The following appeared in a newspaper story giving advice about investments:
“As overall life expectancy continues to rise, the population of our country is growing increasingly older. For example, more than 20 percent of the residents of one of our more populated regions are now at least 65 years old, and occupancy rates at resort hotels in that region declined significantly during the past six months. Because of these two related trends, a prudent investor would be well advised to sell interest in hotels and invest in hospitals and nursing homes instead.”
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 writer makes several assumptions, which weaken his overall argument. First, the writer states that life expectancy is on the rise. A more reliable source might indicate the opposite. The Centers for Disease Control and Prevention (CDC) has shown that after increasing steadily from 1950 to 1960, life expectancy began to level off around 1970. While life expectancy did increase slightly during the 1980s and 1990s, it declined slightly after 2000. Life expectancy in the United States is now around 78. If life expectancy continues to rise, the population of our country is not growing older, but rather younger. Second, the writer assumes that as the population of older Americans increases,the occupancy rates of resort hotels will decline. This seems unlikely, because senior citizens represent a relatively small portion of the overall population, and it is unlikely that they would want to vacation in resorts. If they want to stay in a resort, they will stay in a resort hotel. Third, the writer contends that the profit of hotels may be better spent in nursing homes and hospitals. This may be true, but the investment required to build such facilities is enormous. Moreover, many hotels are located near hospitals. As a result, it is doubtful that an investor would have to build an entirely new facility. In addition, the occupancy rates of many hotels do not decrease significantly as the population of older Americans increases. Many elderly Americans prefer to stay in hotels near medical centers, where access to medical care is convenient. As the population of older Americans continues to increase, it may make sense for hotels to begin catering to the needs of this growing sector
Originally, the life expectancy of most human beings was fairly short, and people invested in businesses that provided food and shelter. As life expectancy increased, people invested in businesses related to education, health care, and recreation. As life expectancy continues to increase, investments in businesses related to these and other basic human needs will continue to be important. But investments in businesses that supply goods and services to older Americans are likely to become more and more important. As the population of older Americans continues to grow, it will require more investment in hospitals, nursing homes, and other businesses. For investors, this means that they will have to consider which businesses will be profitable when the population of older Americans increases.