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Yes Indeed: I Have My Priors About the Minimum Wage

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In a recent comment on another blog – I think it was at EconLog (but I cannot now find the comment; my apologies) – someone argued that he has no priors about the effects of minimum-wage legislation.  Instead, he judges this policy solely by the data – exclusively by the facts.  The implication, of course, is that he is more scientific and objective that is the run-of-the-mill commentator on minimum-wage legislation.

Of course it’s good – nay, necessary – to be objective.  Of course dogma is the enemy of truth, insight, and wisdom.  Of course no scientist or serious thinker should ignore empirical reality.  Of course facts matter.  And of course policies have empirical results that ought to be considered when policies are being debated and crafted.

Yet of course value judgments are unavoidable when debating and crafting public policies.  As David Hume famously argued, no “ought” can ever be logically inferred from any “is.”  But I’m getting ahead of myself….

While it sounds good, noble, and scientific to claim that one has no priors about the effects of a policy, such a claim is almost certainly false (if not intentionally so).  See Jonathan Haidt [2].  Scientific analysis – no less than the ordinary, quotidian thinking necessary to get through the day – requires priors.  There must be some starting point for any analysis.

The starting point for an economically sound analysis of price changes is the law of demand – that is, the recognition that, ceteris paribus, as the cost of performing some action X rises, people will choose less frequently to perform action X.  The law of demand is at the very core of modern economic analysis.  It is also at the core of the way most people, economists and non-economists, understand reality.  It’s fundamental.

So an economist whose priors tell him or her that raising the hourly cost of employing low-skilled labor will cause employers to choose to employ fewer hours of low-skilled labor is falling into no unscientific or dogmatic trap.  Such an economist is behaving no less scientifically than does, say, a biologist whose priors tell him or her that a zebra’s stripes or a trout’s dorsal fin were formed over time by natural selection.  A renegade biologist who insists, say, that a trout’s dorsal fins are unique among all animal features in having been formed by some process distinct from – and, indeed, at odds with – natural selection would have a huge burden of proof to overcome.  Not only that, no one would expect other biologists to immediately, simply upon hearing one or a handful of biologists claim unique origins for a trout’s dorsal fin, to start regarding natural selection as a process that works only sometimes.  All good biologists, in fact – even those who do not specialize in studying fish – would correctly insist that science, far from requiring that they withhold judgment about whether or not natural selection formed the trout’s dorsal fin, requires that they, given the current state of knowledge in biology, regard natural selection as applying to a trout’s dorsal fin no less than it applies to other biological phenomena.

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What is said above is nothing that I’ve not said in one form or another in earlier posts.  I will, however, continue with this exposition in forthcoming posts – hopefully to add something new.

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