Extraordinary Claims Require Extraordinary Proof – Economics Edition

Minimum wage laws are back in the news and the people who like higher minimum wages are lining up studies and papers to support them.

But you have to be careful. As Don Boudreaux points out:

“Empirical researchers who claim to find an exception to the law of demand – especially when any alleged confirmation of such an exception stands to please powerful political forces and to satisfy the popular priors of most people who have no exposure to formal economic theory – must be unusually careful.”

Upward sloping demand curves are like perpetual motion. Any time someone says they’ve found one you need to start looking at where they’ve fudged the numbers because there just isn’t any such animal.

Addendum: Do you know why liberals love the minimum wage even though it hurts the very people that they claim to be trying to help? Because most union contracts tie wages into some multiple of minimum wage. If minimum wage goes up, union wages go up across the board.

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