medium · LSAT Logical Reasoning
A financial advisor reports that, among her clients, those who invested in index funds outperformed those who picked individual stocks, and she concludes that index investing is the superior strategy. An analyst objects that the comparison suffers from selection bias: the two groups were not randomly assigned but chose their own approaches, so the index investors may have differed from the stock-pickers in ways—such as patience or risk tolerance—that themselves explain the better returns.
Which one of the following best describes the 'selection bias' the analyst identifies?
- The advisor's data covers only a single calendar year of performance rather than a full ten-year decade.
- The two groups being compared may already differ in pre-existing traits that account for the observed outcome.
- The term 'outperforming' is not applied in a consistent way from one individual client to the very next.
- The stated conclusion rests on the advisor's own personal track record rather than on the funds' actual returns.
- The clients who invested in index funds were far more numerous overall than those who picked individual stocks.
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