If minimum wage hikes lead businesses to eliminate jobs, should progressives still support them? The Seattle study, after all, seems to confirm neoclassical economic theory, which predicts that raising the minimum wage leads to job losses, particularly among workers with little education and few skills. It is important to note that the Seattle study has not been peer reviewed yet, and some scholars have questioned its methodology.
We are not irrational: By most accounts and my own reading of many of his published works and his memoir, MisbehavingThaler is also quite a nice guy — and rather un-arrogant.
A refreshing contrast from most economists. But is he deserving of the Nobel? The main criticism of the work of Thaler and of other behavioral economists is that its conclusions are plainly obvious, if not to economists blinded to reality, then to generations of psychologists, marketers and hucksters.
And very true, such work would probably not be quite as agreeable to the Nobel committee for awards in physics, chemistry or medicine.
In helping to introduce psychology into economics, and in shepherding behavioral economics from its backwater infancy to mainstream acceptance and political prominence, Thaler has done more to influence the field of economics than perhaps any other academic economist in the past few decades.
A lifetime achievement award as it is. Obvious or not, the key insight of behavioral economics is that we the people, do not behave the way economists and their models thought we did.
Or think we should. In a nutshell, we do not always make decisions that maximize our wealth.
And by showing evidence of this fact time and time again using simple experiments, questionnaires and financial data, a Noble Prize was won. I have no problem with that.
But I do have a problem, and the problem is this. Rationality and utility Now we must get slightly technical. What exactly does it mean for an individual to behave rationally?
So, rationality does NOT imply a decision that winds up resulting in a good outcome. It solely implies that my intent in making a decision was in my best interests given available information. And here is where we will really begin to deviate from the economic mainstream. Now I must be less precise because nobody, neither philosophers nor economists, have agreed upon what exactly constitutes utility.
Some say it is a measure of happiness or pleasure. Some punt and just say, it is whatever it is that I maximize. I think we can shed a bit more light. These include, first, basic life necessities such as water, food and good health. Given that humans are social animals with strong incentives to reproduceour utility is also made up of social desires such as love, friendship, companionship, sex and status status is something to which we will very importantly return again and again.
At any given moment of time or least when we are consciouseach of us have some level of utility. The components of utility will clearly vary from person to person and within a given person, from moment to moment.
Even though utility is not necessarily quantifiable, each of us are capable of judging or estimating whether a given action will likely result in greater or lesser utility to us.
So two final but crucial wrinkles that we need to discuss. And lastly, note that we weight future utility by the likelihood of the events occurring that would result in that level of quantity of utility.
Our brains do this implicitly, kind of the same way a baseball player can calculate the optimal path to run in order to catch a fly ball without knowing the first thing about physics or parabolas. Before we move on, I will admit a few things. First, from the standpoint of philosophy rather than economicsnothing about my idea or loose definition of utility is all that controversial.
Second, my definition is essentially what is known as a tautology. That is, a sane adult will only make decisions they believe to be in their best interests. In other words all decisions made by sane adults are by definition, rational. Third, up until now, I am mostly talking about definitions and semantics.
But that is not really the purpose of this article. Its purpose is to argue that a bad definition should not be used to justify government action.
Fourth and finally, the concept of utility is clearly nebulous and extraordinarily difficult, if not impossible to quantify. And herein lies the problem. So what do economists use to predict decision making and to pass judgement on whether a particular decision or set of decisions is rational or irrational?
They do one of two things. Mostly they use a much more quantifiable metric as a proxy of utility: That is to say, rather than maximize the sum of the present value of probability weighted utility, I should maximize the amount of money that I have.JSTOR is a digital library of academic journals, books, and primary sources.
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Say's Law and Supply Side Economics. It should be known that at the beginning of a dynasty, taxation yields a large revenue from small assessments.
The Bureau of Labor Statistics is the principal fact-finding agency for the Federal Government in the broad field of labor economics and statistics. For many years politicians and citizens have argued on what should be the minimum wage that would benefit the economy and society in general.
[tags: Minimum Wage Essays] Better Essays words | (2 pages) | Preview Its economic side effects are so obvious that make this policy a bad one because it creates more unemployment, . Economist and author Arnold Kling talks about the economic impact of culture and morality with EconTalk host Russ Roberts.
Drawing on a recent essay on the importance of social interactions, Kling explores the role of culture and norms and their.