Cafe Hayek: The Arithmetic Fallacy

« Order Defined in the Process of its Emergence | Main | Trade or Fade» Don Boudreaux

March 28, 2005

The Arithmetic Fallacy

Russell Roberts

Suppose you want to create jobs in your society. Does it seem logical that to create more jobs, you need to restrict the effort of the people who already have jobs? Well, sort of. If it currently takes 100 people to do a certain task, then cutting their work effort in half would then require 200 people to get the job done.

The logic at first glance seems pretty appealing. On a certain level, it seems undeniable. Yes, there might be problems in monitoring how hard people work. But you can see the surface appeal of the basic proposition. It's just basic arithmetic. Half of 200 is 100.

Doubts start to creep in when you wonder about whether the amount of work being done would stay constant if you had to pay twice as many people. And then there's the question of wages. Would they simply fall in half? After all, there are costs related to having another employee regardless of how much they work—record-keeping and maybe other fixed costs.

Maybe cutting work effort in half wouldn't double the demand for labor after all. Maybe it would reduce the demand for labor. For example, if you weren't allowed to cut wages in half, then legislation that cuts work effort in half would actually make workers less attractive. It would create an incentive to find different methods of production that use machines instead of labor.

What seemed so obvious at first to be undeniably true because of arithmetic—cutting the amount of work effort in half would seem to require doubling the number of workers—actually turns out to be false. So what would you call this fallacy? The arithmetic fallacy. Or maybe the vertical demand curve fallacy. Or maybe the Ceteris isn't Paribus Fallacy.

Whatever we should call it, the French seem to have discovered. After a five year experiment, they have repealed the mandatory 35-hour work week which by putting a ceiling on hours of work was supposed to have increased the number of jobs in France. The AP reports:

French lawmakers effectively abolished the country's 35-hour work week Tuesday by allowing employers to increase working hours — and pay — as the country struggles with high unemployment and stagnating living standards.

President Jacques Chirac's government has tried to sell the reform to voters as an opportunity to "Work More to Earn More," but many remain unconvinced.

Work more to earn more. What an intriguing idea!

Many French workers have become accustomed to their longer holidays and regular weekdays off, and a recent survey by polling agency CSA showed that 56 percent of salaried employees oppose the reform — although jobseekers, retirees and unskilled workers approve.

Yes, they would.

Posted by Russell Roberts in Myths and Fallacies | Permalink

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/t/trackback/23120/2142643

Listed below are links to weblogs that reference The Arithmetic Fallacy:

» Tuesday's Daily News from The Club for Growth Blog
Business Self-Defense - Larry Kudlow, Money Politics Worse Than No Social Security Reform - Brendan Miniter, WSJ Is the Payroll Tax a Tax? - Kevin Hassett, NRO Rock the Victim Mentality - Lisa De Pasquale, Luce Institute Open Letter to... [Read More]

Tracked on Mar 29, 2005 9:51:03 AM

» Case Studies on the Minimum Wage from Coyote Blog
OK, I will begin this post with what I guess is, for some, a damning admision: [Read More]

Tracked on Mar 29, 2005 12:09:17 PM

» The Arithmetic Fallacy from Three Knockdown Rule
Aside from this being interesting in and of itself, (What can I say? Yes, my interests really are that pathetic.) it illustrates another more universal point. [Read More]

Tracked on Mar 29, 2005 1:37:23 PM

Tracked on Mar 29, 2005 1:38:00 PM

» New Mars Probe Sends Back View From Orbit (AP) from aboard NASAs
Mars sent back its first view of the Red Planet from orbit, the space agency said [Read More]

Tracked on Mar 25, 2006 9:09:48 AM

» Reporter coerced in captors' video, her father says / Before release, she was told they killed another U.S. hostage from her captors in
Carroll's release, her captors in Iraq said they had one final demand as the price of her freedom: She would [Read More]

Tracked on Apr 3, 2006 8:04:23 PM

» Full Albums Archive from MP3 Album Finder
Enter Artist or Song or Album name to search: ... Download VA - �� 4 �� 70 � (1973 1979) mp3 ... [Read More]

Tracked on Apr 5, 2006 11:06:21 PM

» Links Catalog Search Results For: sunkist from Public Library - Health - Drugs & Medicines
Search the Web:. OneBigVillage Home! Search the Web! Check Your Village Mail! Chat Now! ... Over the Counter (0). Prescription Drugs (0) Painkillers ... [Read More]

Tracked on Apr 8, 2006 1:58:52 AM

» Sounding Off: Hitting the Gym, Not the Vending Machine, on the Road from travelers about
travelers about the dangers of a sedentary lifestyle punctuated by deep-fried meals. [Read More]

Tracked on Apr 20, 2006 9:23:12 AM

» Finance Search Online: sdj insurance services from Business Finance Online
Business Finance Online Product/Service Directory. Search for business finance related products and services by browsing the directory of business finance ... [Read More]

Tracked on Apr 28, 2006 8:58:29 PM

» Library of Congress WWW/Z39.50 Gateway from Harvard Seismology: Centroid Moment Tensor Catalog
Contents: Search Library of Congress Catalog | Search Other Catalogs | About the Z39.50 ... Library of Congress Online Catalog. Simple Search (any keyword) ... [Read More]

Tracked on Apr 30, 2006 9:54:34 AM

» SmartPhone Today: HP iPaq hw6900 from Smartphone Reviews; Best SmartPhones
The Internet's 3rd Party information center for SmartPhone Shareware, SmartPhone Freeware, Reviews, Hardware, Discussion, and more! Updated Daily... [Read More]

Tracked on Apr 30, 2006 9:36:55 PM

» Unidare AGM to vote on winding up from in Dublin-listed
in Dublin-listed company Unidare will vote on May 22 on plans to wind up the company. [Read More]

Tracked on May 2, 2006 7:39:27 AM

» Adande: Intensity of Playoffs Suits Clippers Fine from in Chris Kaman's
blue jacket with pinstripes, and a nice white collared shirt, writes J.A. Adande in the LOS ANGELES TIMES. Yes, the shaggy center [Read More]

Tracked on May 4, 2006 4:12:25 AM

» Kaiser Daily Women's Health Policy Report Highlights Studies Presented At STI Conference from at the 2006 National
Conference in Jacksonville, Fla., on Tuesday and Wednesday. Summaries appear below. [click link [Read More]

Tracked on May 19, 2006 7:23:03 PM

» Dictionary Search Page from Dictionary Search
An unabridged dictionary from aalii to zymurgy, including a pronunciation guide... [Read More]

Tracked on May 22, 2006 1:24:11 PM

» Export pick-up to lift growth to 6% from economist has
economist has reiterated his forecast that the economy will grow by 6% this year. [Read More]

Tracked on May 28, 2006 4:31:36 AM

» Opera NOT Best Web Browser from #1 product Firefox,
Dotzler caught everyone's second favorite browser, Opera, in another marketing mishap. He notblogged about [Read More]

Tracked on May 30, 2006 6:04:26 PM

» Nvu 0.6 (1.0 beta) released from 1.7.1, however
have been rewritten due to bugs in the previous versions. The site manager now displays the default icon in Windows [Read More]

Tracked on Jun 9, 2006 10:35:15 AM

» O'Sullivan optimistic for first Kiwi win from can go close
O'Sullivan is optimistic that his side can go close to claiming a first ever victory over New Zealand in Hamilton on Saturday. [Read More]

Tracked on Jun 11, 2006 5:15:54 PM

» Bus Attack Pushes Sri Lanka Closer to War from pushed closer
closer to war after bombing of bus filled with commuters, schoolchildren; 64 dead [Read More]

Tracked on Jun 18, 2006 1:40:00 AM

» 2 N.Y.ers struck by lightning from struck by lightning
through the area yesterday, leaving one victim clinging to life, authorities said. [Read More]

Tracked on Jul 25, 2006 2:01:51 AM

» Back Pain Revolution: Replacement Disc Surgery from World News Tonight'
World News Tonight' Begins Series on Back Pain Treatments [Read More]

Tracked on Jul 31, 2006 6:59:29 PM