GMAT Essays (AWA)

The following appeared in the personal finance section of a popular magazine:

"The average price of an acre of land in the United States is now 50 times what it was in 1970, and nearly 200 times what it was in 1920. The nation's population is projected to keep increasing, even as the amount of land remains constant. Therefore, people who are approaching retirement should invest heavily in real estate in order to ensure their financial security."

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 counterexamples 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.

RESPONSE:


The argument states that people who are approaching retirement should invest heavily in real estate in order to ensure their financial security. Conclusion is based on the premise that average price of land has been on increase since 1920 and since the nation's population is projected to keep increasing, even as the amount of land remains constant, investing in real estate would be a wise decision.

There are several assumptions that may necessarily not apply to this argument. For example author assumes that investing in real estate is a safe option for investing. Also it is a venture that would give profit in short time as he has asked people approaching retirement to consider it. And finally author assumes that the trend of increasing population,thus increasing land price would continue.

The first issue to be addressed is how safe investing in real estate is. Because if real estate like stock market is a risky option it may not be the best way of investment for people approaching retirement. There may be a possibility that price of a land decreases, if after some time it is discovered that the place is flood prone or the water level of the place is extremely low.In such cases it would be extremely detrimental for for someone who would have invested all his/her life money into such property.

This argument also relies on the idea that investing in property will help one to derive profit in short time.A person approaching retirement on average would not live next 50 years to see the fruit of his investment.Therefore it would be nonsensical of suggesting him an investment option that would prove beneficial to him after a long time. However going with the argument, it took 47 years for the price to become 50 times of what it was in 1970. It would have been better if author would have given data of how property price has changed in last 5 or maybe 10 years.

Finally what if this trend is short lived. Author has not given any statistical evidence that would suggest that this trend would continue. There is possibility that because of certain reasons like maybe some disease the population starts declining or maybe becomes constant.In that scenario since land available would be relatively more , the property price would not increase.

In conclusion we can say that the author's illogical argument is based on unsupportive premises and unsubstantiated assumptions that render his conclusion invalid. While we can take that real estate is good option to invest into , accepting it as best answer to all retirement investment problems is difficult. If the author hopes to change the reader's mind on this issue,it requires large restructure in the argument, fix the flaws in the logic, clearly explicate the assumptions and provide evidentiary support.