Critical Thinking Erroneous Thinking

Business Case Studies Critical Thinking -- Erroneous Thinking Logical Fallacies in Business Reporting Although the reporting of facts and figures is often thought of as an objective science, quite frequently even business reporting is characterized by logical fallacies, including but not limited to appeals to ignorance, hasty generalizations, and ad hominem attacks.

In fact, one could argue that these logical fallacies, however, are particularly common and pernicious in business reporting because of the frequently technically complex nature of the subject matter in regards to facts and figures, combined with the emotional texture of business reporting that involves the fabric and texture of individuals lives. Reporters wish to attract attention and render complexities comprehensible, but frequently fall into logically fallacious traps to accomplish these objectives. Fallacy Hasty Generalization hasty generalization is often characterized by an all or nothing style of reporting.

The fallacy of the hasty generalization is a failure of analogical or inductive reasoning, where one specific example is assumed to stand for all examples of similar or disparate cases, however tangential or irrelevant the similarities. For instance, during the recent Martha Stewart scandal, Stewart's woes were initially assumed to bode ill for all company products bearing her name.

But now: "Instead of haughtily brushing off charges and refusing to answer questions, as she did on The Early Show while wielding a knife to chop up a now-infamous salad, Stewart has since pursued a humbler public image.

While she still maintains that she did nothing wrong, the domestic doyenne is more open and more thankful for public support." ("What's Cooking at the Martha Trial," Business Week Online, January 9, 2004, retrieved on January 19, 2004 at (http://www.aol.businessweek.com/bwdaily/dnflash/jan2004/nf2004019_2816_db016.ht) Stewart's change of public image is assumed to bode well for all companies headed by a single, magnetic CEO.

This is important because, when considering investing in companies with a highly prominent 'brand name' individuals at the helm, an investor should not assume that merely because Stewart's fortunes are suddenly being reversed in the public eye, that she is out of the clear in the long-term, nor that her rehabilitated image will rebuild, in the long-term, the safety of investing in all companies where one person 'brands' the name of the company with his or her image.

Furthermore, as the trial goes on, "she'll [Stewart] have to contend with a cross-examination that could be brutal, aimed at exposing inconsistencies in her story." ("What's Cooking at the Martha Trial," Business Week Online, January 9, 2004, retrieved on January 19, 2004 at (http://www.aol.businessweek.com/bwdaily/dnflash/jan2004/nf2004019_2816_db016.ht) The fallacy hasty generalization is often used in business reporting, because quite often decisions to buy and sell stock must be made quickly.

Thus highly emotionally charged reporting is encouraged, so that investment decisions can be made in a split second fashion. However, although the nerves of investors may be based in emotional decisions in the short-term, over the long-term, the market as a whole responds to data, not simply to the images of CEOs. "Moreover, Joe and Jane Public seem increasingly to feel that Stewart has paid a costly price already for a stock trade that netted her about $50,000 in allegedly ill-gotten gains.

She has personally lost millions of dollars and been forced to step down as chairman and CEO of her own company. Those unflattering photos in the tabloids must have stung, too." ("What's Cooking at the Martha Trial," Business Week Online, January 9, 2004, retrieved on January 19, 2004 at (http://www.aol.businessweek.com/bwdaily/dnflash/jan2004/nf2004019_2816_db016.ht) But if Stewart's company does not rebound in real sales, Joe and Jane Public may still think again when considering reinvesting in the Stewart name. Fallacy 2 Appeal to Ignorance.

An appeal to ignorance is an appeal to the lowest common denominator of knowledge -- 'it's the economy, stupid,' one might say is the ideal example of this rhetorical device. It is a seductive rhetorical technique because it implies an individual's gut instinct and gut ignorance is correct, regardless of the facts. Recently, "William Wolman, author and former Business Week chief economist" has questioned "the usual explanation of the job problem -- a rise in productivity.

In his opinion, many Americans are working far more hours than the productivity numbers measure. In fact, he ventures what he calls a radical notion that the workweek should be shortened, but with no reduction.