When the Joneses' consumption hurts: Optimal public good provision and nonlinear income taxation

Aronsson, Thomas; Johansson‐Stenman, Olof

doi:10.1016/j.jpubeco.2007.12.007

Cited by 117 publications

(132 citation statements)

References 40 publications

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“…With mean value comparisons, each consumer contributes to the positional externalities to the same extent and the average degree of positionality, α , represents the value of the marginal externality per unit of consumption, which explains the second formula in the proposition. This welfarist tax formula is analogous to results derived in the context of representative agent models by, e.g., Ljungqvist and Uhlig (2000) and Dupor and Liu (2003), and of course also to the two-type model in Aronsson and Johansson-Stenman (2008).…”

Section: Corrective Policy In a First-best Settingsupporting

confidence: 60%

“…This decision problem was previously examined by Aronsson and Johansson-Stenman (2008) and is given by…”

Section: The Welfarist Governmentmentioning

confidence: 99%

“…The parameter α is interpretable as the common degree of positionality. Equation (12b) was originally derived by Aronsson and Johansson-Stenman (2008) and shows that a welfarist government has two different motives for adjusting x through tax policy: internalize the positional externality (captured by α ) and relax the Now, to be able to shorten the notation in the subsequent analyses, note that the optimal tax policy implicit in the original Stiglitz (1982) model (the version with fixed before-tax wage rates) follows as the special case where we disregard the effect of x on the Lagrangean, i.e., where we set (13b)…”

Section: Corrective and Redistributive Taxation Under Asymmetric Infomentioning

confidence: 99%

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Paternalism against Veblen: Optimal Taxation and Non-respected Preferences for Social Comparisons

Aronsson

Johansson‐Stenman²

2018

American Economic Journal: Economic Policy

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This paper deals with optimal income taxation and relative consumption under a welfarist government that fully respects people's preferences and a paternalist government that does not share the consumer preference for relative consumption.Consistent with previous findings, relative consumption concerns typically lead to higher marginal income tax rates in the welfarist case. A remarkable result is that the optimal tax rules turn out to be very similar when people's preferences for social comparisons are not respected. Indeed, if the relative consumption concerns are based on mean value comparisons and all consumers are equally positional, or if they are driven by within-type comparisons, the paternalist and welfarist governments can implement their respective first-best allocations through exactly the same marginal income tax formulas. Yet, also in these cases, there are some remaining differences that follow from second-best considerations.

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Section: Corrective Policy In a First-best Settingsupporting

confidence: 60%

“…This decision problem was previously examined by Aronsson and Johansson-Stenman (2008) and is given by…”

Section: The Welfarist Governmentmentioning

confidence: 99%

Section: Corrective and Redistributive Taxation Under Asymmetric Infomentioning

confidence: 99%

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Paternalism against Veblen: Optimal Taxation and Non-respected Preferences for Social Comparisons

Aronsson

Johansson‐Stenman²

2018

American Economic Journal: Economic Policy

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“…On the other hand, a non-welfarist government does not tolerate status preferences -those are basically a form of envy -to be part of the welfare criterion. 5 That is, in the non-welfarist case the government's and individuals' preferences differ. Our analysis sheds light on the optimal policies that emerge from these two different welfare criteria.…”

Section: Johansson 1997)mentioning

confidence: 99%

Asymmetric and non-atmospheric consumption externalities, and efficient consumption taxation

Eckerstorfer¹,

Wendner

2013

Journal of Public Economics

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Abstract. We analyze the effects of a generalized class of negative consumption externalities (asymmetric and non-atmospheric) on the structure of efficient commodity tax programs. Households are not only concerned about consumption reference levels -that is, they gain utility from "keeping up with the Joneses" -they also exhibit altruism. Two sets of efficient tax regimes are compared, based, on a welfarist-and a non-welfarist optimality criterion, respectively. Altruism turns out not to be at odds with the consumption externalities. Rather, altruism implicates a bound on efficient utility allocations. A non-welfarist government tolerates less inequality than a welfarist one. In the welfarist (non-welfarist) case, first-best personalized commodity tax rates respond highly sensitively (barely) to whether or not a consumption externality is asymmetric or non-atmospheric. If personalized commodity tax rates are not available (second-best case), the tax rate on a nonpositional good is typically different from zero for corrective reasons. For plausible functional forms and parameter values, numerical simulations suggest that secondbest tax rates are rather insensitive with respect to both the optimality criterion and the "nature" of the consumption externality.

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“…See Aronsson and Johansson-Stenman (2008) and Wendner and Goulder (2008) for recent analysis of optimal public good provision in a second-best world where people care about relative consumption.…”

Section: ] Speaking Of Myself I […] Work Predominantly On Partial Mementioning

confidence: 99%

Does Environmental Economics Produce Aeroplanes Without Engines? On the Need for an Environmental Social Science

Folmer

Johansson‐Stenman

2011

Environ Resource Econ

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In this paper we first critically review conventional environmental economics. We conclude that the standard theory offers too narrow a perspective for many real world problems and that many theories are not empirically tested. Consequently, environmental economics is at risk of producing aeroplanes without engines. Next, we welcome and discuss some recent trends, particularly the rapid developments of behavioural and new institutional economics as well as the increased interest in empirical analysis. Yet, we conclude that more "logical duels" between competing theories, more interaction between theory and empirics, and more integration between the social sciences are needed to achieve a better understanding of real world environmental problems and the development of adequate policy handles.Finally, we present an outline of steps towards the development of an environmental social science and briefly present the papers that make up this special issue as important building stones of such a discipline.

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When the Joneses' consumption hurts: Optimal public good provision and nonlinear income taxation

Cited by 117 publications

References 40 publications

Paternalism against Veblen: Optimal Taxation and Non-respected Preferences for Social Comparisons

Paternalism against Veblen: Optimal Taxation and Non-respected Preferences for Social Comparisons

Asymmetric and non-atmospheric consumption externalities, and efficient consumption taxation

Does Environmental Economics Produce Aeroplanes Without Engines? On the Need for an Environmental Social Science

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