Must-Read: Noah Smith: Unlearning Economics
Must-Read: Noah Smith is pushing me towards thinking that Econ 1 needs to teach a lot more than supply-and-demand plus macroeconomic externalities that can be dealt with by stabilizing monetary and maybe fiscal policy…
Unlearning Economics: “Right now we’re in the middle of an empirical revolution in econ, and…:
…unsurprisingly–a ton of standard, common theories are just not matching reality very well. For example: 1…. Minimum wages should harm employment in the short term. But the data shows that they probably don’t. 2…. A big influx of immigrants should depress the wages of native-born workers of comparable skill. But the data shows… the effect is very small. 3…. Welfare programs barely reduce observable work effort. 4…. Social norms (or morals, broadly conceived) matter to people…. The stuff… [of] Econ 101… are being smacked down by the heavy hand of new data. We’re slowly unlearning economics…. Econ 101 courses around the country probably need an overhaul…. Teachers should still teach the simple, classic theories that the new facts are beginning to kill… but mainly as a way to show how data can tell us when we’re wrong.