Last visit was: 19 Jul 2025, 14:16 It is currently 19 Jul 2025, 14:16
Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Close
Request Expert Reply
Confirm Cancel
User avatar
akela
Joined: 30 Jan 2016
Last visit: 23 May 2023
Posts: 1,228
Own Kudos:
5,665
 [22]
Given Kudos: 128
Products:
Posts: 1,228
Kudos: 5,665
 [22]
4
Kudos
Add Kudos
16
Bookmarks
Bookmark this Post
User avatar
broall
User avatar
Retired Moderator
Joined: 10 Oct 2016
Last visit: 07 Apr 2021
Posts: 1,138
Own Kudos:
6,956
 [2]
Given Kudos: 65
Status:Long way to go!
Location: Viet Nam
Posts: 1,138
Kudos: 6,956
 [2]
2
Kudos
Add Kudos
Bookmarks
Bookmark this Post
User avatar
TheNightKing
Joined: 18 Dec 2017
Last visit: 20 Mar 2024
Posts: 1,139
Own Kudos:
Given Kudos: 421
Location: United States (KS)
GMAT 1: 600 Q46 V27
GMAT 1: 600 Q46 V27
Posts: 1,139
Kudos: 1,226
Kudos
Add Kudos
Bookmarks
Bookmark this Post
User avatar
auradediligodo
Joined: 31 Jan 2019
Last visit: 18 Nov 2021
Posts: 364
Own Kudos:
818
 [1]
Given Kudos: 67
Location: Switzerland
Concentration: General Management
GPA: 3.9
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Professor: Economists argue that buying lottery tickets is an unwise use of resources, because the average payoff for the tickets sold in a lottery is much lower than the cost of a ticket. But this reasoning is faulty. The average amount paid out on individual insurance policies is much lower than the average cost of a policy, yet nobody would argue that purchasing insurance is an unwise use of resources.

Which one of the following, if true, most weakens the professor's argument?

Inference question

Pre-thinking

In order to understand the correct choice we need to deconstruct the argument.

Economists' stand: Economists argue that buying lottery tickets is an unwise use of resources, because the average payoff for the tickets sold in a lottery is much lower than the cost of a ticket.

Conclusion: But this reasoning is faulty

Evidence supporting the conclusion: The average amount paid out on individual insurance policies is much lower than the average cost of a policy, yet nobody would argue that purchasing insurance is an unwise use of resources.

Now the conclusion of the professor is drawn because he compares 2 elements: the lottery tickets and the insurance policies.
A good weakener would say that such items are not comparable.

POE:


(A) Individuals spend, on average, much more on insurance than on lottery tickets.
irrelevant

(B) Insurance companies generally retain a higher proportion of total revenue than do organizations that sponsor lotteries.
This option supports the idea that it is not wise to buy lottery tickets

(C) Taking small financial risks can often greatly increase one's chances of obtaining much larger benefits.
irrelevant

(D) In general, the odds of winning the grand prize in a lottery are significantly lower than the odds of collecting a settlement from a typical insurance policy.
irrelevant

(E) The protection against loss that insurance provides is more important to one's well-being than is the possibility of a windfall gain.
in line with pre-thinking

Source: LSAT
Kudos
Add Kudos
2
Bookmarks
Bookmark this Post
The key lies in understanding the argument.

This is a statement by a professor that in essence boils down to this :

Don't say Purchasing Lotteries is Unwise BECAUSE Nobody says purchasing a policy is unwise.
The Professor is able to make this point using a common parameter for lotteries and insurance policies ( Average payout vs Avg unit purchase cost)

A weakener would show a key difference as to why people should purchase insurance policies over lottery tickets.
Option E does the job perfectly.
avatar
gmatyodha
Joined: 02 Dec 2019
Last visit: 07 Dec 2020
Posts: 14
Own Kudos:
Given Kudos: 38
Status:kedu
Location: India
Concentration: Strategy, Strategy
GMAT 1: 610 Q50 V23
GPA: 4
GMAT 1: 610 Q50 V23
Posts: 14
Kudos: 2
Kudos
Add Kudos
Bookmarks
Bookmark this Post
VeritasKarishma GMATNinja @crackverbal can you please explain why option D is incorrect? if the odds of winning a lottery is lower than that of collecting a settlement from a insurance policy, then we can say that the reasoning by professor can't be taken into consideration.
User avatar
CrackverbalGMAT
User avatar
Major Poster
Joined: 03 Oct 2013
Last visit: 19 Jul 2025
Posts: 4,847
Own Kudos:
8,652
 [2]
Given Kudos: 225
Affiliations: CrackVerbal
Location: India
Expert
Expert reply
Posts: 4,847
Kudos: 8,652
 [2]
2
Kudos
Add Kudos
Bookmarks
Bookmark this Post
gmatyodha
VeritasKarishma GMATNinja @crackverbal can you please explain why option D is incorrect? if the odds of winning a lottery is lower than that of collecting a settlement from a insurance policy, then we can say that the reasoning by professor can't be taken into consideration.

Hi

Premises:

a) Average payoff per ticket sold in lottery is lower than cost of the ticket.
b) Average amount paid out per insurance policy is lower than average cost of the policy.
c) Purchase of insurance policies is not an unwise use of resources.

Conclusion: Because of / as derived from (a), (b) and (c) above, purchase of lottery tickets is not an unwise use of resources either.

A parallel is drawn between payoff vs cost per ticket/policy, and based on that a conclusion of similarity (in one particular aspect) is drawn between the two. To weaken the argument we are hence looking for some difference between the purchase of lottery tickets and insurance policies. Additionally, this difference must present insurance policies in a favorable light and/or lottery tickets in an unfavorable light.

Option (D) states that the "odds of winning the grand prize in a lottery are significantly lower than the odds of collecting a settlement from a typical insurance policy". The problem with this option is that the odds of winning the grand prize are the same (presumably) for every lottery ticket - each of them has an equal chance. The odds of collecting a settlement on an insurance policy, however, depend on the insured person actually having a healthcare related expenditure to be made (the option states the conditional probability of collecting a settlement given the necessity of a healthcare related expenditure, because otherwise there would be no claim to settle!).

Therefore, the two are not strictly comparable, and it is hard to draw the conclusion that this places the purchase of insurance policy on a higher pedestal. For instance, if the odds of an individual requiring a healthcare expense are very low, then the odds of a payout also fall substantially.

The easier argument to reject this option comes from the fact that the option talks about a settlement of a claim ie; reimbursement of money which would otherwise be spent/is already spent by the individual. The potential net gain for the individual here is zero or less, whereas the potential net gain in a lottery is definitely positive (assuming ticket and premium cost to be sunk). Hence, this does not really place insurance at a higher pedestal.

Hope this helps.
User avatar
GMATNinja
User avatar
GMAT Club Verbal Expert
Joined: 13 Aug 2009
Last visit: 19 Jul 2025
Posts: 7,359
Own Kudos:
68,584
 [2]
Given Kudos: 1,969
Status: GMAT/GRE/LSAT tutors
Location: United States (CO)
GMAT 1: 780 Q51 V46
GMAT 2: 800 Q51 V51
GRE 1: Q170 V170
GRE 2: Q170 V170
Products:
Expert
Expert reply
Active GMAT Club Expert! Tag them with @ followed by their username for a faster response.
GMAT 2: 800 Q51 V51
GRE 1: Q170 V170
GRE 2: Q170 V170
Posts: 7,359
Kudos: 68,584
 [2]
2
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Payoff rates for insurance policies? Sounds exciting. :roll:

Economists say that buying a lottery ticket is a poor use of a person's resources because the average amount won by someone playing the lottery is less than the cost of a ticket. We have a professor who disagrees.

The professor argues that this comparison does not actually show that purchasing a ticket is a poor use of a person's resources. This is because no one claims buying insurance is a poor use of a person's resources, even though the average payout for an insurance policy is less than the average cost of buying a policy.

To most weaken the argument, we're looking for the answer choice that most undermines the professor's comparison. Let's take a look at the answer choices in question:

Quote:
(D) In general, the odds of winning the grand prize in a lottery are significantly lower than the odds of collecting a settlement from a typical insurance policy.
(D) talks about the odds of winning the GRAND PRIZE in the lottery being lower than the odds of obtaining a settlement from an insurance company. However, the professor does not mention just the grand prize, (s)he mentions the average payout from winning ANY PRIZE in the lottery.

If (D) told us that the odds of winning ANY PRIZE in the lottery were much lower than the odds of receiving a payout from an insurance settlement, then this could weaken the professor's argument -- in that case, the lottery could be seen as a poor use of resources (because there is such a low chance of winning) but buying insurance could be seen as a slightly better use of resources (because there is a much higher chance of getting a settlement payout).

However, (D) does not give us that information. We have no idea how the odds of winning the GRAND PRIZE play into the comparison between cost and AVERAGE payout of the lottery and insurance policies. Winning the grand prize could be extremely rare without impacting the professor's stance on average payout at all.

Therefore, (D) does not significantly weaken the professor's argument and we can rule it out as the final answer.

Quote:
(E) The protection against loss that insurance provides is more important to one's well-being than is the possibility of a windfall gain.
This answer choice looks at what provides the value of buying an insurance policy. If the value of an insurance policy comes from the protection against loss that the policy provides, rather than the money gained from a successful payout, then the comparison the professor makes falls apart.

By making the comparison questionable, this answer choice weakens the professor's argument. So (E) is the correct answer.

I hope this helps!
User avatar
unraveled
Joined: 07 Mar 2019
Last visit: 10 Apr 2025
Posts: 2,727
Own Kudos:
Given Kudos: 763
Location: India
WE:Sales (Energy)
Posts: 2,727
Kudos: 2,172
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Professor: Economists argue that buying lottery tickets is an unwise use of resources, because the average payoff for the tickets sold in a lottery is much lower than the cost of a ticket. But this reasoning is faulty. The average amount paid out on individual insurance policies is much lower than the average cost of a policy, yet nobody would argue that purchasing insurance is an unwise use of resources.

Which one of the following, if true, most weakens the professor's argument?

(A) Individuals spend, on average, much more on insurance than on lottery tickets. - WRONG. Irrelevant.
(B) Insurance companies generally retain a higher proportion of total revenue than do organizations that sponsor lotteries. - WRONG. Irrelevant.
(C) Taking small financial risks can often greatly increase one's chances of obtaining much larger benefits. - WRONG. Irrelevant.
(D) In general, the odds of winning the grand prize in a lottery are significantly lower than the odds of collecting a settlement from a typical insurance policy. - WRONG. The comparison in reality is not correct in the passage, however, this choice distorts the comparison further so much so that average payoff is replaced by grnad prize and average cost of policy is replaced by collecting a settlement.  
(E) The protection against loss that insurance provides is more important to one's well-being than is the possibility of a windfall gain. - CORRECT. 

Only D and E stand out. D is slightly offtrack in its comparison.

Answer E.
User avatar
MBAToronto2024
Joined: 21 Apr 2024
Last visit: 06 Feb 2025
Posts: 105
Own Kudos:
Given Kudos: 110
Location: Canada
Posts: 105
Kudos: 16
Kudos
Add Kudos
Bookmarks
Bookmark this Post
KarishmaB
How would you solve it? Struggling between D and E. E looked to me like out of scope.
User avatar
KarishmaB
Joined: 16 Oct 2010
Last visit: 19 Jul 2025
Posts: 16,115
Own Kudos:
74,406
 [1]
Given Kudos: 475
Location: Pune, India
Expert
Expert reply
Active GMAT Club Expert! Tag them with @ followed by their username for a faster response.
Posts: 16,115
Kudos: 74,406
 [1]
Kudos
Add Kudos
1
Bookmarks
Bookmark this Post
akela
Professor: Economists argue that buying lottery tickets is an unwise use of resources, because the average payoff for the tickets sold in a lottery is much lower than the cost of a ticket. But this reasoning is faulty. The average amount paid out on individual insurance policies is much lower than the average cost of a policy, yet nobody would argue that purchasing insurance is an unwise use of resources.

Which one of the following, if true, most weakens the professor's argument?

(A) Individuals spend, on average, much more on insurance than on lottery tickets.
(B) Insurance companies generally retain a higher proportion of total revenue than do organizations that sponsor lotteries.
(C) Taking small financial risks can often greatly increase one's chances of obtaining much larger benefits.
(D) In general, the odds of winning the grand prize in a lottery are significantly lower than the odds of collecting a settlement from a typical insurance policy.
(E) The protection against loss that insurance provides is more important to one's well-being than is the possibility of a windfall gain.

Source: LSAT

The professor has given his argument by attempting to show how the other’s reasoning will lead to an absurd conclusion in a parallel example.

Buying lottery tickets hoping for a windfall
vs
Buying insurance to prevent losses

We have to give something that weakens his conclusion. One way of showing it is that the two examples are not parallel. Are the two situations parallel? No.

When one buys a lottery ticket, it is in the hope of a huge financial advantage by bearing a small financial loss (cost of ticket).
When one buys insurance, it is to safeguard oneself from a possible huge financial loss by paying up a bit now.
The only thing common to the two scenarios is that the lottery organizer/insurance provider retains a lot of money for himself to provide this service.

But the question is whether it makes sense from the perspective of the buyer. Whether it is wise to buy or not. The professor claims that both situations are similar so one should support lottery buying too. We can weaken it by saying that the two situations are different. Insurance provides some advantage that lottery buying doesn't.

The options in contention are (D) and (E) so let's look at them.

(D) In general, the odds of winning the grand prize in a lottery are significantly lower than the odds of collecting a settlement from a typical insurance policy.

Is it about the odds?
Say odds of collecting a settlement from home insurance against floods is much much lower than that of collecting a settlement on health insurance. Does it mean that one should not take 'home insurance against floods'. No. We decide what risks we want to cover. Insurance covers risks. That is the role it plays.
Lottery does not cover risks. It provides no protection. It is bought hoping for a huge gain. So there is no advantage to the buyer that it is providing except for that minuscule chance that one may win. Insurance provides the benefit of covering risk. What the actual odds are in the two cases are irrelevant. Insurance serves a purpose of covering risk.


(E) The protection against loss that insurance provides is more important to one's well-being than is the possibility of a windfall gain.

Correct. This is the difference between the two scenarios. They are not parallel. Insurance provides the benefit of covering risk which is more important to one's well-being than is the possibility of huge gains. This weakens the professor's argument who says that lottery buying is similar to insurance which is promoted by people.

Answer (E)
User avatar
PriyankaGmatIMD
Joined: 24 Jul 2024
Last visit: 24 Apr 2025
Posts: 120
Own Kudos:
Given Kudos: 21
Location: India
GMAT Focus 1: 615 Q83 V76 DI82
GMAT Focus 1: 615 Q83 V76 DI82
Posts: 120
Kudos: 23
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Undermine professors argument means saying that lottery tickets are unwise to buy?
Moderators:
GMAT Club Verbal Expert
7359 posts
GMAT Club Verbal Expert
235 posts