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De Gustibus non est Taxandum: Heterogeneity in Preferences and Optimal Redistribution / Benjamin B. Lockwood, Matthew C. Weinzierl.
- Format:
- Book
- Author/Creator:
- Lockwood, Benjamin B.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w17784.
- NBER working paper series no. w17784
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2012.
- Summary:
- The prominent but unproven intuition that preference heterogeneity reduces re-distribution in a standard optimal tax model is shown to hold under the plausible condition that the distribution of preferences for consumption relative to leisure rises, in terms of first-order stochastic dominance, with income. Given mainstream functional form assumptions on utility and the distributions of ability and preferences, a simple statistic for the effect of preference heterogeneity on marginal tax rates is derived. Numerical simulations and suggestive empirical evidence demonstrate the link between this potentially measurable statistic and the quantitative implications of preference heterogeneity for policy.
- Notes:
- Print version record
- January 2012.
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