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7 Critical Steps To Positive Thinking Episode 1

7 Critical Steps To Positive Thinking Episode 1

This Episode: ARE YOU YOUR OWN WORST ENEMY?

We live in a world where we often feel out of control.
We stress about news stories that we can’t change,
relationships we can’t salvage and other more personal issues as well.
There is one thing we CAN control though - how we think.
We have full control over how we react to the trials and tribulations in our life. We can view every setback as another failure piling up, or we can view our setbacks as lessons on the way to success.
If you are. See More interested in learning how to think positively, then check out the 7 critical steps for the next seven days.

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7 critical steps to positive thinking

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Critical Thinking: Chapter 7

The Ad Hominem Fallacy
  • The ad hominem fallacy rests on a confusion between the qualities of the person making a claim and the qualities of the claim itself. It is a rhetorical device that attacks the arguer instead of the argument.

The Ad Hominem Fallacy

A proposal made by an oddball is an oddball’s proposal, but it does not follow that it is an oddball proposal.

Personal Attack Ad Hominem
  • A pattern of fallacious reasoning in which we refuse to accept another’s argument because there is something about the person we don’t like or of which we disapprove.

Personal Attack Ad Hominem
  • Example: Are you really going to believe her about librarians’ salaries not being excessive? I’ll have you know she herself is a librarian, or don’t you think that matters?

The Inconsistency Ad Hominem
  • A pattern of fallacious reasoning of the sort, “I reject your claim because you act inconsistently with it yourself,” or “You can’t make that claim now because you have in the past rejected it.”

The Inconsistency Ad Hominem
  • The double standard argument is actually the inconsistency ad hominem.

The Inconsistency Ad Hominem
  • Example: Did you ever notice how the people who favor abortion on demand are the same people who are against the death penalty?

The Inconsistency Ad Hominem
  • Example: It really gripes me to see Bill Clinton talking about how cigarette smoking is a big contributor to public health costs. How can we trust him? Even he himself admits to smoking cigars!

Circumstantial Ad Hominem
  • Attempting to discredit a person’s claim by referring to the person’s circumstances.

Circumstantial Ad Hominem
  • Example: Of course the Task Force on Crime is going to conclude that crime is on the way up. If they conclude it’s on the way down, they’d have to disband the task force, wouldn’t they?

Circumstantial Ad Hominem
  • Example: Of course that can’t be a legitimate proposal. They’re just trying to get the city council to pass a regulation that will stir up some business for them.

Poisoning the Well
  • Poisoning the well can be thought of as an ad hominem in advance.

PPT - Critical Thinking: Chapter 7 PowerPoint presentation

Critical Thinking: Chapter 7 - PowerPoint PPT Presentation

Transcript and Presenter's Notes


Title: Critical Thinking: Chapter 7


1
Critical Thinking Chapter 7
  • More Fallacies

2
The Ad Hominem Fallacy
  • The ad hominem fallacy rests on a confusion
    between the qualities of the person making a
    claim and the qualities of the claim itself. It
    is a rhetorical device that attacks the arguer
    instead of the argument.

3
The Ad Hominem Fallacy
  • A proposal made by an oddball is an oddballs
    proposal, but it does not follow that it is an
    oddball proposal.

4
Personal Attack Ad Hominem
  • A pattern of fallacious reasoning in which we
    refuse to accept anothers argument because there
    is something about the person we dont like or of
    which we disapprove.

5
Personal Attack Ad Hominem
  • Example Are you really going to believe her
    about librarians salaries not being excessive?
    Ill have you know she herself is a librarian, or
    dont you think that matters?

6
The Inconsistency Ad Hominem
  • A pattern of fallacious reasoning of the sort, I
    reject your claim because you act inconsistently
    with it yourself, or You cant make that claim
    now because you have in the past rejected it.

7
The Inconsistency Ad Hominem
  • The double standard argument is actually the
    inconsistency ad hominem.

8
The Inconsistency Ad Hominem
  • Example Did you ever notice how the people who
    favor abortion on demand are the same people who
    are against the death penalty?

9
The Inconsistency Ad Hominem
  • Example It really gripes me to see Bill Clinton
    talking about how cigarette smoking is a big
    contributor to public health costs. How can we
    trust him? Even he himself admits to smoking
    cigars!

10
Circumstantial Ad Hominem
  • Attempting to discredit a persons claim by
    referring to the persons circumstances.

11
Circumstantial Ad Hominem
  • Example Of course the Task Force on Crime is
    going to conclude that crime is on the way up. If
    they conclude its on the way down, theyd have
    to disband the task force, wouldnt they?

12
Circumstantial Ad Hominem
  • Example Of course that cant be a legitimate
    proposal. Theyre just trying to get the city
    council to pass a regulation that will stir up
    some business for them.

13
Poisoning the Well
  • Poisoning the well can be thought of as an ad
    hominem in advance.

14
Poisoning the Well
  • Example I wouldnt take a course from anyone in
    the Poly Sci department, if I were you. They are
    all anti-U.S. ultraliberal types, at least
    thats what I hear.

15
Poisoning the Well
  • ExampleThe next speaker is going to speak in
    favor of the idea. But she works for the gun
    lobby Dont even bother listening to what she
    says.

16
Genetic Fallacy
  • The genetic fallacy occurs when we try to refute
    a claim on the basis of its origin or history.
    Rejecting a proposition because it is supported
    by a group you dont like is a genetic fallacy.

17
Genetic Fallacy
  • Example You cant trust the arguments you find
    in that magazine. Its well known as a right-wing
    apologist for the wealthy.

18
Genetic Fallacy
  • Example I dont think postmodern expressionism
    is decent art. Its another style spawned by the
    East Coast art establishment, and, frankly, Im
    tired of that groups dictating to the rest of
    the art world.

19
Positive Ad Hominem Fallacies
  • If we automatically transfer the positive or
    favorable attributes of a person to what he or
    she says, that is a mistake in reasoning, as well.

20
Positive Ad Hominem Fallacies
  • Example The fact that in your view the NRA
    represents all that is good and proper does not
    enable you to infer that any specific proposal
    from the NRA is good and proper.

21
Positive Ad Hominem Fallacies
  • Example The fact that you think your mom is
    clever does not logically entitle you to conclude
    that any specific opinion of your moms is clever.

22
The Straw Man Fallacy
  • The straw man fallacy happens when you refute a
    position or claim by distorting or
    oversimplifying or misrepresenting it, all the
    while ignoring the persons actual position.

23
The Straw Man Fallacy
  • Example Gays in the military? Yes. Maybe you
    favor excluding everyone except for white
    Anglo-Saxon males with adolescent personalities,
    but not me.

24
The Straw Man Fallacy
  • Example Do I want the police department to take
    charge of writing parking tickets? You mean, do I
    want to get shot if I pull up next to a fire
    hydrant? What do you think?

25
The False Dilemma Fallacy
  • The false dilemma fallacy occurs when you limit
    considerations to only two alternatives although
    other alternatives may be available. A straw man
    is often used as part of a false dilemma.

26
The False Dilemma Fallacy
  • Example Overheard I dont know why Barbara
    wont go out with me. She must think Im too
    intense for her.

27
The False Dilemma Fallacy
  • Example Gays in the military? Either let them
    in, or keep out all minorities take your choice.
    Im for letting them in. the alternative is
    ridiculous.

28
The Perfectionist Fallacy
  • The perfectionist fallacy is a subspecies of
    false dilemma and a common rhetorical ploy. This
    principle downgrades policy X simply because it
    isnt perfect.

29
The Perfectionist Fallacy
  • Example No, I dont believe we ought to
    reinstate the death penalty in this state. Doing
    it isnt going to prevent all crime, and you know
    it.

30
The Perfectionist Fallacy
  • ExampleDont stay in the army. You were ROTC
    instead of going to one of the academies, and
    that means they might promote you for a while,
    but youll never get above lieutenant colonel.

31
The Line-Drawing Fallacy
  • Another version of the false dilemma is called
    the line-drawing fallacy, the fallacy of
    insisting that a line must be drawn at some point
    when in fact it is not necessary that such a line
    be drawn.

32
The Line-Drawing Fallacy
  • Example All this talk about secondhand smoke
    causing cancer, I just dont get it. How does it
    happen? WHEN does it happen? The first time you
    take a breath in a smoky room? The second time?
    You can never pin it down exactly.

33
The Line-Drawing Fallacy
  • ExampleWhat do you mean, I broke my curfew? All
    I did was walk to the curb. You wouldnt cite me
    if I stood on the porch, would you? And if Id
    just stepped off the porch, that wouldnt be any
    different. So whats so magical about the curb?

34
Slippery Slope
  • A form of fallacious reasoning in which it is
    assumed that some event must inevitably follow
    from some other, but in which no argument is made
    for the inevitability.

35
Slippery Slope
  • Example No, I dont believe in three strikes
    and youre out for convicted felons. Next thing
    it will be two strikes, then one strike. Then we
    will be sticking people in jail for life for
    misdemeanors. Its not good policy.

36
Slippery Slope
  • ExampleGays in the military? If we allow that,
    then next time well be letting women into the
    mens barracks. And the next thing you know,
    women, men, gays, everyone--theyll all be
    showering together and sleeping in the same
    bunks. Get real.

37
Misplacing the Burden of Proof
  • Misplacing the burden of proof occurs when the
    burden of proof is placed on the wrong side of an
    issue.

38
Misplacing the Burden of Proof
  • 1. The less initial plausibility a claim has, the
    greater the burden of proof we place on someone
    who asserts that claim.

39
Misplacing the Burden of Proof
  • 2. Other things being equal, the burden of proof
    falls automatically on those supporting the
    affirmative side of an issue rather than on those
    supporting the negative side.

40
Misplacing the Burden of Proof
  • When someone claims that we should believe in
    such-and-such because nobody has proved it isnt
    so, we have a subtype known as appeal to
    ignorance.

41
Misplacing the Burden of Proof
  • 3. Special circumstances like court or contracts
    will specify where the burden of proof lies so
    there are no doubts or confusion about who needs
    to prove what.

42
Misplacing the Burden of Proof
  • Example I beg to differ, Officer, but sometimes
    you people go overboard talking about the dangers
    of fast driving. If you can prove that theres
    actually a child near the street right now, and
    that the child would have stepped out in front of
    my car, then Ill grant you that going fifty-five
    was dangerous.

43
Misplacing the Burden of Proof
  • Example Preferential treatment in hiring is
    something we must support after all, can you
    think of a reason why we shouldnt?

44
Begging the Question
  • We are guilty of begging the question when we ask
    our audience to accept premises that are as
    controversial as the conclusion were arguing for
    and are controversial on the same grounds.

45
Begging the Question
  • Example The ACLU? Yeah, I know about them, and I
    dont like them very much. Theyre the ones who
    furnish free lawyers for criminals.

46
Begging the Question
  • Example No, I don NOT believe that a murderer
    ought to be allowed to live. No way! Murderers
    have forfeited the right to live because anyone
    who murders another person has lost that right.

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7 Excellent iPad Games to Develop Kids Critical Thinking ~ Educational Technology and Mobile Learning

In today's post. we are providing you with a list of great games designed to improve your students critical thinking and creative powers.Check them out below and don't forget to check the list we have posted before on iPad Apps to Develop Kids Critical Thinking .


" The iPad adaptation of our classic surrealist toy! Poke the Head. Prod the Head. Tug the Head. but most importantly, Feed the Head. Like a living cartoon, the Head will unfold and transform in surprising, startling, and hilarious ways. "

" Where’s My Water? is a challenging physics-based puzzler complete with vibrant graphics, intuitive controls, and a sensational soundtrack. To be successful, you need to be clever and keep an e ye out for algae, toxic ooze, triggers, and traps. "

" Room Break is an adventure game about escaping. The purpose of this game is simple.
Users will be detained to certain places and situations and they need to open the door of each room and escape."

" Mobigame, the team behind the multiple award winning EDGE for iPhone and iPod touch, returns in full force with Cross Fingers, a unique game which challenges you to combine solid pieces in a gigantic tangram puzzle "

" The task in Doodle Fit is simple: fit the given sets of blocks into the given shapes. Drag the blocks into positions in search for the layout that covers the whole shape. A level is complete when all blocks have been used and there is no more space free in the shape. "


" JellyCar is a driving/platforming game for both iPhone and iPod touch. The game is about driving a squishy car through squishy worlds, trying to reach the exit. JellyCar features soft body physics for all of the objects in the world. Also your car can transform for a limited time to aid progression through the level "

" Geared is a radically new and innovative puzzle game; a unique addition to its genre. The first and only Gear-based game with absolutely no snap-grid. Geared delivers complete and total freedom to the player, bestowing every puzzle with a near infinite array of choices. "


" 7 Little Words is FUN, CHALLENGING, and EASY TO LEARN. We guarantee you've never played anything like it before. Give 7 Little Words a try today! "

C07 Critical thinking assessment

[C07] Critical thinking assessment

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If you have knowledge, let others light their candle by it.

Help us promote
critical thinking!

There are different psychological tests that are used to evaluate critical thinking skills. The more popular ones are usually standardized tests that can be benchmarked against a larger sample.

  • Watson-Glaser Critical Thinking Appraisal (WGCTA) - The standard version consists of multiple choice questions for an hour-long test. There are two versions (A & B) that are supposed to be equivalent and so can be used to measure changes in critical thinking over a period of time.
  • California Critical Thinking Skills Test (CCTST) - A more recent test that can also be completed online, with sub-scores for different categories such as analysis, inference, induction, etc.
  • California Critical Thinking Disposition Inventory (CCTDI) - designed to "designed to measure the disposition to engage problems and make decisions using critical thinking."
  • The Halpern Critical Thinking Assessment (HCTA) focuses on five dimensions of critical thinking: verbal reasoning, argument analysis, thinking as hypothesis testing, likelihood and uncertainty, and decision making and problem solving.
  • Related to the assessment of critical thinking, there is also the interesting Cognitive Reflection Test (CRT), which consists of only 3 short questions. It provides a measurement of rational and reflective thinking.

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How to Stop Negative Thinking in 7 Simple Steps

How to Stop Negative Thinking in 7 Simple Steps

I thought he'd be pleased, I really did. But negative thinking can darken a cloudless day, bring down an uplifting event, and dampen a simple pleasure.

He'd won a lot of money and had been pleased. for a while. But now all Keith could say was, "Yeah, but now I have the added problem of whether to tell my friends or not. If I don't and they find out, it's bad. And if I do, they'll all expect me to share some with them!"

I suggested it wasn't a 'problem' but merely a consideration; that, all in all, he might as well be over the moon.

"Yeah, but I'm torn between paying off the mortgage and buying a Porsche."

Resisting the urge to throttle him (or ask for money), I got thinking about the true nature of negativity.

As someone once said: "Life's problems reveal who we really are!" and that's true; negative thinkers can "yeah, but" when things are going great. On the other hand, the more resilient of positive thinkers can remain upbeat when times are tough.

I sat and looked at Keith. A young man with intelligence (which was not best serving him), looks, and now money, and still he saw the old water jar as half empty. I've known people close to death with more zest and positivity.

Negative thinking can become a habit of mind, picked up from others. Or it can be little more than a failure of courage; because sometimes it actually takes guts to remain positive through setbacks. (Not that I considered winning money a 'setback'.)

I looked at him, thinking; he looked at me, wondering what I was looking at. Actually, I suppose negative thinking seems to have its advantages.

The devil you know

Thinking 'the worst', expecting failure and betrayal, seeing downsides where others don't, even seeing positives as negatives - all convey a kind of insurance policy. "If I expect the worst, then I won't be disappointed when it happens."

Another 'advantage' to negative thinking is the 'I told you so' syndrome. For some, it can feel more important to be proved right in their negative predictions than to have good things happen (and therefore be proved 'wrong').

Before I get too positive about negativity, here's a thought: The habit of thinking negatively doesn't just predict how likely someone is to become depressed, but also predicts how likely they are to suffer all kinds of other illnesses later on in life as well. (1) I'm not suggesting that negative thoughts alone produce illness, but they don't help.

We're going to look at what you can do to stop negative thinking. But first, let's examine a common fundamental mistake the pessimism-prone tend to make.

The most common negative thinking mistake

Keith was proud to describe himself as a 'realist'. Of course, anyone who strongly holds a belief think they are being 'realistic' in holding it, whether it involves green men from Mars or honest politicians.

The 'more realistic' proclamation is a favourite of cynics everywhere. And in a way they are right. But only because thinking negatively causes us not to try - or if we do try, to give up sooner - so the negativity itself influences results. Self-fulfilling prophecies really do happen. Research has even found that what we believe about our health can have more bearing on how long we live than our actual health. (2)

So, negative thoughts can plague us even when things seem to be going well: "It's too good to last!" My first tip has to do with how negative thinking distorts perception.

1) Stop thinking in extremes

Most of life isn't black or white, completely this or that, all or nothing. But negative thinking tends to view bad stuff in the extreme. For example:

  • Rather than not doing as well as I'd like on my test, I'm going to "fail completely!"
  • Instead of my business venture taking a while to get going, it's going to "crash and burn, leaving me ruined!"
  • Rather than just feeling a few nerves during my speech, I'm going to "die out there; they're all going to hate me!"

All or nothing thinking misses out the subtle shades in life. It makes us see the future in terms of dramatic disasters, failures, and catastrophes. Sure, disasters occasionally happen, but - contrary to the shrill pronouncements from newsstands - most of life consists of shades of grey.

The first step to overcoming negative thinking isn't to 'just be positive' all of a sudden, but to look for shades of grey. Say you've been worrying about a relationship. Rather than thinking: "It's going to be a disaster, I just know it is" or even "It's going to be perfect!", how about: "I expect there will be great bits, good bits, and not so good bits, like any relationship."

Write down what you have been thinking negatively about. Write the extreme negative statement that comes to mind. Now write three 'middle of the road' possibilities - not so exciting (or terrifying), but a more realistic take on what is actually more likely to happen. Giving your brain more options will reduce emotionality and allow you to think more clearly.

2) Stop over-generalizing the negative

Ask yourself: "If something bad happens, do I over-generalize it? Do I view it as applying to everything and being permanent rather than containing it to one place and time?"

For example, if someone turns you down for a date, do you spread the negativity beyond that person, time, and place by telling yourself: "Nothing ever works out for me!"? If you fail a test do you say to yourself, "Well, I failed that test; I'm not happy about it, but I'll try harder next time."? Or do you over-generalize it by telling yourself you're "stupid" or "can't learn anything!"?

And while we're on the subject.

3) Don't minimize the positive

Negative thinking stops people seeing the positive when it does happen. It's as if there's a screen filtering out positives and just letting in stuff that confirms the 'negative bias'. Magnifying setbacks and minimizing successes leads to de-motivation and misery.

Get into the habit of seeing setbacks as temporary and specific rather than as permanent and pervasive. We all tend to find what we look for. If you find yourself thinking negative thoughts about a person, for instance, get into the habit of balancing it out with one positive thought about them: "He's so insincere. Mind you, to be fair, he was helpful with that project. and he can be very funny. " The positive is there but you have to look for it.

4) Stop mindreading

Thinking negatively stops us relaxing with uncertainty. This can lead to 'mindreading'. "She hasn't texted me back; she doesn't like me!" or "He only said that to make me feel better, he doesn't really think that!"

Having to assign a meaning to something before you have real evidence makes you more likely to believe what you imagine without question. Holding off assigning (made up) meaning to an ambiguous situation is a key part of overcoming negative thinking.

When you become more positive (or just more comfortably neutral), you'll be doing more of: "I don't know why she hasn't texted me back yet. " You'll also be able to consider all possible reasons you can think of, not just the negative ones.

Here are a few to help you out:

  • She's forgotten her phone.
  • The phone's battery is dead.
  • She's run out of phone credits.
  • She's in a lecture.
  • She's on a plane.
  • She's out of range.

You get the drift. None of these are attributable to you and your likeability and all are as plausible as any other explanation.

5) Stop taking all the responsibility

If I put it down to 'other people' or 'luck' when something is good or successful and don't take any credit myself (even if the success was largely down to me), then I am externalizing the positive. Or I might externalize the quality of goodness from my friend when he does something kind by telling myself: "He only did that to win favours!" If you (or someone else) do something good or well, just accept it.

Negative thinkers also tend to do the opposite. They will internalize - that is, blame themselves - for all kinds of negatives that have little or nothing at all to do with them. Look at how much control and influence you really have over things that you tend to think negatively about.

6) Stop forcing your own rules on life
  • "If he loved me, he wouldn't do that."
  • "If I was a good mother, I wouldn't lose my temper."
  • "People shouldn't act like that."
  • "If I can't do this, then I must be really stupid!"
  • "He was late - he must be seeing someone else!"
  • "Saying that means he doesn't respect me!"
  • "My medical tests haven't come back and that means it's bad news!"

Sometimes known as 'must-erbation', making up tight rules as to how reality must or should be is a sure-fire way of feeling let down by yourself and others.

This isn't to say that we shouldn't expect anything from ourselves and others, but rather that the rules need not be unreasonably inflexible.

If you feel disappointed or let down, then you must have been expecting something else. Examine what it was and ask yourself: "Was my expectation too narrow?"

7) Stop making stuff up and believing it

Imagination is a wonderful thing, but not if you use it to scare yourself. Sometimes we need to be able to 'suspend the functioning of the imagination' (to quote Ernest Hemingway, no less). Looking at an upcoming event in your mind and negatively hypnotizing yourself by vividly imagining the worst is like using a hammer to paint a picture. Your imagination is there as a tool to be used constructively.By practicing imagining things going well, making it more likely, you'll be calmer in the situation and it will be a much better use of your time.

If you'd like a flavour of this exercise, then click the free (yes, there really are no hidden extras) audio link below.

If you still have wildly negative thoughts, then at least 'dilute' them by imagining a positive outcome as well as the negative one. If you imagine forgetting what to say in an upcoming presentation, immediately disregard that and instead imagine it going well.

Stopping negative thinking takes time and effort, and to an extent it's a job that's never done. Practicing using these seven tips will serve you well for the rest of your life – isn't it worth spending a little time with them now?

Despite his negativity, Keith (a friend of mine) recognizes his own negative leanings and actually said he found these tips useful.

Is your negative thinking making life harder than it needs to be?

Section 7: Economics and Critical Thinking

Inflate Your Mind

Critical thinking is particularly important in today’s Internet society and world of information overload. Authors, journalists, economists, politicians, talk-show hosts and even Hollywood celebrities and famous athletes make controversial and sometimes contradictory statements and express their opinions about social, political, and economic issues. It is useful to read their statements and to listen to their opinions. However, as educated citizens and critical thinkers, we must question everything. If we don’t, we could end up with laws, regulations, and economic policies that harm our economy and our country.

When we evaluate a normative statement (for example, we should raise taxes on the rich) or question a positive statement (for example, if we raise taxes on the rich, then the government’s deficit will decrease), what do we look for? Below are some guidelines.

Critical Thinking Guidelines
When evaluating a statement we must

1. Question the source.
Study the background of the person making the statement. If a union leader provides arguments and statistics to support her/his claim that trade restrictions are beneficial to the American economy and that free trade leads to increased unemployment, we need to consider the source. The union leader’s objective is to represent her/his constituency (union workers). Therefore, (s)he is biased and will make arguments to support her/his union agenda. This doesn’t necessarily mean that the union leader is incorrect. However, when a person is biased, we must be prepared to question the validity of the arguments. This also doesn’t mean that we should not question statements from people who are not biased. We should, of course, evaluate all statements, but in particular from people who have an apparent bias.

2. Question the assumptions. An assumption is information you presume to be true. When in the 1990s Washington, D.C. Mayor Marion Barry wanted to raise more revenue for his city, he and his city council decided that imposing a higher tax on gasoline would do the trick. They made the assumption that gasoline is a necessary good and, therefore, “inelastic.” In microeconomics we learn that buyers of an inelastic product will not change their purchases of this product much when the price changes. Let’s say that, for example, the tax was 30 cents before the tax increase, and people were buying 1 million gallons per month. Then the tax revenue to the city was 1 million times 30 cents, or $300,000. The mayor and his council raised the tax by 10 cents, and they expected buyers to purchase approximately the same amount of gasoline after the tax increase. If so, this would mean that the city’s total tax revenue would now be 1 million times 40 cents, or $400,000. However, after the tax increase, the city discovered that total tax revenue actually decreased (to less than $300,000). It turned out that their assumption about the inelastic nature of gasoline was wrong. After the tax increase, many buyers decided to purchase gasoline in neighboring Virginia and Maryland.

Far fewer buyers bought gasoline in Washington, D.C. In other words, whereas gasoline in the entire United States market may be inelastic, gasoline in the Washington, D.C. area alone is elastic. Several months after the tax increase, Mayor Barry and his council rescinded the 10 cent tax increase.

3. Question how the variables are defined. Economists Card and Krueger conducted what is now a well-known study about the effects of a minimum wage increase in New Jersey. New Jersey, several decades ago, had increased its minimum wage by $1. Card and Krueger had noticed that within a brief period of time following the increase, employment in New Jersey had gone up, despite the higher wage. Card and Krueger concluded that an increase in minimum wage increases employment and decreases unemployment. But when other economists questioned this study, they found that Card and Krueger had used a definition for “employment” that was questionable. Card and Krueger defined “employment” as the number of people, full-time as well as part-time, employed. After the minimum wage increased, many businesses, in order to cut costs and compensate for the higher wage, decided to increase their hiring of part-time workers at the expense of hiring full-time workers. The following example illustrates the flaw in the definition Card and Krueger used. When 500 full-time workers are employed, they work a combined 20,000 hours (500 times 40 hours). When 300 full-time and 300 part-time workers are employed, they work a combined 12,000 (300 times 40) plus 6,000 (300 times 20), or a total of 18,000 hours. Even though Card and Krueger’s “employment” increased (from 500 to 600 workers), the total number of hours worked decreased (from 20,000 hours to 18,000 hours). If Card and Krueger had defined employment as the total number of hours worked, they would have concluded that an increase in the minimum wage decreases employment.

Another example of how defining a variable can lead to incorrect conclusions involves the definition of Gross Domestic Product. Gross Domestic Product is defined as the sum total of a country’s production of final goods and services. Because of the inclusion of only final goods and services, most products included in GDP are consumption goods. Intermediate goods are excluded. These are typically goods exchanged between businesses and include the flour sold by the miller to the baker, and the screws and machinery parts sold by the parts factory to the car manufacturer or furniture maker. The sale of intermediate goods, spare parts, and raw materials is an important component of our economy, and provides millions of people with jobs. However, this economic activity is ignored in the definition of GDP. To conclude that a country’s total economic activity is made up of mostly consumption is, therefore, false. It is true that GDP is mostly consumption. However, a country’s total economic activity is more than the items included in GDP. Thus, when economists and politicians claim that in order to grow our economy, we should primarily focus on stimulating consumption, they are committing a fallacy based on an incorrect application of the definition of an economic variable.

4. Question the validity of the statement. A statement’s validity often breaks down because of two common fallacies. These fallacies are the fallacy of cause and effect, and the fallacy of composition. The latter is also called the “fallacy of what you cannot see”, or the “broken window fallacy”. We touched on this fallacy in our last unit (see also Henry Hazlitt’s Economics In One Lesson. Chapter 2).

People suffer from the fallacy of cause and effect when they conclude that just because event A occurs before event B, that A must have caused B. Event A could have caused B, but it is incorrect to automatically conclude that A causes B just because A precedes B. For example, European economists have observed growing technology during the past several decades. They have also observed growing average unemployment rates in most European countries during the past decades. Many economists have therefore concluded that growing technology causes greater unemployment. The fallacy is that they are omitting other variables, which may have caused the increase in unemployment. Perhaps increases in tax rates, or increases in protectionist measures, regulations, generous welfare programs, etc. contributed to the rise in unemployment.

People suffer from the fallacy of composition when they conclude that just because something is good for one group or industry, then it must be good for the entire country. Henry Hazlitt’s Broken Window Fallacy illustrates that when a boy breaks a baker’s window, it doesn’t stimulate the economy. Hazlitt admits that the glazier (window repair person) gains a job, just like construction companies gain jobs from natural disasters, such as hurricanes and floods. However, the baker loses money, because he has to spend $250 to repair the window. He subsequently cannot buy a $250 suit from the tailor (this is foregone economic activity that you cannot see when the baker has to repair the window). Analogously, citizens struck by a hurricane (or their insurance companies) now have less money to spend on goods and services they would have otherwise bought (for example, vacations, a new car, etc.) had they not needed to repair their houses. Hazlitt reminds us that one of the keys to economic thinking is to study the effects of economic action on all groups (the glazier, the baker, and the tailor), and not just one group (the glazier).

5. Question the statistics. Be careful when analyzing statistics. Let’s look at the following example. A business earns a profit of $100 in year 1, and a profit of $120 in year 2. It reports to the media that its profits increased 20% (a $20 increase as a percentage of the $100 first year profit). In year 3, profit declines again to $100, and the business reports a decrease in profit of 16.7% (a $20 decrease as a percentage of the $120 profit in year 2). Looking at the percentage changes, it appears that the business is better off in year 3 compared to year 1 (a 20% increase and a 16.7% decrease). However, in looking at the absolute dollar changes, we know that the profit is the same in year 3 compared to year 1. Statistics can be deceiving if incorrect formulas are used or the wrong calculations are made. For your information, in the above example, a better method of calculating the percentage change for this business is to apply the so-called arc formula. This formula takes the change in the profit divided by the average of the two years’ profits. In the above example, using this formula, the percentage change is $20 (the change) divided by $110 (the average of $100 and $120), or 18.18%. Notice that the percentage change is the same whether the profit increased (year 1) or decreased (year 3).

Another example of deceiving statistics arises when looking at changes in income inequality. Let’s say that in 1985 the richest 20% of the income earners in our country earned 49% of the total income, and that the poorest 20% earned 5%. Let’s say that we noticed that the numbers for the year 2013 changed to 50% and 4%, respectively. Can we conclude that the rich have gotten richer and the poor have gotten poorer? Looking at the percentage earnings only, this is a correct conclusion. However, looking at real dollar earnings, or standard of living, the conclusion may be different. The reason for this is that in 2013, the total income of the country is bigger than in 1985. For example if the country’s total real income in 1985 is $100 billion (hypothetically), and the total real income in 2013 is $200 billion, then the poor are making $5 billion (5% times $100 billion) in 1985, and $8 billion (4% times $200 billion) in 2013. In absolute real dollars, the poor have gotten richer, not poorer.

Statistical conclusions based on short-term outcomes may be erroneous. Both long- and short-term effects need to be considered. If the United States Federal Reserve restricts the money supply today, and within the next six months, the nation’s unemployment rate increases, people may conclude that a tightening of the money supply causes a rise in unemployment. However, the unemployment rate may fall after one or two years. When the Federal Reserve restricted the money supply in the early 1980s, interest rates rose in the beginning because of a shortage of bank reserves. However, in the long run, as a result of the tightening of the money supply, inflation decreased, and interest rates fell. Unemployment significantly fell thereafter.

6. Think like an economist. Thinking like an economist means doing everything described in 1 through 5 above. Furthermore, economists use marginal benefit and marginal cost analysis. For example, does it make sense to eliminate all pollution in our society? It would be far too costly to eliminate every single instance of air, water, or noise pollution. However, the marginal benefit may equal the marginal cost (the optimum point) when we eliminate, say, 50% of the existing pollution.

When giving the solution to a problem, consider alternative solutions, pros and cons, pluses and minuses. It is not enough to support an economic program just because it adds benefit to our society. We also have to ask if the program is the best alternative. In other words, does it add the most benefit? The United States Social Security program has undoubtedly benefited many people, including the elderly, widows, disabled, and orphans. However, to ask whether we should support this program, we must also ask if this program is the best program. Can another program (for example, a privatized program or a reformed government-controlled program) deliver even more benefits? In another example, when the government bailed out Chrysler in the 1980s, it prevented Chrysler from laying off thousands of people, and it appeared to be a success. The real question, however, is not whether the government bailout was beneficial, but what would have happened if the government had not spent this money and how many alternate jobs this would have created. Could this have made the economy even better off?

Proper economic thinkers know to analyze the effects of a policy not just for one group, but for all groups (a technology improvement usually eliminates some jobs, but overall it creates jobs). And they know to consider not just the short run, but also the long run (restricting money supply growth may increase unemployment in the short run, but decrease unemployment in the long run).

Economic thinkers know to use common sense. Does the conclusion of a study violate the general principles of economics? If the minimum wage increases and employment increases, does this make sense? Applying the law of demand, it does not. If we do observe an increase in employment in the real world after a minimum wage increase, what is the reason? Were the definitions of the variables applied properly? Were the assumptions correct? Was the minimum wage below the market wage before and after the increase (in which case, an increase in the minimum wage does not change the actual wage – see Unit 2)? Furthermore, economic thinkers do well to be open-minded and non-judgmental. Look at all the numbers from an unbiased perspective and consider that anything is possible, regardless of any political agendas you may support, and regardless of what the majority of the population believes (the majority is not always correct).

Andrew Bernstein quotes Ayn Rand in The Capitalist Manifesto (Bernstein A. 2005, P. 196): “The virtue of rationality means the recognition and acceptance of reason as one’s only source of knowledge, one’s only judge of values and one’s guide to action.” Bernstein continues: “This means that in every aspect of one’s life – in education, in career, in love, in finances and friendships – one must conduct oneself in accordance with as rigorous a process of logical thought as one can conscientiously muster.” (Bernstein A. 2005, P. 196). Think critically!

See: Bernstein, A. (2005). The Capitalist Manifesto. Lanham, Maryland: University Press of America, Inc.
See: Hazlitt, H. (1979). Economics In One Lesson. New York, New York: Crown Publishing.