this post was submitted on 20 May 2025
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Well tbf we cant make a replica of a national economy in lab and run experiments on it. We only have mathematical models
Yeah, that's true, but that's not the only way to run experiments. "Natural experiments" where experimental conditions happen naturally can be exploited for scientific aims.
I think it should be treated similar to the medical field. They human body is super complex, and there's competing mechanisms for all sorts of things. You could discover a mechanism by which a compound decreases blood pressure. There could be another mechanism by which the same compound increases blood pressure by a much larger amount. A lot of economists would just take that first mechanism as ground truth, and recommend giving the compound to a patient with high blood pressure.
I think in lieu of perfect information (which is always the case for economy and medicine), it's best to just go for whatever is the least abstract benefit. The way I was taught macroeconomics (as a teen, I definitely don't have a degree in it or anything), a minimum wage places an artificial limit on the total amount of labor that will be done, and therefore decreases GDP, and therefore everyone is worse off. That could be the case (I don't think it is), but it's very abstract, so it needs an overwhelming amount of evidence. Contrast that to the fact that a person cannot survive off of $2/hr, which is not an abstract conclusion, and you have good rationale for a minimum wage.
No, but you can examine historical conditions with largely similar situations aside from the variable you're studying. And you can do more limited experiments without emulating a national economy.
You can also look at "artificial" economies in games like EVE Online; I seem to recall a few economics papers coming from behavior seen there.
Yeah i try to do when explaining anything aboit economics to people. No one beloves that because it happen elsewhere is would happen here. Even something simple as lower inflation by rising interest rates.
One would think this limitation would give economists some humility when finding conflict with other fields, but it seems quite the opposite.