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January 16, 2017

James Kwak takes on the fallacious use of microeconomics in politics, focusing on the minimum wage. He hits the important points. First and foremost, that no model substitutes for data. Second, that it’s not enough to argue that raising the minimum wage has a disemployment effect. It matters how much, and whether it is so large as to counter the benefits. The slopes of those counterfactual curves matter. Making those quantitative assessments requires data. The bottom line is what every scientist and engineer should know: no theory takes priority over observation.

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