This Year’s Nobel Prize Is Going To Change Everything... | Economics Explained

This year’s Nobel Prize is going to change everything you thought you knew about economics...
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Content Sources:
www.nobelprize.org/prizes/lis...
davidcard.berkeley.edu/papers...
davidcard.berkeley.edu/papers...
www.nber.org/papers/w7001
www.nature.com/articles/d4158...
www.npr.org/sections/money/20...
www.nytimes.com/2021/10/11/bu...
apnews.com/article/nobel-priz...
www.cnn.com/2021/10/11/busine...
time.com/6105805/nobel-prize-...
apnews.com/article/nobel-priz...
www.nytimes.com/1987/01/14/op...
Image Sources:
Paul R. Milgrom. AP Photograph: Tony Avelar
Alfred Nobel. Photograph: Bettmann/Getty Images
Guido Imbens. Photograph: Andrew Broadhead
John Maynard Keynes. Photograph: Hulton Getty
Johannes Fibiger. Photograph: Library of Congress, Washington, D.C.

[@EconomicsExplained]

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[@namelesshollow3592]

First

[@toxiccommenter6540]

@@namelesshollow3592 bruh.

[@zyansheep]

One word: Yeeeet

[@wanderingdoc5075]

Barack Obama himself was surprised when he received his Nobel Prize. I don't think he knew why he got it lol

[@MarijnRoorda]

My sarcasm detector went off @ 15:47. It was either that, or a volcano has appeared in my backyard for the amount of sulphur in the air...

[@paulpedersen1329]

"I used to think that correlation = causation. Then I took a logic class, and I no longer think that." "So the class helped?" "Well, maybe."

[@noleftturnunstoned]

Hehe

[@ryjtse]

Love xkcd

[@ErasmusGAsare]

Nice one there

[@mikael3095]

🤣🤣🤣🤣

[@dluoultra9633]

Nice

[@Purelyalk]

I’ll be honest I was expecting a bit more of an explanation on how, “this will change everything.” I need some more explanation on the effects of these studies other than they’ll effect policy.

[@evannibbe9375]

The fact that they disproved previous ideas is sufficient. Creating new explanations for why minimum wages can go up without hurting the economy too much will probably be wrong, but disproving the opposite idea is sufficient to allow politicians to at least slightly increase minimum wages.

[@calholli]

He literally explained nothing.. lol

[@zodiacfml]

fluff is throughout the whole video while less than one minute for the true value info. many people on the top or basically most people just likes easy to digest info or conclusion from studies. It turns out the conclusions are pretty flawed with significant bias like those on health, mental health, economic, global warming studies.

[@victorespino5650]

Well it pretty much explained that raising wages wouldn't have a negative impact.

[@billbauer9795]

@@victorespino5650 As another commenter had pointed out above, "There's a misconception about David Card's paper. He won the prize because of the innovative method he used not for the results. In Spain the central bank used the same method in 2018 along with other methods to prove the rise of minimum wage killed more than 75k works." So, no, Card didn't prove that the minimum wage laws don't hurt the poor. Some other good comments about this issue: "So you can seriously compare a grand total of TWO US STATES at ONE TIME IN HISTORY and that is considered worthy of a Nobel Prize?? How about you track 50+ different changes in minimum wages across MANY COUNTRIES/states and MANY PERIODS in History, and THEN see if there is a real connection there. That might be a piece of research that could actually be relied upon somewhat.." "The worry for high minimum wages was never that it would decrease the amount of people working globally, but rather that it would cause the jobs to move away. Of course this would not apply to local fast food places, they can't move away. To convince me, you would have to show me the same thing, but instead of fast food, something that is not tied to the local area, like a factory."

[@laryjr1830]

I know this question could probably be shot down pretty fast but it's why I am asking it. In Angris's study on the causal relationships, he decided to use conscripts in the Vietnam war. But the draft had exemptions. One of the most important exemptions was if you were in college. Later this exemption was changed to draft those in college as well but based off of their rank/grades. So those who were completely free of the draft were those highest in their class. Would that not have affected the results?

[@vinny9988]

All I'm gonna say is that had Trump not had such bad shin splints, we would've won vietnam. It would have been the greatest victory freedom has ever seen. On a side note, had they drafted the brightest college students for roles as officers, the war may have actually went a different route.

[@a.m8858]

Great question! I'll watch this space

[@ristekostadinov2820]

@@vinny9988 Donnie was the brightest student in Wharton, the best of the best. Im suprised he haven't won a Nobel prize in Economics "How to go bankrupt countless times and still be richer than 99.99% of the world".

[@transcrobesproject3625]

I think there is also an argument to be made that many Vietnam veterans who didn't want to go would have suffered very significantly psychologically. Many would, but the situation of basically being forced to kill when you are deeply against it seems likely psychologically more damaging than if you joined voluntarily. What evidence was put forward that wasn't a factor? The problem with economic "science" is that given about 10 minutes, people from the other social sciences can usually find obvious flaws in the assumptions being made. Not that it's not useful, just that it's far, far more like religion and moral philosophy than an evidence-based scientific discipline...

[@thornshar]

Also my first thought. Moreover, those without a college exemption who nonetheless got out of serving in Vietnam, because they partied hard the night before in order to fail the physical (Bruce Springsteen) or got a spot in the National Guard (George W. Bush), probably were on average better connected or just more resourceful/clever/deceitful than those who just did what Uncle Sam told them to do. Lots of ways that conscripts in the Vietnam War would in no way be suitable for removing bias from such a study.

[@GeneralChangFromDanang]

The study of Vietnam draftees' lifetime earnings might be missing one important variable. A lot of more wealthy families found ways to get their children out of being drafted. Either through education exemptions or just good ol' bribery.

[@jl6723]

If that was used as an explanatory variable in the studies (i.e. some measure of parent's wealth), then that is of no concern. If it was not, then the results of the study would be misleading. Typically adding in potential issues with an instrument as an explanatory variable can fix some of those issues.

[@wowie4542]

@@jl6723 Spot on. It's trivial if you actually have the technical acumen and the subject field expertise to back it up, given that one is being meticulous enough. You would have to be a real novice to miss that, and I sincerely doubt an experienced cohort would make a rookie mistake like that. I know there tends to be a lot of pressure to pump out as many academic papers as possible, but it's too rudimentary of a mistake to make. The real problem these studies have are from unknown unknowns; but even with that, there are ways of mitigating them. Also, the results isn't what's of interest, rather the methodology used, i.e. "natural experiments" in economics.

[@AlexFlodder]

Also by making sure that there draftee son got a job 'guarding' the whisky stock in hawaii instead of being deployed as a front soldier.

[@aaronbono4688]

Yep, for example let me introduce president bone spurs.

[@ps.2]

You think the researchers, who were actually alive at the time of the Vietnam War, didn't know that? They controlled for family background. Obviously they controlled for family background. It is the most basic thing for any economics study to control for.

[@gmcoe]

There's a misconception about David Card's paper. He won the prize because of the innovative method he used not for the results. In Spain the central bank used the same method in 2018 along with other methods to prove the rise of minimum wage killed more than 75k works. This is because amount of work depends on a ton of facts not only minimum wage, but it's a really heavy part of the equation.

[@oldvlognewtricks]

Wouldn’t the Spanish example be confused by their two-tier employment system? There aren’t many other countries with an entire parallel job market to access workers while bypass many employment regulations, making the Spanish job market uniquely elastic.

[@rdean150]

@Nova Flares I wonder if those studies factored in the revenue lost in the exact kind of labor shortage event the market is currently experiencing, where the repercussions of underpaying workers is disrupting corporate P & L across numerous industries.

[@GodwynDi]

@@froufroufeatherstone6291 To refute your point, if I value my time higher than my employer does, why would I work for them? Once my basic needs are met, the incentive for me to spend my limited hours serving someone elses needs is money. That is the employer underpaying. And, if someone else is available to do the job at that price, the employer can get away with it. Until no one is willing to.

[@nochan99]

I remember a story told by my former boss and mentor. He was setting up a chain of restaurants in China and had hired a local outfit to help him construct them. When he arrived at the site he was impressed by the sheer number of workes there and that they all used hand tools. He asked the manager why that was and got the reply "power tools cost 200 dollars, hourly rate is 1 dollar".

[@khaoscip1234A]

Yayaya

[@babyimHOME]

Still doesn’t make sense. Tools are a fixed cost and save a lot of energy and time. He sounds like a shitty businessman to me haha

[@C1azed]

@@babyimHOME 200 hammer welding humans put in more nails in an hour then 5 nail guns. plus you now have more manpower for lifting walls or just being able to work on more things at once

[@Maitch3000]

@@babyimHOME Yeah, I used to work for a guy like that. He would only focus on keeping costs down, instead of spending money on stuff that could increase productivity. Making his staff doing a lot of basic routine stuff. Weirdly, he could not see why his business was not growing.

[@DingoAteMeBaby]

You spent like an 1/8th of the video actually explaining the Nobel winner's theory...

[@H33t3Speaks]

Not a an actual Nobel. It’s handed out by the Swedish central bank in MEMORY of Alfred Nobel. Sneaky sneaky

[@Bhardwaj_Kunal]

"Nobel despised people who cared more about profits than society's well-being", saying that "There is nothing to indicate that he would have wanted such a prize", and that the association with the Nobel prizes is "a PR coup by economists to improve their reputation"

[@J0N3H]

A more important concern: Does raising the minimum wage increase the percentage of people working at the minimum wage and are those working at a minimum wage level see an increase to their cost of living smaller or greater than their wage increase?

[@ziglaus]

Did you mean "an equally important concern"?

[@justinland1208]

@mick careful with those words. Liable to catch a fist using such language.

[@jtxo9305]

@BlueCrow You could take a peek at the studies rather then stating conjecture. Sorry but no, increasing minimum wage by these amounts will not meaningfully drive cost of living increases. 7% of the median US income is around 2000 a year. 7% of US minimum wage is around 1000 a year. There are tolerances in wages that have to be met for an increase in cost of living to materialize. This should be obvious. The biggest factor in cost of living is housing. Meaning that wages have to go up enough so that more competition is added to the housing market. 5% or 7% increase in income isn’t going to add new consumers to the rental or homeowners market in most US cities.

[@chrisordway7950]

It's all about promoting the liberal agenda. They just simply wouldn't study factors like that because they wouldn't win a prize if they study something with an outcome that doesn't support the one world order liberal agenda.

[@lukefrance9558]

@@chrisordway7950 ahh yes a study supports something. Then it must be a lie i didn’t read it but it is wrong. Can’t do math but something does not add up.

[@5p0ngy]

Not to be facetious but this comes across as: economists using proper controls is grounds for a Nobel prize...

[@Treviisolion]

To be fair to them, it’s more discovering how to properly create controls when your field of study is the literal economy where experiments can have decades of repercussions. But yes, using proper controls in economics is absolutely Nobel Prize worthy.

[@solidfuel0]

@@vardekpetrovic9716 prize and price is the same thing..

[@MC-dn8if]

If these studies had proper controls is questionable. This prize has always been more: if you can “prove” that what the global elites wanted have been doing was & is the “correct” thing (usually by a false equivalency to disprove easy arguments against) then you get a prize they can cite as proof they were right all along.

[@U6kCtBuN]

its even better when the "proper controls" seem to effectively just be putting a couple more exceptions to the old allegedly faulty controls, which was already being done, which still seem to have obvious flaws on the face of it

[@anycombo]

Although this is factual in a truely fair market the debasement of the dollars purchasing power via legal counterfeiting (money printer goes brrr) & artificial manipulation of other aspects of the fractal banking system breaks this relationship in real terms. In point of fact once you remove hard money & replace it with fiat (value by mandate) & privately owned central banks it becomes a Ponzi scheme in the truest sense. This also dooms the currency’s to collapse with 100% certainty (see the fall of the Roman Empire for current equivalent or Germany post WW2 for a taste)

[@AlanW]

"Powerful computers to crunch huge datasets" - Shows blurry image of a Commodore 64. 😆

[@AaronMichaelLong]

"In 1888, Nobel was astonished to read his own obituary, titled "The merchant of death is dead", in a French newspaper. It was Alfred's brother Ludvig who had died; the obituary was eight years premature. The article disconcerted Nobel and made him apprehensive about how he would be remembered." The reason Nobel created the prizes wasn't because his *conscience* bothered him, he created them when he saw what people really thought of him and the way he made his fortune.

[@leiftorbjorn5621]

This is a gross misinterpretation of his work. It 100% isn’t some proof that minimum wage doesn’t effect employment like you make it out to be. Infact, he himself doesn’t even claim it does. Several studies were made afterwards using the same populations that achieved opposite conclusions. Basically, it’s still an unanswered question. He won the prize for his practical application of statistics and sampling methods within his field of labour economics and minimum wage. Not as some sort of pat on the back for proving minimum wage doesn’t affect employment.

[@trapfethen]

It's not an wholly unanswered question. modest increases to minimum wage have zero correlation to employment numbers over a five year period after the increase. Shown by a body of research done not only in the states, but other countries too, with varying reliance's on natural resources, finance industry, etc. His study doesn't state that there is no impact on unemployment, but it does shed significant doubt on how strong the correlation could be. Other more robust studies since then have backed up not only his conclusion, but also the much stronger conclusion outlined above. The studies finding negative correlations have almost universally suffered from the same few nails. They made no attempt to control for outsourcing that was going to happen regardless of wage shifts. They ignored critical shifts in underlying worker demographics that affected the outcome (shrinking metropolitan population for example).

[@paxdriver]

Word. But not intentionally misdirected as most infography channels do. Promoting this type of discourse is the point of the award metaphysically speaking - it engaged you; so ultimately, its approach was successful ipso facto lol 😘 But it's just important this dude is publishing opinions and encouraging discourse. There's still an argument worth considering even if that means missing the mark a bit here and there.

[@robertlaw4073]

As I mentioned in another comment, it's more about having general relativity in most instances and special relativity at one extreme and something like quantum theory at the other extreme. A study of minimum wage in fast food industry is so rife with particularities that it might actually have to include as an instrument variable the distance the workers had to drive to their job or the number of days per week that each worker took off (you can reduce unemployment by under-employing a work force, as we've seen throughout the 21st century).

[@TheMohawkNinja]

I was just thinking this. Like EE said, he found a correlation, and that's not a causation. Which really means we shouldn't be making laws around it since we don't even know the "why". Not to mention that the slight increase to minimum wage used in the paper just sounds like NJ was simply making up for inflation, which is not something that people who ask for $15/hr minimum wages can use as justification.

[@mariusvanc]

One of the applications is that perhaps employment, both supply and demand, behave like demand for gasoline, ie, largely inflexible, in which case the cost of labor is not a significant factor in demand for labor. IOW, a certain amount of labor is required to sustain a certain level of economic activity, and that's your cost of doing business. The factors that DO drive demand for labor are things like technologies increasing productivity or automation. In any case, there is much more to look at and consider what happens downstream as effect of increasing minimum wage. Does it actually benefit the workers, does it increase the number of people earning minimum wage, does it improve their standard of living, etc.

[@hueyiroquois3839]

Did the Nobel Prize committee ever issue a retraction after a Peace Prize recipient launched more than 500 air strikes?

[@HGRAP1]

Those were “peaceful” strikes

[@xway2]

Even though that's bad there's no way to revoke it (apparently). Even Aung San Suu Kyi keeps her price, despite the Rohingya genocide.

[@petherarlemalm55]

Well no, but the peace prize is handed out by the Norwegians, the others by Sweden 🙃

[@lesath7883]

No. The peace nobel is a bit decadent.

[@liamjones7322]

Man I think there's still hidden variables there ,many soldiers where picked out and draft because of either low economic background or for low training/skills

[@jl6723]

It is being used as an instrument, rather than an explanatory variable, so it should not have a significant effect, especially if low economic background is also used as an explanatory variable. Just statistics things.

[@ps.2]

If you're implying that _any_ economist would ever do a study of _economic outcomes_ and somehow _forget to account for family background_ ... I can't even.

[@liamjones7322]

@@ps.2 what I'm saying is that scenario does still have hidden variables like everything you are completely correct but the point is there could be plenty more unknown variables that are more complicated they just were examples

[@ps.2]

@@liamjones7322 OK but then please use an example that any first-year econ student, much less a researcher in the field, wouldn't think was obvious.

[@genb4374]

@@ps.2 Economists aren't known for being smart, rather seeming smart

[@stephen-finance]

I feel like not researching and attempting to explain the why behind a lot of these just creates more skepticism. Like your analogy of the ice cream and drowning, these researchers could show that raising wages didn't affect job openings in those areas, but without diving into the why there is too much room for hidden variables that politicians should be aware of before creating laws around this research.

[@ValeOfMuses]

Yes and no. There absolutely needs to be more research and interpretation, but it doesn't necessarily have to happen in these exact same studies. If anything, it might be better to have left that blank so that it could then be filled in by successor studies who both repeat the experiments in other places or other fields, and then have their own room to explain without being influenced by the earlier attempts. There's always a place for raw data, even where exploration and interpretation are infinitely more important.

[@stephen-finance]

@@ValeOfMuses I can see your point and I agree. It's really on the politicians to not be too impetuous in making laws based on these findings without more research and data to inform their decisions, which is really true for any issue.

[@luizasr3495]

One of the key things in science is to know when you should stop gathering and analysing data. If you take too long, your contribuition can become outdated or irrelevant. Or you can use decades of your time just to someone else point a flaw that you let escape. You publish enough for that moment and wait for the responses of the community. Then you do more. Or someone else do more.

[@rogerbartlet5720]

If, as an Academic Economist. you can propose a convincing enough theory governments can use to create something from nothing, you bagged that Nobel Prize!!!

[@ziguirayou]

Very true! And they don't care about cherry picking, independent researcher reproducibility, experimentation or anything. All you need is to have your BS peer reviewed, then you're golden!

[@homoyoutubus]

Well, you bagged a Sveriges Riksbank prize in appropriation of Alfred Nobel.

[@pennyforyourthots]

Did somebody mean to give this award to an "alchemist" and misspell it as "economist"?

[@loki-of-asgard7877]

@@ziguirayou Peer reviews hold no water. It's just people who regard themselves as experts pattting each other on the back for validiating a specific bias within their circles.

[@stylist_bitter6194]

@@loki-of-asgard7877 this entirely depends on the field. Peer reviews in fields of hard science absolutely do mean something.

[@gustavmeyrink_2.0]

Let's just make one thing clear: This is NOT a bona fide Nobel Prize and it has nothing to do with the Nobel Prize Committee. Indeed the Nobel family has protested vociferously against the use of their good name in this 'prize'. This is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It is handed out by a committee of the Swedish Central Bank.

[@HansLemurson]

Very interesting! Did not know that.

[@NotShowingOff]

From that point of view neither is the peace prize.

[@incendiary6243]

@@NotShowingOff what??? the peace prize was literally one of the prizes created by Alfred Nobel, how could it not be a legit nobel prize

[@Fractoide]

@@incendiary6243 the peace prize might be legit technically speaking, but it has clearly been somewhat of a joke compared to other nobel prizes. It's largely based on ideology and politics.

[@JoseRodriguez-ey7ju]

I honestly don't understand what point you are trying to make, EE explains everything you said in the video already, the reason EE calls it "the sixth nobel prize" is because economics wasn't really considered its own field at the time the original nobel prizes were created, your comment is pretty pointless

[@saminyasir1847]

That "Ignore air friction " part cracked me up 😆

[@luke8324]

9:30 Could someone that supports the conclusion of this study please explain: The study seemed to ignore the fact that the law in question allowed employers to pay less than the minimum wage for training rates. The paper's own results shown in Table 9 showed that NJ showed reduced employment in the age group of "25 and older" over the study period, whereas the same magnitude of change was not present for the "control" being Pa, nor for NY. How can this be ignored when their conclusions are drawn from measure of equivalent full-time hours, which is a measurement that disregards whether or not those employees being counted are actually being paid the minimum wage? The reason this seems important to me is that the reduction in employees in the older age bracket in NJ suggests that the companies increased their number of entry-level positions by reducing the positions available to older staff who would have been the ones ACTUALLY receiving the full minimum wage (and not on a reduced training wage). I'm Australian, and this practice seems very similar to how large fast food chains like McDonalds operate here today:- they employ a large number of very young casual staff, break down the tasks into very simple micro-tasks to maximise productivity with a minimum level of training, and then find new employees to replace the older ones when the older ones are actually able to receive a full wage. In my current mind, there is no way the above manipulation could be used to justify a widespread notion that increasing minimum wage actually "increases" employment.

[@maxwalraevens7795]

Splendid point. I think it's fair to say that a narrow study that only studies 3 largee companies on a localised level in a single industry cannot even begin to make the argument he stretches it out to be. I believe the Nobel was awarded for statistical methods used within the paper rather than for the results or alleged proof. (Or so other have claimed)

[@GodwynDi]

@@maxwalraevens7795 As the video even stated, the original paper didn't claim to answer why. It just analyzed data. I think it is still poorly done, as why is probably the most important question regarding the data since it is used to set policy.

[@Cecilia-ky3uw]

Luke again it depends, I think we all agree that simply putting money in the hands of the consumer will increase employment, we simply do not know how that increase in employment occurred

[@Nebram2]

I think its important that its a study that challenges assumptions. It's very sexy to find out "this causes that" and those findings get lots of exposure, but studies that find "this is unrelated to that" don't really get out and are really unintuitive are to study

[@JL-lt3gg]

The study about minimum wage doesn't sit right with me. Seems like something is missing. There should be some kind of threshold where wages are actually too high and can affect business profitability. The wage increase in the study was very minor and businesses would generally have the ability to absorb the cost. Secondly that study almost seems unnecessary. Generally there already should be employment data available during and after minimum wages have been increased all over the country.

[@ryuuguu01]

A national change is not as good for a study because it has no control group. For example, If there is an international slow down or pick up at the same time you could not tell if the changes were caused by international events or national events. So two states side by side where one changed and one did not makes a better study. The wage increase was 18% I think that is fairly large.

[@jl6723]

The paper is heavily criticized and has been very contentious. There're entire lectures dedicated to criticizing this paper: kzbin.info/www/bejne/gquvkIiXjdSmb6s Personally, I find the minimum wage policy to be something good intentioned, but has a tendency to induce inefficiency into the economy system. And as I believe that it is in the public good for economic systems to run efficiently (though without force), I advocate against policies that deliberately tamper with it.

[@TheTurdballs420]

If Jerome Powell doesn’t get it for printing more money than anyone thought possible we should riot

[@mr.p215]

Agree, worst case is we storm the vault in which the coin is kept, take it, kill a few people to send a message and give it to him ourselves.

[@torfistrom4549]

@@mr.p215 fort nox?

[@rdean150]

@@mr.p215 Real life is not just a Grand Theft Auto mission.

[@CosmiaNebula]

I'll save you 17 minutes. Summary: Recent Nobel Prizes in Economics have been mostly awarded to discoveries tried and worked in real life, rather than untested mathematical models. This year's prizes are awarded to 3 economists for 2 contributions. David Card was awarded "for his empirical contributions to labour economics". One example is "Minimum wages and employment: A case study of the fast food industry in New Jersey and Pennsylvania" (Card, Krueger, 1993). In this paper, he found that minimum wage increase in New Jersey did not decrease employment in the fast food industry, compared to nearby Pennsylvania (picture at 10:04). Joshua Angrist and Guido Imbens were awarded "for their methodological contributions to the analysis of causal relationships". Their main technique is "instrumental variable estimation", used to discover causation (not just correlation). To use this, one either performs a randomized trial or find a natural equivalent of it (called a "natural experiment"). The example given in the video is the American draft in the Vietnam War, which effectively was a randomized trial where able-bodied American men was randomly chosen to enter military service. The result was that the Vietnam war veterans were earning $400/year less than their peers who did not go to Vietnam War, giving strong evidence that military service causes lower lifetime earning. "Lifetime earnings and the Vietnam era draft lottery: evidence from social security administrative records" (Angrist 1990)

[@ihave2cows]

Okay, so higher minimum wages dont mean less jobs, good to know. But here's my question, which I personally feel is more important. Does minimum wage affect inflation? Because it doesn't matter much that as a californian I make $15 an hour when renting 1 bedroom for $1000 a month is considered cheap.

[@justindion4394]

It does cause some inflation but inflation does not hit everything the same. Higher wages for say skilled or semi skilled work are not tightly related to the minimum wage so the gap between the two can potentially decrease.

[@davebeach2343]

But isn't the price you're paying to rent an apartment more directly due to the number of people who would like to reside where you live. If you wanted to live in Wyoming instead, the price of renting an apartment would be significantly lower. I do wonder about the potential for inflation if everyone receives higher wages. But the alternative of leaving wages at their current levels is responsible for creating poverty among many citizens.

[@vozestoica8436]

Económics is hard

[@loki-of-asgard7877]

Raised minimum wage can mean less jobs depending on the business and their local economy. Some cases it has no effect, but other times it leads to lay offs or reduced hours. The point of the video was to teach people to consider all the factors and do the math. The economists who won the prize were cherry picking from cases where employees weren't impacted by the increase. They had a clear bias in my opinion.

[@ikhbjhbkm5]

Exactly. If minimum wage goes from $15 to 16% (6.6% increase). It's reasonable to assume inflation might rise quickly in the next few quarters to erase any real wage increase. It's likely the base of the wage scale has a very large impact on inflation. It's easy to assume all the money is getting spent and employers can raise prices as these same minimum wage jobs are responsible for making available many necessities. Also, all other wages tend to rise with minimum wage. If everyone makes 5% more, the cost of everything is going to rise 5% you can be assured.

[@patrickfreeman9460]

Re: the Card-Krueger paper, he didn't establish that there was no impact of minimum wage on labor markets, but that the particular minimum wage increase in New Jersey didn't impact labor markets. If the minimum price for new cars in my state is $10000, and that floor is raised to $15000, there also would be no discernible impact, because the market price is already far above the $15000 mark. Raising the legal minimum wage to a market-consonant minimum wage is a great way to boost voter popularity without actually doing anything, and every elected official knows it.

[@marknowak8172]

I just want to say I love your channel and the information you provide. Thanks!

[@sniperbasic2563]

Thanks ee for teaching us what instrumentals variables estimation actually means and how to use it

[@LOL-ev8ft]

The amount of refutation that this nobel prize will deal is just huge.

[@NeoZondix]

I like that a lot of your stock videos are Ukrainian. One of them even had a friend of mine, lol

[@zarbis]

I see a lot of Russian footage also, mostly piggy-bank-related. I guess It's cheaper to produce and cheaper to license by stock sites.

[@sparklej1142]

I really appreciated your explaining this topic. I wish I could find such detailed information on the other recipients.

[@Radicalist-Manifesto]

Awesome video, a complex set of things very simply and aptly explained. 👍👍

[@TheBerserk69]

-Professional economists being rewarded after sitting through countless data and being peer reviewed by other professionals -Random schmucks who do not like the results: ThEy WrOnG

[@jackwalsh5850]

Seriously, these internet comment economists are hilarious!

[@ilijavxx]

Being peer reviewed for statistical studies doesn't mean anything. I am not one who would say they are wrong but the results of these economists regarding minimum wage have been challenged by other economist, notably Borjas. In psychology for example more than 50% of studies don't replicate even though almost all of them have been peer reviewed.

[@theomnipresent1]

I just read about 'Skimpflation' and how it is hard to quantify and is unaccounted for by economists when analyzing inflation.

[@lonestarr1490]

Yeah? Where? All I can find is some article about the tram service at Disneyland(?)

[@henryroberts1233]

It can’t be that hard… measure by $/lb not $/package… very easy to backtest by tracking the net weight of whatever brand was used in the basket

[@theomnipresent1]

@@henryroberts1233 That's only one aspect. How should they account for longer lines and wait times? Or just poor quality customer service in general? When workers aren't worried about being fired they don't go the extra mile. Or businesses shutting down and the ones left have less competition and can relax their previous standards. Extras that used to be added/included are gone. You still buy meat but there are less choices available.

[@henryroberts1233]

@@theomnipresent1 thats a fair point. I was confusing “shrinkflation” for “skimpflation”. For most things (eg baggage no longer included on plane tickets), you can controls for it by breaking each component into its parts (look back at what is price of tickets with no baggage-or subtract price of baggage from total ticket). For cases like longer lines, you can’t pay your way out of it in any organized way. So the cost for what you’re getting didn’t rise… is it really a ‘flation? iPhones were impossible to get in 2000. Does that mean it was deflated since then?

[@danielsan901998]

Skimpflation is just cost reduction, and that is necessary for any business in a competitive market, the real problem is that not enough competition allow business to maintain the prices to increase their profits instead of increase prices like previous monopolies.

[@michaelsmith4904]

Isn’t there a flaw in looking at conscripts, namely that the more wealthy have a higher chance of dodging the draft or enlisting in an officer or non-combat role?

[@talltroll7092]

Yes, but you'll probably find that the numbers of people who dodged the draft using family wealth are very small compared to the overall draft intake. Thus, even if you don't control for them, their cumulative effect on the results is small enough to not make a substantial difference in your conclusions

[@gefginn3699]

Thanks for all you do

[@musicarroll]

Judeah Pearl pioneered and popularized causal methods long before these two. Also, people got drafted during Vietnam War because they didn't have student deferments. Student deferment enabled one to get a college degree and thus earn more money.

[@fjwald]

Angrist has a video lecture where he explains how those people are accounted for in his charter school study. People who always would refuse charter schools or would always find a way in despite the random draft are given less weight or not included or some esoteric math thing, but the focus is put only on those who could go either way and only accept charter schools when offered by lottery. In the case of a draft he would exclude anyone who would always join the military and anyone who would never join the military and focus on those whose decision is less than certain

[@jordanwilliams9300]

Vietnam study is also problematic because more affluent draftees could get an exemption for higher education, or just buy their way out of it

[@CombatCuddler]

I think your videos are great! You should explore the economy of Colombia. It would be a interesting ride from the Escobar's 80 till now!!

[@rafliadam9079]

I dont get the statistical methods point. Isnt it basically: if there is a hidden variable that u cant controll, find a way to control it. First the whole problem as far as i understand is that we dont know what are these hidden variables is such complex fields like economics. And didnt people try to control hard data for ages at this point? Why would the solution be: just find some data thats controlable.

[@karl0ssus1]

One of the oldest problems with economics as a science is that it's pretty much impossible to have a controlled experiment, due to financial limitations and ethical concerns. So, seeing as you effectively can't control the data, it's not surprising that a lot of energy has to go in to accounting for confounding variables

[@Numaria828]

To follow up on what Karl said, it’s basically about finding an event that approximates a randomized controlled trial without actually conducting one yourself.

[@tommyrea]

Did the study mention anything about how the cost of living in NJ tends to be higher than eastern PA?

[@afgor1088]

this... this is really your evidence that minimum wage laws are inflationary. dude, you are not an economist

[@myothersoul1953]

Yes I am nearly certain they did but you might want to read the paper again just to be sure.

[@gireeshgprasad7589]

That is reflected in the minimum wage before the NJ increase. Too easy..

[@mYnAME-ww9iv]

But wouldn't this be argument FOR the MW. Because the cost of living in NJ is higher you would need higher wages to sustain yourself

[@torfistrom4549]

@@afgor1088 no I’m a capitalist I want death to central banks

[@jackjmaheriii]

If you have an 8th grade education skip to 7:20. If you can name any Australian school economist, skip entire video. Like MMT this is faith based approach to science.

[@aleistercrowley2215]

Do you even know what MMT says?

[@AusValue]

@@aleistercrowley2215 magic money tree

[@jackjmaheriii]

Bro… This isn’t a dinner party where you might impress someone by casually mentioning economic terms like the Paris Club. We might differ on implementation but everyone here knows was MMT is.

[@maxvarjagen9810]

"Australian school" - Still, pretty much my opinion too

[@jackjmaheriii]

Nooooo! Noooo! Ugh… That’s what I get for using swipe-text and not proofreading.

[@nishantintouch]

great vid.

[@anonperson3972]

I would love to see a video about an energy based currency.

[@mateuszkajdan8912]

The problem with Card's research is that it still doesn't prove that there was no relationship between wages and unemployment. After raising the minimum wage in New Jersey and not raising it in Pennsylvania, we still don't know if there weren't any hidden variables. What if raising the minimum wage actually had an influence on increasing unemployment, but other variables have decreased it even more and thus the end result suggested no relationship? There is no way to control that kind of study unless we know all of the variables. Besides, what if we increased the minimum wage tenfold? Would we still see no relationship?

[@stoda01]

It's not possible to control all the variables. Just like it hasn't been proven that there is a relationship between rising minimum wages and unemployment. You can't control for all the variables.

[@mateuszkajdan8912]

@@stoda01 Of course, that's why it's all just theory. I just don't see how this research is revolutionary.

[@gireeshgprasad7589]

By that logic nothing can be proven / disproven. All research would be stuck in limbo, and the discussion quickly turns philosophical - what even does it mean to prove / disprove something? Does smoking really CAUSE cancer? Does decapitation really CAUSE death? What if there's a hidden variable..

[@billbauer9795]

@@mateuszkajdan8912 The judges are other revolutionaries, who take care of their own.

[@bengoacher4455]

@@stoda01 you can increase your population size. New Jersey at that time might have seen massive increase in the number of high salary people living there, maybe because new motorways were being constructed, cutting commute times to major cities. Or maybe Pennsylvania saw an exodus of workers towards more populous regions like New Jersey. But looking at tthe global market, and analysing the level of unemployment and the minimum wage adjusted PPP.

[@Andrew-ob5ij]

The Nobel prize for economics shouldn’t even exist

[@fanbuoy9234]

Well, it kind of doesn't, but why shouldn't it?

[@shardamohite2670]

why

[@laurenceng-cordell2062]

Would've liked more details on their actual work ie. how the methodologies they proved works. And how we can apply it to other situations

[@IntaminFanboy]

The thought I’ve had for awhile is that minimum wage increases (particularly for the service jobs they typically apply to) wouldn’t really hurt businesses because lower wage earners tend to spend a larger portion of their income than middle- or high-earners. Thus, while the wage costs would be higher, there would probably also be enough new business to keep earnings/profits healthy. Additionally, the conversation around higher wages rarely seems to consider hiring costs (which are probably higher than most people think); a higher hourly wage may not have as big of an impact on a decision to hire if overall hiring costs aren’t affected.

[@spaceisawesome1]

For instrumental variables I can explain in an introductory way (assuming intro stats background) via the following: In regression , suppose we want to know the relationship between two variables (x,z) with output (y). We may want to learn a regression function that looks like: y = a + b*x + c*z, so we want to learn the values of the coefficients (a,b,c) to better study the (x,z) --> (y) // (input) --> (output) relationship. However the typical learning for this hinges on the assumption that x, and z have not relationship between one another. That they are independent of one another, so that there is a direct "causal link", from x-->y, and z ---> y individually. This picture looks something like: x - - -> y < - - - z Notice no connection between "x" and "z". However, it is entirely possible that there is a hidden relationship in the form of z x, which can impact learning our learning problem of the relationship: (x,z) --> (y) // (input) --> (output) relationship. And in particular by "learning" we mean finding the "proper" or "correct" value of the coefficients (a,b,c) which correctly quantifies or models the relationship. Now how do we "prove" this, we introduce another variable, called the "instrumental variable", we can call this "i" It can look as follows: i ---> x ---> y ^ ^ |______| v z so there is a relationship between (x,z) assumed, and they both relate to "y", but we can isolate the effect of "x" by studying the relationship between "x" and "i" to see if it can isolate away "z". The method for doing so require some statistics, but that's the underlying motivation for instrumental variables, and the thought behind them. Now this is a good idea, but in practice, it can be found that the instrumental variables are a little "too weak", or sometimes the choice used is a little "bizarre", as we need to find an "i" such that we are sure it has no influence on "z", which in the real world is hard in of itself to verify. So it can be hard to find a good "instrument" Also there is a philosophical debate as to whether or not this really demonstrates "causality". For more thorough and deep understanding on this perspective I can refer you to Judea Pearl, "Book of Why". And I hope nothing is wrong! This is just from memory, but please correct me if I am wrong.

[@spaceisawesome1]

@Thomas Richardson I didnt write this for all levels certainly. I wrote this for those who dabble (or have dabbled) in stats / regression models but arent aware of how causality manifests. This is actually very common situation, as little (i.e. almost none) of this taught formally across many tertiary education systems unfortunately. And wiki gets a little bit "too involved" for a cursory overlook.

[@billbauer9795]

Thank you!

[@georgeshapiro301]

We should be careful not to imply that causation can be definitely proven or unknowns disprove generally with this kind of analysis. It just gets more complicated. There is really no such thing as ever being sure (logically) that you know all of the dynamics and facts about a system from within; if anyone claims otherwise, they're being anti-scientific and risking failure to uncover truth.

[@billcounterstrike]

Yeah, if learning econometrics over the last year has taught me anything, "causality" is almost impossible to determine with panel data. You can only do so much to account for omitted variables and time-variant and time-invariant factors before reaching the limit of what you can do with your analysis.

[@georgeshapiro301]

@@billcounterstrike Hey, at least it isn't as bad as the state of psychiatry. He jokes in the video about the misguided bandwagon of lobotomies, but little has changed today except that we've swapped drugs for ice picks (drugs which were chosen and advertised as being chemical lobotmizers), still without any rational basis for their use beyond a vague perception of association (mental sedative must be medicine because doctor wanted perceived distressed or aberrant person more docile, or a mirrored but similar line of thinking about SRIs - it must balancing chemicals! - and it essentially really is that superficial). Actually it's remarkable how rabid the clinical bandwagon has become so quickly despite growing mountains of research calling into question basically everything - there are even some psychiatrists calling for a return to psycho-surgeries. Of course there are others speaking out and academia seems to be shifting again, but walk into a standing institution or underfunded clinic and see how that works out. The point is that experts, institutions, or even "entire" authoritative fields can be very wrong, repeatedly and in different ways over long stretches of time, and get everyone to agree with them, because people don't think critically and assume they/we have more insight than we have real claim to say. That's not to say we can't act or have theories and make predictions, but we cannot be dogmatic about it, because we're going to be wrong and be none the wiser.

[@hungrymusicwolf]

As has long since been known: absence of evidence is not evidence of absence. Just because your study doesn't show an effect doesn't mean you have proven that there is none, a lesson even the best sometimes like to ignore in favor of their bias. We're all humans after all, even the scientists.

[@Croz89]

@@georgeshapiro301 Neurological implants are driving a lot of the renewed interest in psycho surgery. In some ways it's the precision airstrike to the lobotomies carpet bombing, delivering electrical stimulation to just the right part of the brain to treat a condition. We've also got to consider the "anti-psychiatry" movement, that claims most, if not all mental illnesses (other than those caused by physical illness/injury such as head trauma) are either rooted in psychological trauma or maladaptation caused by societal problems such as poverty and discrimination, or are not an illness at all, but a "neurodivergence" that is not accommodated by an overly conformist social structure. That has made its way into mainstream academia among some left wing social and political scientists.

[@georgeshapiro301]

@@hungrymusicwolf Sure, but if we proclaim that we have insight that we do not, or that evidence that contradicts our understanding either does not exist or is invalid or something without cause or any number of excuses, or if we simply close ourselves off from questioning, then we are setting ourselves up for disaster. The example of lobotomies - and involuntary chemical lobotomies - is a disturbing example. Imagine being on the receiving end, and absolutely nothing you do or any material evidence of your mental condition not jiving with "the way it is" mattering to what is going to be done to you.

[@ianwoodaudio]

Really glad I watched this, after you said it had had lower views in a latter video

[@glenngilbert7390]

Thank you!

[@327efrain]

Sincere question do you need land to create software products because theoretically I could just move from Starbucks to Starbucks with my laptop and not own or lease or do anything with my money to acquire said land

[@Cryptogram44]

No but there are still other costs that take it’s place. While a software company being run off public wifi as you suggested, or maybe the classic run out of a garage of your parents house, they will still have to pay for server hosting. This could be thought of as a “digital real-estate” cost. So yeah maybe land cost isn’t always 100% applicable but there will always be additional costs besides just labor was the point.

[@joefox9875]

@@Cryptogram44 The video had three categories: Labour, land, capital.

[@Cryptogram44]

@@joefox9875 yes he only mentioned 3 but he was just giving examples of what are costs. Costs can take the shape of maybe things (rent, labor, electricity, water; raw materials, permits, etc) but those 3 are the most common across business of all different industries so when making models or examples they are easy catch-all’s. The original post made a senior that is an end-case that defies this catch-all and i simply showed how it still pertains to the idea even if not 1:1. Point is, labor is a component of cost, and thus is a percentage of your cost.

[@fnorgen]

In that case the cost of "land" would be the extra time spent walking from Starbucks to Starbucks. Consider that if you refuse to buy anything you may end up spending a significant portion of your time walking rather than working. You can put a price on that lost productivity. Alternatively if you do buy some coffee to not get kicked out then "rent" is included in the price of the coffee.

[@jordanwade517]

And the Nobel prize for most stock footage used goes to… EE!

[@seansteel328]

So the guy wanted to see if raising the minimum wage affected employment so he checked fast food chains. I was under the impression the argument against raising the minimum wage is that those that will be unaffected are the large corporations, the ones it hurts are the small local private businesses and young people who can't find a job because of a lack of experience. All he seems to have done is confirm that as more people are having to work for McDonalds. Great. What a hero 😐

[@paxdriver]

Your contributions should be awarded. This channel is really important imho

[@seanhurley4003]

I know several business owners who had to fire some employees when minimum wage went up. Hard to beleive that wouldn't happen on the whole.

[@carsncakes1285]

You know business owners that fired some employees, making the other employees work harder to maintain the business owners profits...there fixed it for you. There is a very old adage about this in economic terms: The boss rocks up in his brand new Mercedes. Joe says. "wow boss that's an amazing car" The boss says, "well work harder this coming year Joe and I can have a better one next year" There are always several ways to look at these situations in economic terms, primarily it will be down to profitability, competition and greed. You can work out which one of them is the cause with your business owners, I am willing to bet it will be the last one that is the prime motivator.

[@reesehendricksen1871]

@@carsncakes1285 except people can be hired out of an expectation of a greater future profit relative to the current costs. Though as present costs increase, it changes the future speculation, meaning future investment become unavailable.

[@Sheeshening]

Card’s studies have been refuted. Doesn’t mean that minimum wage hikes can’t bring some benefit, but the economic laws remain unchanged

[@carsncakes1285]

@@reesehendricksen1871 That is business risk in a nutshell, speculate to accumulate, if you want to be in business that is the risk you take and on your shoulders does it rest. You want the profit, you take the risk, its very simple this one. If parameters change then you change with them, adapt or die, its the only law of the jungle within capitalism.

[@renim2974]

@@carsncakes1285 no, if you’re working off low margins then employees definitely eat a big slice of the cost pie. Employers don’t just pay x amount of money per hour. The real cost of hiring someone is much larger than you see on your paycheck. You’re also not the only cost to the business. If rent increases along with minimum wage, you’re going to have to make a decision. Usually it’s getting rid of an employee. I’ve worked at a place before that wanted to hire someone part time, but discovered the cost would exceed the benefit of hiring them. So, they weren’t hired. That’s an opportunity lost for someone to get factory experience and side money.

[@seen5173]

Could the fact that they examined the number of employees in local chain restaurants, which would have a more standard number of employees per establishment due to the global cut and paste format of the companies have any effect on the lack of drop in employment in correlation with the higher minimum wage? I'm not an econ. genius or anything, but that seemed like a possible experimental error.

[@BikeHelmetMk2]

That is possible. But there's also a psychological and mathematical component that helps explain it. It's widely known that people gravitate towards desirable areas. Many things make an area desirable. Higher wages make an area desirable. Parks and choice of businesses and amenities make an area desirable. Safety makes an area desirable. Public transit makes an area desirable. Sane laws make an area desirable. Clean air makes an area desirable. Wages are only a small component, but they do factor in when employees or students are making decisions on where to go. When the wage increases across a whole state, everyone feels a little bit richer, and people will happily go the places they desire and spend more on the things they desire. Now, math. Wages are typically a pretty small percentage of a businesses's costs. Rent, mortgage, supplies/equipment, taxes, contracted services, etc; account for the rest. If wages go up 25%, a business's total expenses might go up 5% to 15%. If they increase their prices 5 to 15%, they maintain their profit margin. But their customers (other workers) now have 25% more wages. Math. If you want to spur the economy, raise wages. Just ask Henry Ford, and numerous other people and places that have tried it. ;) People spend more easily when they make more money.

[@HR15DE]

Well they don't care, they hug to whatever research fits to their leftist agenda, If raising minimum wage doesn't mean more unemployment then make the minimum wage 100k a year and let's see if you won't have more unemployment or not lol They are nit picking the industry that raising minimum wage a bit may not lead to immediate more unemployment. Throw every economic theory down the drain apparently according to them printing money didn't cause significant inflation either. Print money like mad ,raise minimum wage to 100k its fine because we live in lala land

[@BikeHelmetMk2]

@@HR15DE Both money printing and raising minimum wage stoke inflation. But one injects a hundred billion or so into the economy. The other... trillions... lately, anyway. Big difference. We're talking an extra 0.5% inflation, or an extra 15%. Since during both the Obama and Trump administrations, deflation was a bigger concern than inflation, a little bit more wouldn't be a big deal. That said, super sizing it 50x over probably won't be taken as well as gradual wage increases. I think Australia is the best country to model it on... annual minimum wage increases to keep all businesses handing out raises and all employees moving on up - not just the professionals and unions. Here in BC, Canada, a lot of our city councils have been handing out annual 6-8% "cost of living increases", despite posted inflation running at < 2%. I think the city councils have it more correct than the posted numbers, don't you? So, in short - low single digit inflation? Fine by me. Double digit? Much less desirable, at least to me.

[@HR15DE]

@@BikeHelmetMk2 wow you can increase all wages 8% every year and keep inflation under 2% ? BC is an utopia then for workers. Probably Canada has some other force countering inflation. Probably account surplus ? The country actually getting richer then. Can afford to do it.

[@seen5173]

@@HR15DE I try to be objective about these things, but your totally right. After all, this is the organization that awarded Obama a Nobel Peace Prize just for being elected even though he aggravated the situation in the middle east. This as opposed to Trump, who, say what you may about his Twitter, accomplished more towards peace in the middle east than any other recent president.

[@Croz89]

I would be interested to know how elastic fast food demand really is. It might be quite inelastic because of the "downgrading" effect, if an increase in minimum wage impacts more high end restaurants as well, the increased prices may cause some to downgrade from fancier fare to fast food, which makes up for those that downgrade from fast food to, say, instant noodles. Demand might even be higher than it was before, since labour costs likely have less of an impact for a big fast food chain with automated kiosks and a streamlined kitchen than an independent local restaurant, so they don't have to raise prices as much.

[@pedrovictor4002]

Where can I read these works?

[@czarofallthecanadas8145]

Wanna hear a sad joke? The Nobel Peace Prize.

[@Cheesecake99YearsAgo]

Oh

[@ushift]

I don't get it where's the sad part?

[@trunkage]

@@ushift both Obama and Trump got it I wouldn't call either of them peaceful

[@Jorge26367]

@@trunkage wait Trump got a Nobel Prize? Also wow may as well give Clinton & Bush 1 since they killed a buttload of people as well & apparently that's peaceful

[@tonyjohnson5669]

@@trunkage Former-President Trump didn't get it. He wanted to be nominated for brokering a deal between north and south korea and trying to bring peace to the middle east through pulling out of Afghanistan.

[@joetoh8657]

you should do a video on how monetary policy can create inequality

[@AusValue]

He’s a Keynesian economist, he won’t go into this because it contradicts his ideas. He thinks manipulating the interest rates lower to create inflation is good for the economy, he doesn’t address the fact that inflation is a regressive issue and recessions should be allowed to happen to rebalance mis allocated capital and speculation

[@joetoh8657]

@@AusValue it's curios to me that after crisis after crisis as asset price recover central banks than fret about wage inflation. It seems to me this mode of thinking essentially transfers value to asset owners at the expense of labor. Labor wage is always last to recover and has the shortest runway before central banks get nervous. Over time this reinforces inequality. To me monetary policy seems to be setup to be pro asset i.e. rich people

[@AusValue]

@@joetoh8657 spot on, then the politicians do a head fake and act as if they are standing for the working class. These problems are keeping me up at night

[@gnanasivam5155]

I always follow your videos and I am an subscriber with bell icon on :) ... just wanted to know if market crashes tomorrow what would you recommend to buy and why you recommend it?

[@elilastnamington9808]

Congrats on the Nobel Prize, Economics Explained!

[@user-zb8ss9xb1b]

Why is it a good idea to have central banks independent? And can they really be independent? Turkey's Lira made me think of this. Could you please address this in a video if relevant? .. and keep up the good work! :)

[@jl6723]

Central Banks being independent force them away from political cycles and drastic policy changes that come from the changes in the political class, which enhances the central bank's ability to do their jobs. There is however a lot of complaints over whether they should be doing the job that they are created to do and whether such job should go unimpeded.

[@tobene]

It stops politicians from pressuring the central bank into not raising interest rates because that would cool down the economy and maybe affect the politicians reelection.

[@danielsan901998]

@@jl6723 "force them away from political cycles and drastic policy changes that come from the changes in the political class" This is the same argument China use to justify why their system is superior to western democracies.

[@YD-uq5fi]

Skip to 7:13 to hear about this year's winners. Everything before then is just intro and a long-winded product advertisement. Seven minutes!

[@flatsurfaces1913]

Thanks.

[@kylorenkardashian79]

ty

[@LukDeRiff]

Ref_src Ref_src rr

[@LukDeRiff]

5rrr

[@jai-kk5uu]

I liked iy

[@SuperNovaJinckUFO]

My question is whether an increase in minimum wage would negatively harm the ratio of small businesses to corporate franchises. I could imagine that even if jobs in total don't end up going down, the jobs would mostly be provided by the larger companies capable of affording the higher wages, while the smaller business would suffer.

[@ShayNoMore1]

Increase the salary helps Doesn't mean u should increase a country minimum by 1000%

[@joshgribben3500]

Genuinely love that Krueger was purposefully not mentioned in this video

[@ionnanskilliorus6877]

If you had enough money you didn't get conscripted for the Vietnam War... Another variable.

[@inigobantok1579]

But most wouldn't do that and those who did are a very small example

[@ps.2]

Yeah ... but can you seriously believe that a professional economist would somehow _forget to account for family background_ when doing a study about _economic outcomes?_ How dense do you think those people are? This is basic, basic stuff.

[@5GTower1000Percent]

The thing with minimum wage is that many of those stores make so much money that they could easily pay double if not tripple the wage and still walk away with a decent chunk of money. A pizza place once decided to not take any extra money one single evening. The workers walked home with 78$ of hourly pay. Even if they were earning 15$ an hour, this is 5 times that. And if your store doesn't make enough without not paying your staff slave wages instead of actual income, then you shouldn't be in business.

[@emilebichelberger7590]

Does that include small businesses?

[@arielleung3917]

A Data Bear finds it both exciting and interesting to see her research topic in an economics video. Structrual Equation Modeling is kinda conventional method for causal inference, with a lot of formulas and regularity conditions (which, BTW, if you look closely enough, almost never hold in reality). Computer scientists have been developing machine learning algorithms for assumption-free causal inference for decades. Lots of great papers recently. The reliability and generalizability is being tested in the real world

[@marlbankian]

Excellent

[@NickRigas-mi4hh]

The companies example in my opinion is a little off because fast food chains don't really have problems with minimum wage but small businesses get hurt the most.

[@anneonymous4884]

A lot of fast food places are franchises, so have some characteristics of small businesses.

[@mateuszkajdan8912]

@@anneonymous4884 The markup is so high tho that their operational costs after some time are minimal.

[@jl6723]

To be clear, most fast food chains are franchised nowadays and rather make money licensing their brand, so they are rarely involved in day to day hiring and firing decisions at most locations. So, minimum wage effects them quite highly. Small increases don't usually do much, but big ones have big and immediate effects.

[@ericreinhart9795]

I also thought about this.

[@robertburns4429]

Weren't military conscripts during the Vietnam war more likely to be from lower socio-economic backgrounds?

[@thidios]

aren't poor people the most numerous everywhere?

[@Cryptogram44]

Yeah but again as he said in the video you can control for that variable by only comparing them to others of lower socioeconomic backgrounds that were not drafted.

[@robertburns4429]

@@Cryptogram44 Why were they not drafted? Physically or mentally (potentially) unfit for military service can have a massive impact on earning potential for someone without higher education.

[@Cryptogram44]

@@robertburns4429 again these are factors that you can control for. Look into how the draft was done there are some people who were baked bodied that were just not chosen. It was a raffle based system just because you qualified doesn’t mean you were chosen. So there were able bodied people who were not drafted to compare to.

[@ps.2]

@@Cryptogram44 Man, the sheer number of people in the comments who are all "hey I bet these prize-winning economists forgot to account for _family background_ when doing their study of _economic outcomes,_ and the prize committee didn't think of it either."

[@bosniankumquat1835]

The problem I have with minimum wage study is that large fast food chains were used as an example . I mean of course they can withstand the price increase in the minimum cost of labor .

[@guidocampostrini]

He said mate at the end!!!

[@mahmoud1382]

I personally think that the argument and statistics are not valid ,the fact that employment wasn’t affected by the rise in minimum wage doesn’t prove anything because the study was firstly focused on fast food chain’s (resources to handle the increase on wages unlike small businesses ) and secondly other sectors of the economy could be affected differently by an increase in the minimum wage (thinking about factories that could reallocate) and a lot of other factors that I have in mind .Tell me what you think,Econ is sometimes complicated and not everything seems straightforward .

[@jasertio]

Card analyzed one specific real world cenario. It does not, however, imply that minimum wage has no impact on employment levels.

[@JayVal90]

Right, it was an interesting data point. Employment wages are weird, especially if you have a feedback loop where wage earners are the same people buying things that they make. If there’s inflation, it offsets. I’m curious about how prices were affected in those areas.

[@UltraRik]

there could be a number of confounding variables offsetting the changes in either location

[@xrunner55]

If it's hourly, you can always cut back on the hours.

[@JayVal90]

@@UltraRik And if you sample enough locations OR are clever enough to pick the right one, you are CERTAIN to be able to find that one location where it goes the other way. I’d like to know what went into the NJ vs PA comparison.

[@tobene]

It still shows that the "higher minimum wages will ALWAYS lead to more unemployment" is wrong

[@ValeOfMuses]

Can you do a video on the comic book market? I saw another comment on last year's Nobel Prize video asking for it, and apparently it's an *extremely* interesting piece of work.

[@jiminverness]

The problem with the Vietnam conscripts analysis as narrated is that it appears to take into account the numbers of children of wealth who either avoided conscription due to family connections, or had service deferred due to study, or had medical discharges due to connections and/or money moved in appropriate manners.

[@bradhax]

Exactly the same thought that occurred to me.

[@seasong7655]

Legend has it Nobel's wife cheated on him with a Mathematician

[@ProuvaireJean]

Tricksy of her, considering he never married.

[@shardamohite2670]

ha

[@loki-of-asgard7877]

Here's the thing. Raising minimum wage does reduce employment. It just hasn't reached high enough to where you see that happen on a noticeable level. What usually happens is businesess will just raise their prices to pay for increased pay

[@JAN0L]

It's complicated and depend on many factors. If an employee enables more profit than the increase in minimum wage then there's no reason to fire them, but if the business is operating on very slim margins then it might be the straw that breaks the camel's back. If the consumers are local and competitors are similarly affected by the increases it's easier to push the costs on the customers, but if it's meant to be for export and it's a competitive market it might be harder to raise the prices. Also if you already have a running profitable business it might not be worth firing people over the increase, but if you're planning to start one decreased potential profitability might cause you to chose a different location or a different type of investment instead.

[@loki-of-asgard7877]

@@JAN0L I agree. Economics is incredibly more nuanced than people give it credit for. What some economists do is they cherry pick from situations that fit their narrative and leave out the unique variables that set them apart. Anything that increases expenses hurts small business the most.

[@ArlindoBuriti]

this is what happens in brazil, every year we increase the minimum wage based in the inflation of the year before. all produts have a increase in price in the next month... it makes no difference what so ever, because the next month all other jobs get increases as well... ...

[@loki-of-asgard7877]

@@JAN0L A good real life example is Kroger closing some of their locations in california after the unions fought for " hero pay" which was a wage increase with a snazzy new name that made them feel like they earned it. The union was just unable to connect the dots that they closed because increased wages was cutting too much into profit. It wasnt worth keeping the stores open if they were losing more money than they were bringing in.

[@dh510]

@@loki-of-asgard7877 isn't the reason stores in Cali close that you could walk out the front door with tons of merchandise without paying, as long as it's worth less than 950$?^^

[@ThePhiphler]

Very ironic that the Swedish Central Bank would give a reward to economists theorizing that minimum wage can be high and is not harmful, given that Sweden has no minimum wage at all.

[@johnphamlore8073]

David Card co-authored a paper that concluded: "We find a strong correlation between the risk of induction faced bv a cohort and the relative enrollment and completed education of men. Our estimates suggest that draft avoidance raised college attendance rates by 4-6 percentage points in the late 1960's, and raised the fraction of men born in the mid-1940's with a college degree by up to 2 percentage points." I can't believe the one example you cite is men conscripted during the Vietnam War.

[@justforkicks5112]

I nominate EE for the Nobel Prize in Economics for introducing economics to the general public in a fun and interesting way! Also: #TEAMSEAS

[@RainedOnParade]

Shut up

[@zaktabyte]

@@RainedOnParade why you mad

[@ranDOm9431]

Seconded

[@YD-uq5fi]

I disagree. He is pushing a bogus 'hyperinflation' narrative that is very ignorant.

[@jensaugust743]

@@YD-uq5fi explain?

[@dylanhoyal3150]

Correct me if I'm wrong...but one of the problems with the study looking at fast food restaurants and minimum wages is that it totally ignores small business, which actually make up something like 44% of the US economy. Just throwing that out there.

[@Schwifter]

Very interesting 🤔

[@Drecon84]

The amount of work that one person can do varies wildly. The assumption that there is any rule to that is just fundamentally wrong.

[@jordanknight336]

I'm gonna have to call BS. The worry for high minimum wages was never that it would decrease the amount of people working globally, but rather that it would cause the jobs to move away. Of course this would not apply to local fast food places, they can't move away. To convince me, you would have to show me the same thing, but instead of fast food, something that is not tied to the local area, like a factory. This just feels really cherry picked, and then he got a Nobel Prize for the same reason Obama did, the people giving out the prizes have a political agenda.

[@aw2031zap]

You are correct on most things here, but the fear against the minimum wage is mostly unfounded, especially since - as we've seen - if wages are too low, people simply won't work. They simply will move away to find work elsewhere. If they are so poor they cannot move, then the area becomes impoverished and further exhausted, leading to urban decay. You cannot easily establish cause=>effect for minimum wage toward any hypothesis, there are so many potential explanations and systems at work. But. You can assume it is an incredibly complex system that requires careful calibration. No simple policy or explanation should satisfy you. And frankly, if we look at people like Elon Musk who earn $37B in one single DAY, you can conclude there are many sectors in the economy where people are not being taxed enough, or are reaping too much money; especially since people like Musk benefitted from government subsidy (Tesla was partially funded in '08 by Obama's green initiatives; why doesn't the gov't get some of that $37B? Why not fast food workers see that money in the region?). There is obviously some economic detriment and ineffecienes if resources are unnecessarily concentrated in a few individuals.

[@jakephillips5140]

Happens a lot in architectural drafting, large firms in Australia offshore to Singapore because graduate wages are higher locally compared to experienced people internationally. The digitization of these services has allowed this to occur more often, you'll see this with engineering as well. We don't get engineering baristas for no reason.

[@SangoProductions213]

@@aw2031zap *cough* Detroit was once prosperous *cough*

[@mYnAME-ww9iv]

@@SangoProductions213 ...and then the wages decreased and the unions were busted

[@SangoProductions213]

@@mYnAME-ww9iv ...Businesses moved after the socialist experiment. Even a cursory review of Detroit's history (and current state) reveals it...

[@ruzzsverion2728]

Obama winning the peace prize was the biggest joke ever.

[@schentler]

do we have ranking list of countries have the best discretionary income?

[@joshuatuning9674]

I don't fully understand. How do these methods apply to countries like Australia where there is already a very high minimum wage standard (at $19-$21 AUD/hr). Do these methods only apply to countries trying to figure out a better balance for their minimum wage?

[@DiiceForeveroO]

Should go to Satoshi Nakamoto

[@sesloajit5185]

I'm guessing you dont have a PhD in economics?

[@DiiceForeveroO]

@@sesloajit5185 You don't need a PHD in economics to recognize the power of giving the world a decentralized digital property right that is inclusive to everyone in the world with access to the internet, bud.

[@ejw7247]

@@DiiceForeveroO 2% of accounts hold 95% of all bitcoin. Being decentralized makes it volatile, and still a small percentage of people have ended up holding most of the wealth. There are merits to decentralized currency, but to pretend that there aren’t also significant downsides is foolish. Additionally, the idea that bitcoin is giving power to the people is clearly untrue. Like most things, once the value of bitcoin was established (relatively speaking) the wealthy and/or those with the foresight to take the risk on bitcoin, have reaped the benefits.

[@CommandantNOVA]

@@DiiceForeveroO Bitcoin is more impressive as a technical paper than it is as an economic one. But there's far better versions of it that have been implemented. Zooko Wilcox probably deserves a Turing Award at some point for his demonstration of zk-snarks.

[@cleanjimmy]

@@sesloajit5185 imagine thinking the only way to have a relevant opinion is academic certification. you are literally the reason this award was given, to fool clowns who see an award and immediately attribute relevance.

[@TheAdamAdy]

The only guy that deserves nobel price for economics is Satoshi Nakamoto

[@torfistrom4549]

Lol

[@ArawnOfAnnwn]

And that is? Do you have a real person for them to present that award to?...

[@RJKYEG]

It seems to me that the award winning study, according to this EE analysis, does not show that raising minimum wage does not contribute to unemployment, but instead that New Jersey's raising of minimum wage from $4.25/hr to $5.05/hr in 1992 didn't cause a net decrease in employment in the three big fast food chains in comparison to restaurants belonging to the same chains in eastern Pennsylvania at that time.

[@mnazaal]

imo it means that the statement "higher minimum wages cause unemployment" has been falsified for this specific case, and thus cannot be taken to hold in general

[@Xerathiel]

The prices of full meals increased in NJ more than in PA.

[@ValeOfMuses]

I'm sure this is true, but that proves the point more in my head. They had to compensate for the change somewhere, but they didn't do it in the labor part of the process. What needs to happen then is someone else picking up where the first studies left off to figure out why that is, probably including replicating the original experiments.

[@1112viggo]

So.. How is everything going to change?

[@Cryptogram44]

Their theories don’t alone change anything, just makes use have to re-evaluate some preconceptions the economics community of the world has held for a while. Maybe through that process, we may see things start to change. Such is the slow moving progress of science

[@1112viggo]

@@Cryptogram44 Sure, maybe, if its in their interest to reevaluate. I just don´t see any country jacking up the minimum wage because of a study. I was hoping for some more concrete examples of changes given the title.

[@Jedievil]

minimum wage has no effect? Great news, why not make it 1 Milion!

[@iandaniel1748]

Nice. Love to see next . Maybe you can create video about small medium large businesses which is the best course for growth stability in low cost I have plan to go BUSINESS when i retired . The idea come up in this pandemic and I now your best person to ask for your expertise . You can give some light question of most people wanting or planning to open a business

[@spencerz4503]

You should make a video about the Hudson’s bay company from Canada