Legitimizing Napkin Drawing: The Curious Dispersion of Laffer Curves (1978-2008)

Abstract

The Laffer curve is a graphical representation of how government revenues vary with the level of taxation. Allegedly, it was first drawn on a cocktail napkin by one of US President Ronald Reagan’s advisors in the 1970s. Since then, it has been routinely reproduced in economics textbooks. This article provides an historical account that shows a sharp contrast between the formal triviality of the curve and the complexity of its circulation through various communities of economists, policy advisors, propagandists, and journalists. In this paper, I show that the dispersion of the Laffer curve presents two peculiarities: first, unlike many other diagrams used in economics, popular instantiations of the Laffer curve preceded its “academization” in professional economics; second, in spite of numerous transformations in the process of circulation, the curve’s canonical presentation as a symmetrical, bullet-like diagram was reinforced over time. I attribute these peculiarities to the community dynamics that sustained and circulated the curve.

Keywords: Laffer curve, visual representation, research dissemination, history of recent economics

JEL Classification: A14, B20