A few days ago, an amazing thing happened when Thomas Brand (@thlbr) tweeted about a short article I posted on my blog EconomicsOne.com. My post was old–posted 10 years ago on October 3, 2009–and I titled it “A Beautiful Model, A Clear Prediction.”
It was about the effect of the minimum wage on employment and the wage. The basic supply and demand model was displayed with the following graph. It was drawn from the Principles of Economics (Economics 1) course that I taught at Stanford in the Fall of 2009, and will still be teaching at Stanford in the Fall of 2019 (and in online form this summer).
The amazing thing was that Brand’s tweet resulted in a huge amount of renewed traffic and hits to the blog, many more in 2019 than in 2009. Also, unlike 2009, much of the traffic in 2019 was very critical of the model. One of the several thousand tweeters changed the diagram as shown here for the case where the minimum was lower than market equilibrium and thus not binding.
It is encouraging that more people are interested in economic models and their policy implications. But I cannot help but think that fewer people understand or believe the basic supply and demand model than 10 years ago. Yes, I know there are underlying assumptions, and these must be explained.
But opinion is shifting, even though the model is as accurate and as beautiful as ever. I’ll have my work cut out for me next fall in Economics 1.