Why Don’t Full Daycares Raise Prices?

James Bailey12 Comments

We put my daughter on a waitlist for the daycare her siblings attended when she was one month old. Fourteen months later, she is still waiting, and we are looking around for other options. Almost every daycare I contact is full, with many saying their waitlists run into 2025.

This sounds like a classic shortage: demand exceeds supply at prevailing prices. But I am puzzled by such a shortage in the absence of price controls. Why don’t these daycares simply raise prices enough to eliminate their waitlists?

Theories:

  1. The kind of person who runs a daycare is not inclined to act as a ruthlessly efficient profit maximizer. This probably explains some of it, but some of the daycares are literally publicly traded for-profit corporations, and they still have big waitlists.
  2. Daycares deliberately underprice infant care as a loss leader to sell care to older kids. Sure, they could raise prices for infants and make more money today, but they want to make sure their preschool stays full down the road, and the easy way to do that is to keep infants as they age.
  3. This is a temporary dislocation due to Covid. Demand fell off during Covid, some centers closed, then demand came back and the remaining centers are full. Perhaps opening a new center would be a good business, but regulation is slowing this down, or people just haven’t realized the opportunity yet.

I think there is something to each of these, but I still feel puzzled, especially since the most expensive locations seem to have the longest waits (at least here in Rhode Island). I can’t come up with a definite answer without lots more data on prices, waitlist sizes, entry, and exit. But I’d love to hear your theories.

What’s Killing Girls Ages 10-14?

Jeremy HorpedahlLeave a comment

I’m in the process of writing a review of Jon Haidt’s book The Anxious Generation. I wrote some preliminary thoughts a few weeks ago, but I’m diving a lot deeper now, so watch for that review soon. But one of the main startling pieces of data in the book is the dramatic rise in suicides among young girls. Haidt isn’t the first to point this out, but in large part his book is an attempt to explain this rise (as well as the rise among boys and slightly older girls).

This got me thinking a bit more broadly about not just suicides, but all causes of mortality among young Americans. So in the style of my 2022 post about the leading causes of death among men ages 18-39, let’s look at the historical trends for deaths among girls 10-14 in the US.

Data comes from CDC WONDER. The top dark line shows total deaths, and the scale for total deaths is the right-axis. Notice that for total deaths, there is a U-shaped pattern. From 1999 to about 2012, deaths for girls aged 10-14 are falling. Then, the bottom out and start to rise again. While the end point in 2022 is lower than 1999 (by about 9 percent), there is a 22 percent increase from 2010 to 2022.

What’s driving those trends? A fall in motor vehicle accidents (blue line, the leading cause of death in both 1999 and 2022) is driving the decline. This category fell 41 percent over the entire time period: a big drop for the leading cause of death!

But the rise in suicides (thick red line) starting in 2013 is the clear driver of the reversal of the overall trend. Suicides for this demographic in 2022 were 268 percent higher than 1999, and 116 percent higher than 2010. Haidt and others are right to investigate the causes of this trend (I’m not convinced they have the complete answer, but more on that in my forthcoming book review).

There has been no clear trend in cancer deaths over this time period, and the combination of all the three of these trends means that roughly equal number of girls ages 10-14 die from car accidents, suicide, and cancer.

What can we learn from this data? First, we should acknowledge just how rare death is for girls ages 10-14. At 14.8 deaths per 100,000 population, it is the lowest 5-year age-gender cohort, other than the ages just below it (ages 5-9, for both boys and girls). But just because it is small doesn’t mean we should ignore it. The big increase, especially in suicides, in the past decade is worrying and could be indicative of broader worrying social trends (and suicides have risen for almost every age group too, see my linked post above).

If a concern, though, is that we are over-protecting our kids and this is leading them to retreat into a world of social media, we might want to see if there are any benefits of this overprotection in addition to the costs. The decline in motor vehicle accidents is one candidate. Is this decline just a result of the overall increase in car safety? Or is there something specific going on that is leading to fewer deaths among young teens and pre-teens?

As we know from other data, a lot fewer young people are getting driver’s licenses these days, especially compared to 1999 (and engaging in fewer risky behaviors across the board). Of course, 10-14 year-olds themselves usually weren’t the ones getting licenses — they are too young in most states — but their 15 and 16 year-old siblings might be the ones driving them around. Is fewer teens driving around their pre-teen siblings a cause of the decline in motor vehicle deaths? We can’t tell from this data, but it is worth investigating further (note: best I can tell, only about 23 percent of the decline is from fewer pedestrian deaths, though in the long-run this is a bigger factor).

Social tradeoffs are hard. If there really is a tradeoff between fewer car accident deaths and more suicides, how should we think about that tradeoff? Or is the tradeoff illusory, and we could actually have fewer deaths of both kinds? I don’t think I know the answer, but I do think that many others are being way too confident that they have the answer based on what data we have so far.

One final note on suicides. For all suicides in the US, the most common method is suicide by firearm: about 55% of suicides in the US were committed with guns in 2022, with suffocations a distant second at about 25%. For girls ages 10-14, this is not the case, with suffocation being by far the leading method: 62% versus just 17% with firearms. I only mention this because some might think the increasing availability of firearms is the reason for the rise in suicides. It could be true overall, but it’s not the case for young girls.

Proposal: Mandating Hard Prison Time for CEO’s of Companies Whose Consumer Data Gets Hacked Would Cut Down on Data Breaches

Scott Buchanan2 Comments

Twice in the past year, I have received robo notices from doctors’ offices, blandly informing me that their systems have been penetrated, and that the bad guys have absconded with my name, phone number, address, social security number, medical records, and anything else needed to stalk me or steal my ID.  As compensation for their failure to keep my information safe, they offer me – – – a year of ID theft monitoring. Thanks, guys.

And we hear about other data thefts, often on gigantic scales. For instance, this headline from a couple of months ago: “Substantial proportion” of Americans may have had health and personal data stolen in Change Healthcare breach”. By “substantial proportion” they mean about a third of the entire U.S. population (Change Healthcare, a subsidiary of UnitedHealth, processes nearly half of all medical claims in the nation). The House Energy and Commerce  Committee last week called UnitedHealth CEO Sir Andrew Witty to testify on how this happened. As it turned out:

The attack occurred because UnitedHealth wasn’t using multifactor authentication [MFA], which is an industry standard practice, to secure one of their most critical systems.

UnitedHealth acquired Change Healthcare in 2022, and for the next two years did not bother to verify whether their new little cash cow was following standard protection practices on the sensitive information of around a hundred million customers. Sir Andrew could not give a coherent explanation for this lapse, merely repeating, “For some reason, which we continue to investigate, this particular server did not have MFA on it.”

But I can tell you exactly why this particular server did not have MFA on it: It was because Sir Andrew did not have enough personal liability for such a failure. If he knew that such an easily preventable failure would result in men in blue hauling him off to the slammer, I guarantee you that he would have made it his business within the first month of purchasing Change Healthcare to be all over the data security processes.

Humans do respond to carrots and sticks. The behaviorist school of psychology has quantified this tendency: establish a consistent system to reward behavior X and punish behavior not-X, and behaviors will change. As one example, Iin one corporate lab I worked in, a team of auditors from headquarters came one year for a routine, scheduled audit of the division’s operations. If the audit got less than the highest result, the career of the manager of the lab would be deeply crimped. Our young, ambitious lab manager made it crystal clear to the whole staff that for the next six months, the ONLY thing that really mattered was a spotless presentation on the audit. It didn’t matter (to this manager) how much productivity suffered on all the substantive projects in progress, as long as he was made to look good on the audit.

Let me move to another observation from my career in industry, working for a Certain Unnamed Large Firm, let’s called it BigCo. BigCo had very deep pockets. Lawyers loved to sue BigCo, and regulators loved to fine BigCo, big-time. And it would be a feather in the cap of said regulators, or other government prosecutors, to throw an executive of BigCo in the slammer.

Collusion among private companies to fix prices does do harm to consumers, by stifling competition and thereby raising prices. So, back in the day when regulators fiercely regulated, statutes were enacted making it a criminal act for company agents to engage in collusion, and authorizing severe financial penalties. American authorities were fairly aggressive about following up potential evidence, and over in Europe, police forces would engage in psychological warfare using their “dawn raid” tactic: just as everyone had sat down at their desks in the morning in would burst a SWAT team armed with submachine guns and lock the place down so no one could leave. I don’t know if the guns were actually loaded, but it was most unpleasant for the employees.  BigCo’s main concern was avoiding multimillion dollar fines and restrictions on business that might result from a collusion conviction, so they devoted significant resources to training and motivating staff to avoid collusion.

Every year or two we researchers had to troop into a lecture hall (attendance was taken) and listen to the same talk by the same company lawyer, reminding us that corporations don’t go to jail, people (i.e. employees) go to jail, by way of motivating us to at all costs avoid even the appearance of colluding with other companies to fix prices or production or divide up markets or whatever. This was a live issue for us researchers, since some of us did participate in legitimate technical trade associations where matters were discussed like standardizing analytical tests. If memory serves, the lawyer advised us that if anyone in a trade association meeting, even in jest, made a remark bordering on a suggestion for collusion, we were to stand up, make a tasteful scene to make it memorable, and insist that the record show that the BigCo representative objected to that remark and left the meeting, and then stride out of the room. And maybe report that remark to a government regulator. That maybe sounds over the top, but I was told that just such a forceful response in a meeting actually saved BigCo from being subjected to a massive fine imposed on some other firms who did engage in collusion

My point is that if the penalties (on the corporate or managerial level) for carelessness are severe enough, the company WILL devote more substantial resources to preventing fails. It seems to me that the harm to we the people is far greater from having our personal data sucked out of health care and other company databases, than the harm from corporate collusion which might raise the price of copier paper or candle wax. Thus, I submit that if someone in the C-suite, like the chief information officer or the CEO, were liable to say 90 days in jail, management would indeed apply sufficient resources to data integrity to thwart the current routine data theft.

If I were king, this would be the policy in my realm. I recognize that in the current U.S. legal framework, the corporate structure shields management from much in the way of personal liability, and there are good reasons for that. I suppose another way to get at this is to have automatic fines structured to strip away nearly all shareholder value or management compensation, whilst still allowing the company to operate its business. This would be another route to put pressure on management to prioritize protection for their customers. Sir Andrew’s total compensation package has been running about $20 million/year. To my knowledge, the impact of the recent gigantic data breach on him has been fairly minimal in the big picture. Sure, it was aggravating for him to have to tell the U.S. Congress that he had no idea why his corporate division screwed up so badly, and to have to devote a good deal of effort to damage control, but I am guessing that his golf game (if he is a golfer) was not unduly impacted. He is still CEO, and collecting a princely compensation. But what if the laws were such that a major data hack would automatically result in a claw-back of say 95% of his past two years of compensation, and dismissal from any further management role in that company?  I submit that such a policy would have motivated the good Sir Andrew to have devoted proper diligence and company resources to data integrity, such that this data breach would not have happened.

I don’t mean to pick on Andrew Witty as being uniquely negligent. By all accounts he is a nice guy, but his behavior is paradigmatic of ubiquitous benign management neglect, which has consequences for us little people.

These are just some personal musings; I’m sure readers can improve on these proposals.

Brief thoughts from attending SOLE 2024

mdmakowsky1 Comment

I just back from the Society of Labor Economics Meetings in Portland. A couple thoughts in no particular order

  1. Conferences are about both luxuriating and reinvesting in our geographically dispersed social networks. Everything else is a secondary. Its not just that I like seeing these people who speak our language and share our jokes, I genuinely miss them when it’s been too long.
  2. Post sessions are fantastic for applied work. I enjoyed multiple 2 to 4 person discussions with an actively engaged author who had a perfect prop to lean on. Great stuff.
  3. If you’re going to give a keynote, don’t try to impress people, try to educate them on something you specialize it. We all miss being students. Give us a crash course to distract us from the hotel catering.
  4. Portland, and the Pacific Northwest in general, is just beautiful. Go to the Japanese Gardens next time you are there.

Sugar Fast Blog

Joy Buchanan5 Comments

Why do Americans eat a lot of junk food? Because it’s the easy way out.

Unhappy? Open a candy bar. You’ll feel happy again in seconds. Kid crying? Hand them a fun-sized candy bar. They will be quiet.  

If you are struggling with paying bills or health (I know, the health one is ironic here), then you’ll tend to reach for anything that is fast and easy to deal with immediate problems.

For me, I decided to wait until my semester is over, so I won’t be attempting this while teaching or traveling. A 40-day sugar fast for the whole family technically began on May 1, but the grocery shopping changed earlier. The idea was to eat down junk and not buy new for over a week.

Forty days isn’t much in the big scheme. The idea is to make a deposit on health. Possibly, I’ll break a mild sugar addiction to the point where the body doesn’t expect it so much. Maybe something that we end up doing to meet this artifactual goal will end up getting into the routine on a regular part of the year when there is more travel and work. Part of the problem I identify is that there are points throughout the day where people feel unhappy. If sugar is on hand, then there is a tendency to reach for it. Part of what I’m going to do is insert more healthy food and activities, but of course that is a lot more work. If it’s just not there, people barely miss it.

I’m already so much happier at home. There is barely any sugary junk food left in the house. Now if the kids circulate the kitchen, I don’t have to stress out and yell at them to not eat cookies before dinner or whatnot.

Internet: So, you’re going to meal plan and not eat dessert for a month? This was worth telling everyone?

Me: I’ve been thinking about it constantly since Christmas.

Internet: Wasn’t this the site where we get more optimistic about the world?

Me: There are some things I read about and decided against. I will not worry about sugar in sauces (e.g. Chicken teriyaki bowl). I will not cut out bread or pasta. There is a sliding scale of how healthy you can be and how much time you are willing to put in. I have decided on a level of effort and a fixed amount of time. I’m not even going to turn down cookies if they are offered to us for free. The most important thing is to stop buying junk from the grocery store. It’s financially very cheap, but actually very costly.

P.S. It’s a small step toward getting my personal chef, but I saw an ad for Walmart “emeals” which is more intelligent grocery delivery plus recipes. I haven’t tried it myself, but it seemed like an update on What the Superintelligence Can Do For Us. When I have the equivalent of “former restaurateur, Frances,” in my house, then I just won’t need anything else and innovation can stop there, thanks.

Social Cost Irregularities

Zachary BartschLeave a comment

If you want an economist to support a government intervention, then there are two major sets of logic that they generally find attractive.

The first concerns rate of return and attracts narrower support. If the government can invest in a project in a way that the private sector couldn’t/wouldn’t and the payoff is bigger than the investment by enough, then the project should be built. 

The second set of logic is more accepted more broadly. If there is an externality, and the administration costs are small relative to the change in the externality, then the project should be pursued in order to increase total welfare.

I’m going to criticize and refine the second argument.  I was inspired by a student who wrote about education creating positive externalities for “all”. They kept using the word “all”. And I notated each time “not *all*”. While we might refer to something called ‘social’ cost and value, the existence of externalities does not imply that everyone is affected by the them identically. That’s a representative agent fallacy. The externalized costs and benefits are often irregularly distributed among 3rd parties. This is important because government intervention can impose its own externalities depending on how the administrative costs funded.

I’ll elaborate with two examples that illustrate when an irregular distribution of externalities is a problem and when it isn’t a problem.

Electric Plant Pollution

The first example illustrates how resolving an irregular distribution of externalities can be resolved without issue. Consider a coal-powered electric plant that serves a metropolitan area and creates pollution. That pollution drifts east and passively harms residents in the form of asthma exacerbation and long-term ill health. The residents to the west are unaffected by the pollution, thanks to favorable weather patterns. Obviously, one would rather live on the west side, all else constant (importantly, all else it not always constant and there is a case to be made that there is no externality here).

To resolve the externality, the government imposes a tax per particle on the power plant at a low administrative cost. That’s nice and efficient – we won’t waste our time with means-oriented regulations. In turn, the cost of electricity increases for all metropolitan residents, both those in the east and in the west. Why is this appropriate? Prior to the intervention, the electricity users in the west were enjoying electricity at a low price, failing to pay for the harm done by their consumption. For that matter, the residents to the east are also paying the higher rates, but now they enjoy better health.

In the end, the externality is resolved by imposing a cost on all consumers of the good – which happens to be everyone. This circumstance is not pareto efficient, but it is Kaldor-Hicks efficient. Everyone now considers the costs that they were previously able to impose on others and ignore.

That’s the best case scenario.

Continue reading →

The Largest Health Systems in the US

James BaileyLeave a comment

Health spending keeps rising, and hospitals keep consolidating, so the largest health systems in the US keep growing bigger. But getting exact data on how big is surprisingly difficult. So I appreciate that someone else did the work, in this case Blake Madden of Hospitalogy. Here are his top 10:

See his post for the full list of the largest 113 health systems, and details and caveats on the methodology. I have found that Hospitalogy generally has good coverage of the business of health care, and that following Blake on Twitter is a good way to keep up with it.

How Much Inflation Do Americans Want?

Jeremy HorpedahlLeave a comment

If we have learned anything in the past 2 years, it’s that people don’t like inflation. Well, you probably already knew that. But I guess we learned that they really, really don’t like inflation. Polls of various sorts still indicate that Americans are upset about inflation, even though the worst of it was happening in June 2022, almost 2 full years ago.

But how much inflation do Americans want? The answer: almost 0%. In fact, the median preference is exactly 0% according to a new working paper titled simply “Inflation Preferences.” The mean preference was 0.2%.

But this paper does more than just survey people on their preferences. It also presents to them several “narratives” about inflation, and to see whether people who have considered those narratives have different preferences. Given my many blog posts about the relationship between wages and inflation (or rather, the race between them), this narrative was interesting to me:

T4 (Wage inflation) When prices increase over time (inflation), worker’s wages may not immediately adjust in proportion. Inflation, therefore, affects the amount of goods and services that workers can buy with their wages. By keeping inflation low, workers can buy a similar amount of goods and services over time.

People who had considered that narrative (wages increases trail price increases) tended to prefer even lower inflation rates, by about 0.7 percentage points. Again, perhaps this is obvious, but it is important to understand how different individuals think about inflation (it was the only one of five narratives that had a statistically significant negative impact on inflation preferences).

Finally, as one final interesting tidbit, survey respondents that were also Economics Majors in college reported higher inflation preferences, by about 1 percentage point.

My Frozen Assets at BlockFi, Part3: I Finally Recovered 27% of My Original Funds.

Scott Buchanan4 Comments

Well, it’s finally over. As noted in previous blog posts, back when interest rates were essentially zero, I started an account with cryptocurrency investing firm BlockFi. They paid me a hefty 9% per year for lending out my crypto coin to “trusted institutional counterparties”, backed by large collateral. However, when  Sam Bankman-Fried’s FTX exchange went belly up, it took BlockFi with it. (Bankman-Fried, the former rock-star white knight of the crypto world, is now in prison for fraud).  My funds at BlockFi disappeared into the black hole of bankruptcy proceedings for about a year and a half.

Last month, a judge finally allowed a settlement for clients to withdraw their assets from their interest-bearing accounts. There were two wrinkles. First, you get far less than 100% of your funds. Most of my money got chewed up in the corporate bankruptcy itself, and then was eaten by the law firm (Kroll) processing the bankruptcy and the client reimbursement process. So,  I’m only getting about 27% percent of my money back.

As an aside, Kroll got hacked about a year ago, leaking the names and email addresses of us BlockFi clients, and so some scammer sent out a very well-crafted email that a number of people, including me (briefly) were taken in by, as I wrote earlier.  if you responded to that scam email, you ended up connecting your wallet to a scam application, which could then suck everything out of your wallet. Fortunately, I had almost nothing in my wallet for the short time I had it connected, but other victims lost considerable sums. I guess the reason why criminals continue to run crypto scams is because they are profitable, like the legendary bank robber Willie Sutton who robbed banks because “that’s where the money is.”

The other wrinkle In the BlockFi reimbursement is that they will only reimburse you with the actual cryptocurrency coin that you held, not with its dollar value. So, I had to set up a cryptocurrency wallet (I used Trust wallet) to receive my crypto, which was all in the form of the stablecoin USDC.

I had to do considerable background work to make this happen. In order to test that that wallet worked to receive USDC, I had to also set up a cryptocurrency exchange account, which I did with Coinbase (which seemed to be the most solid crypto exchange). I had to connect that account with my bank, put some money into the Coinbase exchange, buy some USDC, and send it to my crypto wallet to make sure that it all worked.


As of a week ago, after some fairly intrusive ID verification, the reimbursement machinery did finally deposit the measly remnants of my USDC into my wallet. OK, I thought, I’ll just transfer that to my Coinbase exchange account, turn the USDC into cash and be done with it all.


But not so fast… Because USDC is transferred over the Ethereum network, I had to have enough ETH coin in my Trust wallet to pay for the transfer. The network transfer cost, called the gas fee, was about eight dollars at midday, going down to about three dollars by 10 o’clock at night.

So, I had to go into my Coinbase account, convert some USDC there into ETH (incurring a $1.49 fee for that), and then send some ETH to my Wallet, incurring yet another a transfer fee there. Then I could use that ETH in my wallet to pay for the transfer of the USDC to my Coinbase exchange. Then at long last I was able to convert my USDC to cash and transfer it to my bank account, to finally put this whole BlockFi drama to rest.

Looking on the bright side of all this uproar, I now have a functioning cryptocurrency exchange account and wallet, and am familiar with elementary crypto operations. This might prove handy if I ever want to dabble more in this area or if some other need arises. For now, however, I have had enough of crypto.

ADDENDUM: Finally got all my BlockFi funds back as of November, 2024. BlockFi was able to claw back its assets from FTX, and fully reimburse its customers. Yay! This post describes the process:

https://economistwritingeveryday.com/2024/11/26/my-frozen-assets-at-blockfi-part-4-full-recovery-of-my-funds/

The effect of the minimum wage on everything

mdmakowskyLeave a comment

David Neumark has an excellent article reviewing the extensive literature examining the effects of the minimum wage on, well, a little bit of everything. Sometimes we see improved outcomes, sometimes worse outcomes, often not much of anything. I’m not demeaning this literature to which I’ve myself helped make a modest contribution, but there does arise the concern that perhaps the fruit has begun to hang a bit too low. Which is to say that in a world of modern computing, where regressions can be run at approaching zero cost and policy changes are characterized by an at least a minimally sufficient level of exogeneity, there’s nothing stopping anyone from regressing any measurable outcome on the minimum wage. We’re still arguing about the minimum wage, but what exactly is it that we are learning?

I’m going to head this post off at the pass befores it veers into “back in my day economics used to be about the theory” territory. Yes, the ascendance of empirically-driven applied economics has led to theory to taking something of a backseat, at least in terms of the sheer volume of published research, but I don’t think that is what is going on with the minimum wage literature. Rather, I think its a story of supply and demand.

The minimum wage is an almost perfect issue for people to argue over. It’s not life or death, which keeps the temperature below “brick throwing” levels. The status quo always bears the possibility of change, making arguments policy salient. The absence of action is a meaningful option, particularly in a world with non-trivial inflation. It’s a quantifiable policy that affects incomes and employment directly, which means it’s sufficiently concrete for anyone to have an opinion on. Last, but certainly not least, it lends itself to binary opinion-affiliation in that you either think the minimum wage should be higher or you don’t.

From the point of view of researchers, this adds up to a policy for which there will be near endless research demand. To satisfy that demand your research should, preferably, give consumers a new reason to belief the minimum wage should or should not be higher. To do that a researcher need either i) give new and useful evidence as to how and how much the minimum wage affects earnings and employment, or ii) new and useful evidence that the minimum wage makes some other measurable outcome better or worse. When you consider that the cost of consuming new research is both low and constant, it’s fair to consider the demand to be perfectly elastic. Coupled with the increase in the supply of empirical research generated by reduced cost of computing noted earlier, we shouldn’t be surprised by an equilibrium where an ever-growing number of outcomes have been regressed on the minimum wage.

I don’t think this is anything to get worked up over, don’t see any first-order negative externalities. Most complaints about low-cost empirical research usually sound like academics pining for a time with higher barriers to entry, when you had to be “really good” to produce economic research. The assumption that the complainer is themselves, of course, “really good” always seems to remain unstated. Back to my earlier question, though: what are we learning?

If you’re genuinely curious about the minmum wage, read Neumark’s review. It’s characteristically excellent. Rather than recap, let me come out and say what I think I’ve learned from the reading a lot, but certainly not all, of the minimum wage literature. The minimum wage matters, it’s salient to people earnings, but not nearly as much as the volume of research or argument would suggest. The effects observed tend to be moderate, but labor markets are sufficiently local, heterogenous, and complex that the there remains the possibility of observing different results with different (but largely honest) analyses. This goes doubly so for observing any second-order effects beyond wages and employment, such as health, education, or crime. You are more likely to observed improved outcomes when changes are small, deleterious effects when changes are large.

Those are easy, largely riskless conclusions to share, so let me go a bit farther. The fact that we observe anything but trivial outcomes, positive or negative, is a stark reminder of the margins on which so many people are making decisions. Whether it’s earning a dollar more an hour or losing half a shift a week, it is telling that we see more criminal recidivism, more smoking, less teen-pregnancy, more maternal time with children, and a dozen other effects. It just doesn’t take that much to move the needle.

There is a constant cultural bombardment to value income and material goods less. Perhaps the lesson of a thousand and one minimum wage regressions is that many people aren’t experiencing the diminishing returns to income that popular advice would have you believe. For the young, less-educated, recently immigrated, or those burdened with the stigma of a criminal record, the income elasticity of human behavior remains very much intact. Labor policies matter, even if the minimum wage shouldn’t be quite so close to the top of the list.