Question

Which pitfall to sound economic reasoning is illustrated when a person comments that "capitalists focus only on profits and don't care about their workers"?
A. Abstraction
B. Biases
C. The fallacy of composition
D. Confusing correlation and causation

Answer 1

Answer:

B. Biases

Explanation:

A bias occurs when an individual makes an ill informed decision. This usually results from previous experience or deeply held beliefs about a situation. The individual diverges from rational choice and are rather influenced by emotions and invested opinions.

When a person says capitalists focus more on money and do not care for their workers, this is a subjective statement that is not based on facts. In capitalism it is not all employers that focus on only making money. Employer-employee relations are important for efficient production. So this statement is made on the basis of the speaker's bias.

Answer 2

Answer: B. Biases

Explanation: Bias is defined as an inclination towards something; often preconceived, it can lead to adverse judgment or opinion formed beforehand or without knowledge of the facts. Without being aware of it, people have biases that affect how they view the world which potentially can cause them to make decisions that are neither wise nor fair. When a person comments on capitalist as only profit driven and not caring about their workers shows an existence of bias. Capitalism has been shown to motivate its workers better than any other economic system because it allows for inequality and it allows for the most productive workers to reap the rewards for being significantly productive. Several other benefits include: encouraging innovation, promoting equality, provides freedom etc. Thusly, identifying our biases, by changing our way of thinking and by learning about the group, or groups, you have a bias against, we can start becoming aware of these biases and address them where necessary.