MGMAT CAT Verbal Question - Measuring Poverty

[clarence.booth]

Hi,

My question is a CR type (Strengthen the Arg) from my MGMAT CAT test. It is as follows:

The United States government uses only a household's cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household's disposable income. For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in "poverty" because this income is not included in the calculation.

Which of the following, if true, validates the contention that the government's calculation methods must be altered in order to provide statistics that measure true poverty?

A - For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household's disposable income.

B -While the government’s calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade.

C- Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government’s calculation method.

D - Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.

E - The government’s calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.

Per the explanation given (below) it states that Answer C is correct and I do not understand how so. The question asks us to validate (or strengthen) the conclusion that the gov't's approach to calculating poverty is insufficient. However, to my mind C does not accomplish this: it does not offer definitive proof (validation) that the private sector's calculations are better, but merely says that private sector has produced many reports that uniformly indicate lower levels of poverty. Indication is not the same as definitive. Given the background info, one would agree the gov't method should change, but without a statement declaring, say, the private sector took measures to now include retirees living off capital gains, then it is a blanket statement to say the private sector has a more valid method without more information. Answer E, if true, is the better choice as stated: the government’s calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year. Interesting, the explanation for why E is wrong doesn't make sense as stated: it does not, however, address whether there are other calculation methods that are more accurate than the government’s method. Neither does C, and secondly, who cares. The question stem ask which statement further supports the notion that the gov't calculation must be altered. It does not ask which statement demonstrates that another calculation has been produced by someone else, although, again if C provided more info that the private sector indeed has a better formula (more than just "reports indicate") then it would be an acceptable answer.

What am I missing here?
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MGMAT Explanation
The conclusion of the argument is that the government's calculation methods must be altered in order to provide statistics that measure true poverty. To support this position, the author first explains how the government’s method works and then introduces a hypothetical example that would return a "false positive" - that is, a person who has a large income, yet is classified by the government as living in poverty. One example, however, is generally not enough to invalidate an entire method; no method is perfect and there are always a few results that are not consistent with the overall conclusion. In order to validate, or strengthen, the conclusion, we need to show that the government’s method is fundamentally inferior to some alternative that would produce more valid results.

(A) This choice weakens the argument by minimizing the importance of the author's evidence (the hypothetical retiree with capital gains). According to this choice, the use of cash income to designate poverty levels is a very sound method because it provides valid results for more than 99% of those classified as living in poverty.

(B) This choice shows that the government’s method provided a wide range of results for the poverty rate over a certain period of time, but it is irrelevant to the argument at hand. It tells us nothing about whether the method provides relevant statistics in any given year.

(C) CORRECT. If this statement is true, then the government’s calculation method seems to overstate the number of people living in poverty, while the various private sector studies generally agree with each other that the number of people is lower. Thus, the methods used in the private sector are likely to be more valid than the government’s method, lending credence to the author's contention that the government’s method should change.

(D) Although this choice provides an example of people who might agree with the conclusion (several prominent economists), this choice provides no evidence that the alternate method they endorse would provide more relevant statistics than the government’s method.

(E) This choice adds another hypothetical example of how the current method could include someone in the poverty count who does not actually live in poverty. It does not, however, address whether there are other calculation methods that are more accurate than the government’s method.