Lump of labor fallacy

Extracted Attributes

• Type

  Economic misconception

• Rooted in

  Zero-sum thinking/bias

• Core Belief

  There is a fixed amount of work available in an economy

• Counter-argument

  The amount of work is not fixed; the economy grows as more work is done; jobs lost in one industry are often absorbed by others; a larger workforce can increase consumption and economic activity

• Alternative Names

  Lump of jobs fallacy, Fallacy of labour scarcity, Fixed pie fallacy, Zero-sum fallacy

• Commonly applied to fears about

  Increased labor productivity, Automation, Immigration, Women's participation in the workforce, Artificial Intelligence (AI), Robotics

• Historical Example of Similar Fears

  Queen Elizabeth's refusal to grant a patent for a stocking frame (1589), dire warnings about automation in the 1950s

Timeline

• Queen Elizabeth of England refused to grant the inventor of a stocking frame a patent, fearing job displacement, an early manifestation of the underlying fear associated with the fallacy. (Source: Web Search Results)

  1589

• Economist David Frederick Schloss argued against the idea that the amount of work is fixed, considering it a fallacy. (Source: Wikipedia)

  1891

• Dire warnings were made that automation would lead to mass unemployment, reflecting the lump of labor fallacy. (Source: Web Search Results)

  1950s

• Paul Krugman published an article titled "Lumps of Labor" in the New York Times, discussing the fallacy. (Source: Web Search Results)

  2003-10-07

• A Pew Research survey found that 72% of respondents expressed worry that robots and computers would take over many human jobs, indicating a prevalent fear related to the fallacy. (Source: Web Search Results)

  2017

• The Federal Reserve Bank of St. Louis published an article titled "Examining the 'Lump of Labor' Fallacy Using a Simple Economic Model." (Source: Web Search Results)

  2020-11-02

• The St. Louis Fed published "Countering the 'Lump of Labor' Fallacy: Two Lessons." (Source: Web Search Results)

  2021-01-06

• David Sacks, an investor and technologist, frames fears of AI job displacement as a modern manifestation of the lump of labor fallacy. (Source: Related Documents)

  Contemporary

Lump of labour fallacy

In economics, the lump of labour fallacy is the misconception that there is a finite amount of work—a lump of labour—to be done within an economy which can be distributed to create more or fewer jobs. It is also known as the lump of jobs fallacy, fallacy of labour scarcity, fixed pie fallacy, and the zero-sum fallacy—due to its ties to zero-sum games. The term "fixed pie fallacy" is also used more generally to refer to the idea that there is a fixed amount of wealth in the world. This and other zero-sum fallacies can be caused by zero-sum bias. It was considered a fallacy in 1891 by economist David Frederick Schloss, who held that the amount of work is not fixed. The term originated to rebut the idea that reducing the number of hours employees are allowed to labour during the working day would lead to a reduction in unemployment. The term is also commonly used to describe the false belief that increasing labour productivity, automation, immigration, or women's participation in the workforce causes an increase in unemployment. The facts show that just like the amount of labor is not fixed, neither is the size of the economy (fixed pie fallacy) and as more work is done, the economy grows.

Web Search Results

• Lump of labour fallacy - Wikipedia

  In economics, the lump of labour fallacy is the misconception that there is a finite amount of work—a lump of labour—to be done within an economy which can be distributed to create more or fewer jobs. It is also known as the lump of jobs fallacy, fallacy of labour scarcity, fixed pie fallacy, and the zero-sum fallacy—due to its ties to zero-sum games. The term "fixed pie fallacy" is also used more generally to refer to the idea that there is a fixed amount of wealth in the world. This and other [...] 1. ^ a b c d e "Examining the 'Lump of Labor' Fallacy Using a Simple Economic Model". Federal Reserve Bank of St. Louis. 2 November 2020. The lump of labor fallacy is the assumption that there is a fixed amount of work to be done. This assumption can create anxiety about new entrants to the labor market and automation. This article provided two strategies for thinking about labor. First, because labor is a valuable resource, jobs lost in one industry due to technological advance will usually be [...] 2. ^ Krugman, Paul (7 October 2003). "Lumps of Labor". New York Times. Economists call it the lump of labor fallacy. It's the idea that there is a fixed amount of work to be done in the world, so any increase in the amount each worker can produce reduces the number of available jobs. (A famous example: those dire warnings in the 1950's that automation would lead to mass unemployment.) As the derisive name suggests, it's an idea economists view with contempt, yet the fallacy makes a comeback

• Lump of Labor Fallacy: Definition and How It Works - Investopedia

  The lump of labor fallacy is the mistaken belief that there is a fixed amount of work available in the economy, and that increasing the number of workers decreases the amount of work available for everyone else, or vice-versa. [...] The lump of labor fallacy is a common contention that workers are competing for a finite number of jobs. This claim is contentious among economists because there are many factors that affect labor demand, and a large labor force can also result in higher consumption. Article Sources [...] The "lump of labor" fallacy is the mistaken belief that an economy only has enough jobs for a certain number of workers. This fallacy is sometimes used to argue against immigration, or for earlier retirement. Economists believe that this is a fallacy because a larger workforce can result in increased consumption and economic activity. ## Understanding the Lump of Labor Fallacy

• Lump of Labor Fallacy: AI's True Impact on Work - Draup

  In economics, there is a theory called the Lump of Labor Fallacy. This fallacy is the misconception that there is a finite amount of work—a lump of labor—to be done within an economy that can be distributed to create more or fewer jobs. Here is what technologist and investor Andreessen Horowitz says about it in his blog – Why AI will save the world. (it is a great blog, so I encourage you to read the same) [...] “The Lump Of Labor Fallacy flows naturally from naive intuition, but naive intuition here is wrong. When technology is applied to production, we get productivity growth – an increase in output generated by reduced inputs. The result is lower prices for goods and services. As prices for goods and services fall, we pay less for them, meaning we now have extra spending power to buy other things. This aspect increases demand in the economy, which drives the creation of new production – [...] Previous Next Previous Next Previous Next Previous Next Previous Next Previous Next Previous Next Previous Next Previous Next Previous Next Previous Next Previous Next Previous Next No items found. PreviousNext 1 / 53 ###### EAIGG ### Draup is a Member of the Ethical AI Governance Group

• Examining the 'Lump of Labor' Fallacy Using a Simple Economic ...

  The lump of labor fallacy is the assumption that there is a fixed amount of work to be done. This assumption can create anxiety about new entrants to the labor market and automation. This article provided two strategies for thinking about labor. First, because labor is a valuable resource, jobs lost in one industry due to technological advance will usually be absorbed by other (expanding or new) industries. Second, the size of the economic pie is not fixed—it grows. As the circular flow model [...] “Lump” and “labor” are two words that people don't normally put together. However, the “lump of labor” fallacy is evident in many people’s thinking. The lump of labor fallacy is the assumption that there is a fixed amount of work to be done. If this were true, new jobs could not be generated, just redistributed. Those who believe the fallacy have often felt threatened by new technology or the entrance of new people into the labor force. These fears are rooted in a mistaken zero-sum view of the [...] Machines, robots, and artificial intelligence are completing tasks that had been performed by human workers. The lump of labor fallacy would say that automation displaces human workers and results in fewer jobs. Accord­­ing to a 2017 Pew Research survey, this is a common fear: 72 percent of respondents expressed worry that robots and computers will take over many human jobs.2 Anxiety about automation is nothing new. In 1589, Queen Elizabeth of England refused to grant the inventor of a

• Countering the 'Lump of Labor' Fallacy: Two Lessons | St. Louis Fed

  The fallacy is the assumption that there is a fixed amount of work, Economic Education Coordinator Scott Wolla explained in a Page One Economics essay. The monthly publications provide short overviews of economic concepts and current events. The “lump of labor” fallacy is the assumption that there is a fixed amount of work. [...] ## The Economic “Pie” Isn’t a Fixed Size Imagine the economy is a pie. According to the lump of labor fallacy, the size of this pie doesn’t change, Wolla said in the essay. For one person to get a bigger piece, the other pieces would need to get smaller. Under that fallacy, the same thing would happen if more workers, such as immigrants, joined an economy’s workforce: More people would be splitting up the same-size pie, and some slices would have to get smaller. [...] # Countering the “Lump of Labor” Fallacy: Two Lessons January 06, 2021 SHARE THIS PAGE: Link Copied Ever worry that computers and robots will take too many jobs? If you have, you’re in good company: 72% of respondents to a 2017 Pew Research survey had the same fear about automation. But that concern and a similar worry that immigrant workers will leave too few jobs for a country’s native-born workers are rooted in a mistaken belief with an odd name, the “lump of labor” fallacy.