The share of income collected in taxes is much higher in developed economies than in developing economies, yet among developing economies, the influence of per capita income on the tax share is much less clear. Most studies to date have discovered no statistical relationship between the tax share and per capita income when other measures of economic development are included in the model. The present study finds a statistically significant negative relationship between the tax share and per capita real GDP for a sample of eight African countries over a nine year period of their development. This study also finds that the tax share is negatively related to the agriculture share but positively related to the trade and mining shares.
Free riders are those who enjoy the benefits of a public good without contributing to the costs of provision. Their presence is often used as a rationale for government intervention in the private market.Yet little is known about the prevalence of free riding or about the characteristics of those who free ride. This paper presents a classroom experiment that introduces students to the free rider concept, and helps them assess the importance of free riding and the characteristics of the free rider.The experiment does not require props or group behavior inappropriate to the large class, and does not consume an inordinate amount of class time.It illustrates how experimental economics can be used to involve students actively in the learning of economic concepts.
A FREE RIDER EXPERIMENT FOR THE LARGE CLASSFree riders are those who enjoy the benefits of a public good without contributing to the costs of providing it.Because it is impossible, or highly expensive, to exclude people from the benefits of a public good once it is produced, there is an incentive for consumers to free ride on the contributions of others. The presence of free riders can lead to the under-representation of preferences for the public good and, hence, to its under-provision. In extreme cases, the free rider problem causes complete market failure, and the public good will not be provided at all except through nonmarket allocation.National defense is often cited as the classic example of market failure due to the free rider problem, although many other interesting examples exist. Stiglitz (1988, 122) provides the example of family members who fail to contribute to the benefits of family life. A spoiled child knows that failure to do chores is not likely to significantly affect the guantity of services he or she receives from the family. A typical parental response to this type of free riding behavior is "time out," an attempt to exclude the recalcitrant family member from family benefits until behavior becomes more cooperative.Rosen (1992, 76) stresses that free ridership is not a fact , but a hypothesis. While individuals can be observed free riding in many situations, they often voluntarily contribute to numerous causes such as public radio and television, museums, athletic associations, and churches. Asch and Gigliotti (1991) complain that treatments of the free rider problem often ignore the fact that individuals do contribute 2 voluntarily to the provision of public goods as evidenced by personal observation and by the results of recent free rider experiments.Asch and Gigliotti (1991, 33) are also concerned that the standard treatment of free riding behavior as "rational" is ethically questionable. They feel that economists often ignore such noneconomic motivation as sense of commitment or morality. Other motivations for
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