Non-Welfarist Optimal Taxation and Behavioral Public Economics

32 Pages Posted: 22 Oct 2004

See all articles by Jukka Pirttila

Jukka Pirttila

United Nations - World Institute for Development Economics Research (UNU/WIDER); Tampere University of Technology

Ravi Kanbur

Cornell University; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Matti Tuomala

University of Tampere

Date Written: October 2004

Abstract

Research in behavioral economics has uncovered the widespread phenomenon of people making decisions against their own good intentions. In these situations, the government might want to intervene, indeed individuals might want the government to intervene, to induce behavior that is closer to what individuals wish they were doing. The analysis of such corrective interventions, through taxes and subsidies, might be called "behavioral public economics." However, such analysis, where the government has an objective function that is different from that of individuals, is not new in public economics. In these cases the government is said to be "non-welfarist" in its objectives, and there is a long tradition of non-welfarist welfare economics, especially the analysis of optimal taxation and subsidy policy where the outcomes of individual behavior are evaluated using a preference function different from the one that generated the outcomes. The object of this paper is to first of all present a unified view of the non-welfarist optimal taxation literature and, secondly, to present behavioral public economics as a natural special case of this general framework.

Keywords: non-welfarism, optimal taxation, behavioral economics

JEL Classification: H21, H23

Suggested Citation

Pirttila, Jukka and Kanbur, Ravi and Tuomala, Matti, Non-Welfarist Optimal Taxation and Behavioral Public Economics (October 2004). CESifo Working Paper Series No. 1291. Available at SSRN: https://ssrn.com/abstract=608981

Jukka Pirttila (Contact Author)

United Nations - World Institute for Development Economics Research (UNU/WIDER) ( email )

Katajanokanlaituri 6B
Helsinki, FIN-00160
Finland

Tampere University of Technology ( email )

P.O. 541, Korkeakoulunkatu 8 (Festia building)
Tampere, FI-33101
Finland

Ravi Kanbur

Cornell University ( email )

301-J Warren Hall
Ithaca, NY 14853
United States
607-255-7966 (Phone)
607-255-9984 (Fax)

HOME PAGE: http://www.kanbur.dyson.cornell.edu

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Matti Tuomala

University of Tampere ( email )

P.O. Box 607
Tampere, FIN-33101
Finland
+358-3-2156031 (Phone)
+358-3-2157254 (Fax)

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