Concerned about the well-being of its eldery citizens

[allison.kao]

Which of the following most logically completes the passage?

Concerned about the well-being of its elderly citizens, the government of Runagia decided two years ago to increase by 20 percent the government-provided pension paid to all Runagians over 65. Inflation in the intervening period has been negligible, and the increase has been duly received by all eligible Runagians. Nevertheless, many of them are no better off financially than they were before the increase, in large part because __________________.

a) they rely entirely on the government pension for their income
b) Runagian banks are so inefficient that it can take up to three weeks to cash a pension check
c) they buy goods whose prices tend to rise especially fast in times of inflation
d) the pension was increased when the number of elderly Runagians below the poverty level reached an all-time high
e) in Runagia children typically supplement the income of elderly parents, but only by enough to provide them with a comfortable living

Answer: E

*********

I chose answer C originally, thinking that if the cost of the goods elderly Runagians are purchasing is rising faster than the increase in pension they are receiving, then they are no better off than before the pension increase. However, re-reading the problem, I don't think C is the answer any longer because the problem states that inflation in the current period has been negligible.

Regardless, I'm not sure I understand why E is the correct answer & how the children come into play. Would someone be able to explain?

Thank you!!

[himangshu.roy]

I will try to explain.

C: "they buy goods whose prices tend to rise especially fast in times of inflation", But as the inflation is almost constant so we can safely assume that these prices are also same, so this is not the reason.

E: Take an example, Person A needs $ 200 per month. Previously pension was $100, so Person A used to take $100 for his livelihood from his/her children.
Now the increased pension is &120, so that person takes $ 80 from his/her children. But the net income is still $200, as the inflation is same so their financial condition remains the same.

[allison.kao]

makes sense to me now! thanks for the quick explanation!

[pritesh.suvarna]

am thinking D is also pretty close.

coz many were below poverty line when the income increased by 20%. it should'nt add that much to the overall income.

thinking what can be the clincher between D & E...

[RonPurewal]

Which of the following most logically completes the passage?

Concerned about the well-being of its elderly citizens, the government of Runagia decided two years ago to increase by 20 percent the government-provided pension paid to all Runagians over 65. Inflation in the intervening period has been negligible, and the increase has been duly received by all eligible Runagians. Nevertheless, many of them are no better off financially than they were before the increase, in large part because __________________.

a) they rely entirely on the government pension for their income
b) Runagian banks are so inefficient that it can take up to three weeks to cash a pension check
c) they buy goods whose prices tend to rise especially fast in times of inflation
d) the pension was increased when the number of elderly Runagians below the poverty level reached an all-time high
e) in Runagia children typically supplement the income of elderly parents, but only by enough to provide them with a comfortable living

Answer: E

*********

I chose answer C originally, thinking that if the cost of the goods elderly Runagians are purchasing is rising faster than the increase in pension they are receiving, then they are no better off than before the pension increase. However, re-reading the problem, I don't think C is the answer any longer because the problem states that inflation in the current period has been negligible.

Regardless, I'm not sure I understand why E is the correct answer & how the children come into play. Would someone be able to explain?

Thank you!!

when you get questions like this, SIMPLICITY and DIRECT RELATIONSHIP TO THE MATERIAL OF THE PASSAGE are the keys.

one especially powerful technique is to simplify the passage down to 1-2 sentences.

here is one such simplification, for this passage:
the government increased all the elderly people's pensions. but, for some reason, the elderly people don't actually have any more money now.
our challenge is to find the "some reason" here.

we need a reason why the increase will have NO EFFECT on the elderly people's income. in other words, we must find some factor that will immediately cancel out the effect of the increase, since we know that the elderly people are indeed getting the money.

(e) does a splendid job of this. if the elderly's income is supplemented by their children - up to a FIXED amount ("a comfortable living") - then it makes absolutely no difference how much pension those elderly people are receiving, as long as the pension is less than "a comfortable living". in other words, their children are just going to pay the difference anyway.

(d) gives no reason why the effect of the pension would be cancelled out. in fact, if (d) is true, then we would expect just the opposite: if more elderly runagians are in poverty than ever before, then the effect of the pension increase should be amplified (in terms of lifting them out of that poverty).

[karanrob]

Hi Ron,

Iam a newbie (at or in) (dont know which one sits well) the forum.

With regard to choice (D), how can one assume how far back down the line Runagians were in the poverty line?? For eg: If the poverty line in the country says anyone with an yearly income of $1200 or below is under the poverty line and current pension to Runagians 65 and over is $600 a year, then a 20% increase really wont make a difference, they would still be below the poverty line. Also, since all goods in an economy have a certain price point based on a certain income level (usually the poverty line rate), the purchasing power for all elderly to move onto the next level will not increase.

[RonPurewal]

Hi Ron,

Iam a newbie (at or in) (dont know which one sits well) the forum.

With regard to choice (D), how can one assume how far back down the line Runagians were in the poverty line?? For eg: If the poverty line in the country says anyone with an yearly income of $1200 or below is under the poverty line and current pension to Runagians 65 and over is $600 a year, then a 20% increase really wont make a difference, they would still be below the poverty line. Also, since all goods in an economy have a certain price point based on a certain income level (usually the poverty line rate), the purchasing power for all elderly to move onto the next level will not increase.

the argument says that many of them are "no better off financially than they were before the increase".
this is not an approximate statement; it means that their standard of living has improved by exactly zero.
therefore, your argument of "well, 20% isn't much" doesn't hold up here -- if they actually get 20% more money, then "no better off financially" is false.

the only way this statement can be true is for some other source of money to give proportionally less in response to the additional government spending. that's the only way you can have a net increase of 0 even though the government is giving out more pension money.

[parthian7]

(e) does a splendid job of this. if the elderly's income is supplemented by their children - up to a FIXED amount ("a comfortable living") - then it makes absolutely no difference how much pension those elderly people are receiving, as long as the pension is less than "a comfortable living". in other words, their children are just going to pay the difference anyway.

I picked E too but by process of elimination. Still not fully convinced by it though..just sounded less bad than the other choices.

Ron, what makes you assume that pension will still be less than "a comfortable living" even after the 20% increase? In other words, what if the increase eliminates the need to get support from the children?

Let's say an elderly couple used to get 2000 rungs (Runagia's currency) each month, while they'd need r2250 to make a comfortable living. E says the children would typically pay the difference (r250). However, now they get r2400 (150 more than what they need)..so the raise covers their needs and they don't need to get any money from their children anymore..

Thanks

[RonPurewal]

(e) does a splendid job of this. if the elderly's income is supplemented by their children - up to a FIXED amount ("a comfortable living") - then it makes absolutely no difference how much pension those elderly people are receiving, as long as the pension is less than "a comfortable living". in other words, their children are just going to pay the difference anyway.

I picked E too but by process of elimination. Still not fully convinced by it though..just sounded less bad than the other choices.

Ron, what makes you assume that pension will still be less than "a comfortable living" even after the 20% increase? In other words, what if the increase eliminates the need to get support from the children?

Let's say an elderly couple used to get 2000 rungs (Runagia's currency) each month, while they'd need r2250 to make a comfortable living. E says the children would typically pay the difference (r250). However, now they get r2400 (150 more than what they need)..so the raise covers their needs and they don't need to get any money from their children anymore..

Thanks

you can't just hypothesize a random event/possibility, and then proceed to construct an argument that is based exclusively on that event/possibility.
in other words, you have an argument here that starts with "what if..." -- which means that it is, well, not actually an argument. it's just a hypothesis, which can be completely collapsed by the symmetric counterargument: "well, what if NOT...?"

the only time you're allowed to hypothesize events/possibilities is when those events/possibilities are very clearly the MOST likely, practically certain, outcomes according to simple common sense. that is definitely not the case with this particular supposition.
here is an example of what i mean:
let's say that apple suddenly starts making ipads only in the color red. in this case, there is no common-sense outcome -- i.e., there is no obvious reaction that consumers will (or won't) have here. therefore, you cannot start your reasoning with something like "what if people are willing to pay more for a red ipad?" or "what if people don't want to buy red ipads?", because those are essentially random suppositions.
on the other hand, let's say that the government of a certain state decides that the penalty for speeding on freeway should be twenty years in prison (and that this penalty should actually be enforced). in this case, there's no "what if...", because, under such circumstances, people WILL start driving more slowly on the freeway. so in that kind of case you could go ahead and construct an argument on that particular supposition.

[parthian7]

(e) does a splendid job of this. if the elderly's income is supplemented by their children - up to a FIXED amount ("a comfortable living") - then it makes absolutely no difference how much pension those elderly people are receiving, as long as the pension is less than "a comfortable living". in other words, their children are just going to pay the difference anyway.

I picked E too but by process of elimination. Still not fully convinced by it though..just sounded less bad than the other choices.

Ron, what makes you assume that pension will still be less than "a comfortable living" even after the 20% increase? In other words, what if the increase eliminates the need to get support from the children?

Let's say an elderly couple used to get 2000 rungs (Runagia's currency) each month, while they'd need r2250 to make a comfortable living. E says the children would typically pay the difference (r250). However, now they get r2400 (150 more than what they need)..so the raise covers their needs and they don't need to get any money from their children anymore..

Thanks

you can't just hypothesize a random event/possibility, and then proceed to construct an argument that is based exclusively on that event/possibility.
in other words, you have an argument here that starts with "what if..." -- which means that it is, well, not actually an argument. it's just a hypothesis, which can be completely collapsed by the symmetric counterargument: "well, what if NOT...?"

the only time you're allowed to hypothesize events/possibilities is when those events/possibilities are very clearly the MOST likely, practically certain, outcomes according to simple common sense. that is definitely not the case with this particular supposition.
here is an example of what i mean:
let's say that apple suddenly starts making ipads only in the color red. in this case, there is no common-sense outcome -- i.e., there is no obvious reaction that consumers will (or won't) have here. therefore, you cannot start your reasoning with something like "what if people are willing to pay more for a red ipad?" or "what if people don't want to buy red ipads?", because those are essentially random suppositions.
on the other hand, let's say that the government of a certain state decides that the penalty for speeding on freeway should be twenty years in prison (and that this penalty should actually be enforced). in this case, there's no "what if...", because, under such circumstances, people WILL start driving more slowly on the freeway. so in that kind of case you could go ahead and construct an argument on that particular supposition.

While typing up a fiery reply to your post, I realized that I'd missed the "many of them" part..
it all makes sense now and I do look like an idiot for that hypothesis lol

Thanks for taking the time as usual sir :)

[jnelson0612]

:-)

[reotokate]

Hi Ron,

How about Choice C? Is it because the passage states "inflation has been negligible", this factor is a no longer a concern?

Thanks!

[RonPurewal]

How about Choice C? Is it because the passage states "inflation has been negligible", this factor is a no longer a concern?

Precisely.

[reotokate]

How about Choice C? Is it because the passage states "inflation has been negligible", this factor is a no longer a concern?

Precisely.

Thank you!!!

[RonPurewal]

Sure.