Public Economics and Inequality: Uncovering Our Social Nature

43 Pages Posted: 27 Jan 2021 Last revised: 30 Jan 2021

See all articles by Emmanuel Saez

Emmanuel Saez

University of California, Berkeley

Date Written: January 2021


This paper argues that the social nature of humans, absent from the standard economic model, is crucial to understand our large modern social states and why concerns about inequality are so pervasive. A social solution arises when a situation is resolved at the group level (rather than the individual level) through cooperation and fair distribution of the resulting surplus. In human societies, childcare and education for the young, retirement benefits for the old, health care for the sick, and income support for those in need, is resolved at the social level, and through the social state in advanced economies. Social situations are pervasive even outside government and play a significant role in the distribution of pre-tax market incomes.

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Suggested Citation

Saez, Emmanuel, Public Economics and Inequality: Uncovering Our Social Nature (January 2021). NBER Working Paper No. w28387, Available at SSRN:

Emmanuel Saez (Contact Author)

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

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