Thursday, February 23, 2012

Matt Y commits the infra-marginal fallacy

Man oh man. Can't anybody on these interwebs play this game?

People, the fact that the average wage in manufacturing is higher than the average wage in non-manufacturing is SIMPLY UNINFORMATIVE about whether new hires in manufacturing enjoy a wage premium vs. new hires in non-manufacturing.
Economic analysis is MARGINAL ANALYSIS.

We know that new hires in manufacturing nowadays often come with wages and benefits significantly below historical averages.

This is a basic economic point, but people just keep getting it wrong.


4 comments:

John said...

Just like the bad arguments for boosting college attendance. "The average college graduate makes $1 million more..."

Anonymous said...

I do wish there were some economics in Yglesias' economics blog. He also says that productivity in Indian agricultural is limited by the availability of land. This is nonsense, since productivity is measured as output/whatever.

Speedmaster said...

It's too bad. I feel like Matt Y. in spite of being wrong on a fair number of things, really does mean well. Which is more than I can say for most of the collectivists I encounter.

Angus said...

John: EXACTLY! that is another great example of the same logical error.