the growth of the older adult proportion within the population for the next twenty years to support or discard the evidence that there will be an increase in the consumption of cola and a decrease in the consumption of coffee. Also, the author needs to take into account that even though consumptions patterns for both beverages have been steady for the last four decades, they may not be in the future. Lastly, there is a need for explanation for the decision to pick specifically Cola Loca and Early Bird Coffee for the transfer of investments.