What is fallacy of composition? Definition and examples

Fallacy of composition exists when somebody assumes that what is true for one part of the economy is true for the whole economy. We can use the term for segments of the economy, members of a group, and parts of a whole. For example, fallacy of composition arises when somebody assumes that something is true for the group because it is true for one individual.

Fallacy of division works the other way round. Fallacy of division arises when we infer that something is true for a part of the whole because it is true for the whole.

Study.com has the following definition of the term:

“The fallacy of composition arises when an individual assumes something is true of the whole just because it is true of some part of the whole.”

In the world of investing, we sometimes have to make assumptions. However, fallacies of composition when trading securities can be costly and even dangerous.

Securities are financial instruments such as bonds or company shares.

Fallacy of Composition - example
I know that if I stand, up I’ll get a better view. If I subsequently assume that if we all stood up, we would all get a better view, I’d be wrong. My assumption would be a fallacy of composition.

Fallacy of composition or division

Fallacy of composition – example

Peter is in a sports stadium watching a soccer match (UK: football match). The stadium is full. Peter knows that if he stands up, he can get a better view of the players.

If he assumed that everybody would see better when everybody stood up, he would be wrong. If everybody got up, many people would be blocking other spectators’ view.

His mistake is a fallacy of composition. He is inferring that something is true for everybody just because it is true for one person.

Some fallacies of composition are clearly wrong, i.e., anybody with common sense would never infer so incorrectly.

For example, we know that if a runner in a race runs faster, he or she can win. Therefore, if every runner in the race runs faster, they can all win.

That is impossible because there is only one winner in a race.

Fallacy of division

Jane is American. She lives in Chicago. Her friend, Nico, is Japanese. Nico lives in Tokyo.

Nico is coming to visit Jane in Chicago next week. Jane knows that Americans, on average, are fatter than Japanese people. Therefore, Jane assumes that Nico will be thinner than she is.

However, Jane’s assumption might not be accurate. Nico might be fatter, thinner, or have the same BMI (body mass index) as Jane.

Jane’s assumption might be is a fallacy of division.