Week 7 Discussion — Floors, Ceilings, and the Evidence: How Would You Weigh Them? — Traditional alternative (no AI)

Instructors: publish this instead of the adaptive version if you prefer, and unpublish or delete the adaptive one.

Hook

The model gives a plain answer about what a binding minimum wage or a binding rent ceiling does, and economists still argue, with real data, about how large those effects are and whether the trade is worth it. This week you can separate those three questions, so you can now make the argument yourself.

Your discussion question — choose Option A or Option B; they carry the same weight and the same rubric, and you say which you picked.

Option A: A minimum wage is a price floor in the labor market. The federal minimum wage is 7.25 dollars an hour, in effect since 2009, and many states and cities set higher minimums. The simple model predicts that a binding minimum raises the wage of workers who keep jobs and lowers the quantity of labor employed. On the size of that effect, Card and Krueger (1994) found no fall in fast-food jobs in New Jersey after its 1992 increase, Neumark and Wascher (2000) reworked the question with payroll records and found a fall, and Card and Krueger's reply (2000), using Bureau of Labor Statistics records, again found no fall. Suppose your city is debating a moderate increase. What would you weigh, and which way do you lean? Give each side's strongest evidence, and label which of your claims are positive (what the model or the studies show) and which are normative (what ought to happen).

Option B: Rent control is a price ceiling in the market for rental housing. The simple model predicts that a binding rent ceiling creates a shortage of rental housing. Diamond, McQuade, and Qian (2019) studied San Francisco's 1994 expansion of rent control and found that tenants in covered buildings were more likely to stay in their homes, and that landlords of covered buildings reduced the supply of rental housing. Suppose your town is debating a similar limit. How would you weigh protection for current tenants against fewer units for future renters, and which way do you lean? Give each side's strongest evidence, and label which of your claims are positive and which are normative.

There is no single right answer. Reasonable people who accept the same model and the same studies weigh them differently. Pick the one you actually care about, and tell us your reasoning.

Expectations

Activity format: one initial post followed by two substantive peer replies. Plan on about 45 minutes across the two deadlines; your instructor sets both due dates in Canvas.

Your initial post — by the first due date (early in the module week):

• Say which option you chose.
• Say in one sentence what the simple model predicts for a binding floor (Option A) or a binding ceiling (Option B).
• Give the strongest evidence on each side from the studies named in the question, then say which way you lean and why.
• Give the strongest version of the view you disagree with in one or two sentences, and say why you still hold your lean or what part of the other view you accept.
• Use at least two of this week's terms (price floor, price ceiling, binding price control, shortage, surplus, deadweight loss) correctly.
• Label at least one of your claims as positive (what the model or the studies show) and at least one as normative (what ought to happen).
• Use only the studies named in the question, and cite no politician, party, news outlet, or advocacy group as evidence.
• Length: roughly 150–250 words if written. You may instead record your post as audio or video (about two minutes) and attach a transcript; both forms are scored by the same rubric.

Your replies — by the second due date (the end of the module week):

• Reply substantively to at least two classmates.
• A substantive reply does more than agree: point out where a post runs the model's prediction together with the debate about its size, check whether a floor or a ceiling was named correctly, or argue the other side of the question at its strongest. "Nice point!" on its own does not count.

What a strong post looks like. Here are two short examples on Option B that lean in opposite directions; both meet the bar.

I chose Option B. Positive: the model predicts a binding rent ceiling creates a shortage, and the San Francisco study found that landlords of covered buildings reduced the supply of rental housing. Also positive: the same study found covered tenants were more likely to stay in their homes. Normative: I lean toward a limit, because I weigh a family's stability heavily. The strongest objection is that fewer units hurt the renters who come later, and I accept that cost is real.

I chose Option B. Positive: the San Francisco study found covered tenants were more likely to stay, which is the benefit supporters point to. Also positive: it found landlords of covered buildings reduced the rental supply, the shortage the model predicts. Normative: I lean against a limit, because I weigh access for future renters heavily. The strongest objection is that the tenants who stayed were real people kept in their homes, and I accept that benefit is real.

Notice how each one states the model's prediction, gives both findings, labels the positive and the normative parts, and gives the other side its strongest form. The lean is the student's own; either lean meets the same bar.

Participation rubric

This discussion is worth 10 points. The three criteria below look at your initial post and your peer replies.

Post early if you can — the best threads happen when people have time to reply before the second due date.

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