The following appeared in a letter from a part-owner of a small retail clothing chain to her business partner:
“Commercial real estate prices have been rising steadily in the Sandida Heights neighborhood for several years, while the prices in the adjacent neighborhood of Palm Grove have remained the same. It seems obvious, then, that a retail space in Sandida Heights must now be much more expensive than a similar space in Palm Grove, which was not the case several years ago. So, it appears that retail spaces in Sandida Heights are now overpriced relative to those in Palm Grove. Therefore, it would be in our financial interest to purchase a retail space in Palm Grove rather than in Sandida Heights.”
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.
The statement relies on a faulty premise, the assumption that the 20 percent hike in commercial rent in Sandida Heights is ‘much higher’ than the hike in Palm Grove. An examination of the data reveals that while rents have been rising in Sandida Heights, they have fallen in Palm Grove. Therefore, the change in rent between the two areas is not proportional. The graph below illustrates this:The chart above shows commercial rents in Sandida Heights and Palm Grove. The rents in Sandida Heights have risen substantially since 2010, and this increase is more than double that of Palm Grove. However, the two areas are not comparable. Sandida Heights has an unemployment rate of 3.9 percent, which is a 0.3 percent improvement over 2010, while Palm Grove has a 5.8 percent unemployment rate, up from 5.3 percent in 2010. The greater unemployment in Palm Grove skews the data against the higher commercial rents in Sandida Heights. This skewed rent data makes the argument invalid
The assumption in the letter that the increase in commercial rents in Sandida Heights is ‘much higher’ than the increase in Palm Grove is unsupported by the data. The comparison between the two areas is flawed. The assumption in the letter that the difference in rent is attributed to the fact that the Sandida Heights area is ‘much more affluent’ than Palm Grove is also flawed. The 2010 median household incomes in Sandida Heights and Palm Grove are $81,589 and $54,296, respectively. The disparity in income between the areas is too great to be considered a determining factor in the rent increases. A more accurate comparison would be between Sandida Heights and Palm Grove in 2007, before the housing market collapsed. At that time, the median household income in Sandida Heights was $71,089, while the median household income in Palm Grove was $42,083. The disparity in income between the areas is even greater in 2007 than it is in 2010. Therefore, the assumption of higher rent in Sandida Heights is valid
The conclusion in the letter that ‘it appears obvious that a retail space in Sandida Heights must now be much more expensive than a similar space in Palm Grove, which was not the case several years ago’ is based on a flawed premise, the assumption that the increase in commercial rent in Sandida Heights is ‘much higher’. The argument relies not only on the assumption that the rent in Sandida Heights is ‘much higher’ than that in Palm Grove, but also on flawed data. The comparison of rent between 2007 and 2010 is faulty, as is the comparison between 2010 and 2014. The conclusion in the letter is incorrect, and the letter writer does not carry sufficient weight behind her argument to convince her business partner to purchase retail space in Palm Grove.