In response to concerns that some recent financial crises were exacerbated by consumers misunderstanding risks associated with credit cards, loans,...
GMAT Craft and Structure : (Structure) Questions
In response to concerns that some recent financial crises were exacerbated by consumers misunderstanding risks associated with credit cards, loans, and other financial products, policymakers in many countries have instituted risk-disclosure requirements on sellers of those products. Enrique Seira et al. investigated a variety of risk-disclosure messages sent to thousands of credit card customers and found that the messages had only small and short-lived effects on behavior. Seira et al. asserted that such effects may nevertheless be worth pursuing, given the negligible cost of messaging.
Which choice best describes the function of the underlined portion in the text as a whole?
It notes a factor that led Seira et al. to not dismiss risk-disclosure messaging altogether despite their evidence of its limited utility.
It acknowledges a type of risk-disclosure messaging that Seira et al. may not have fully accounted for in their study.
It describes a consideration that explains why Seira et al. recommended risk-disclosure messaging even though its effects may be small relative to its costs.
It points out a circumstance that Seira et al. conceded may make risk-disclosure messaging more effective than their study suggests.
Step 1: Decode and Map the Passage
Create Passage Analysis Table
| Text from Passage | Analysis |
|---|---|
| "In response to concerns that some recent financial crises were exacerbated by consumers misunderstanding risks associated with credit cards, loans, and other financial products," |
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| "policymakers in many countries have instituted risk-disclosure requirements on sellers of those products." |
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| "Enrique Seira et al. investigated a variety of risk-disclosure messages sent to thousands of credit card customers" |
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| "and found that the messages had only small and short-lived effects on behavior." |
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| "Seira et al. asserted that such effects may nevertheless be worth pursuing," |
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| "given the negligible cost of messaging." |
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Provide Passage Architecture & Core Elements
Main Point: Despite research showing that risk-disclosure messaging has only limited effects on consumer behavior, researchers argue it's still worthwhile because it costs almost nothing to implement.
Argument Flow: The passage sets up a policy solution that was created to address a real problem. However, research reveals this solution has disappointing results. The researchers nevertheless defend the policy by pointing to its extremely low cost.
Step 2: Interpret the Question Precisely
What's being asked? The function of the underlined portion in the text as a whole.
What type of answer do we need? A description of what role this specific phrase plays in the overall argument or structure.
Any limiting keywords? Function, underlined portion, text as a whole
Step 3: Prethink the Answer
- The underlined portion comes right after Seira et al. concluded that the messaging effects "may nevertheless be worth pursuing"
- The phrase "given the negligible cost of messaging" explains WHY they reached this conclusion despite the disappointing results
- The correct answer should explain that this phrase provides the rationale for why researchers didn't abandon risk-disclosure messaging even though their study showed it had only small effects
It notes a factor that led Seira et al. to not dismiss risk-disclosure messaging altogether despite their evidence of its limited utility.
✓ Correct
- This accurately captures that the "negligible cost" is a factor that prevented Seira et al. from dismissing the messaging
- It correctly identifies the contrast: despite "limited utility," they didn't give up on it altogether
It acknowledges a type of risk-disclosure messaging that Seira et al. may not have fully accounted for in their study.
✗ Incorrect
- This suggests the underlined portion is about a type of messaging they didn't account for
- But the phrase is about cost, not about different messaging types or study limitations
It describes a consideration that explains why Seira et al. recommended risk-disclosure messaging even though its effects may be small relative to its costs.
✗ Incorrect
- This gets the direction wrong by saying "effects may be small relative to its costs"
- The passage actually emphasizes that costs are negligible, meaning the cost-benefit ratio favors continuing
It points out a circumstance that Seira et al. conceded may make risk-disclosure messaging more effective than their study suggests.
✗ Incorrect
- This suggests the cost factor makes messaging more effective than the study showed
- But the underlined portion doesn't claim messaging works better than measured—it just says minimal cost justifies continuing