Social Preferences and Tax Policy Design: Some Experimental Evidence

15 Pages Posted: 26 Jun 2007

See all articles by Lucy F. Ackert

Lucy F. Ackert

Kennesaw State University - Michael J. Coles College of Business

Jorge Martinez-Vazquez

Georgia State University - Andrew Young School of Policy Studies

Mark Rider

Georgia State University - Department of Economics

Abstract

This article reports the results of a set of experiments designed to examine whether a taste for fairness affects peoples preferred tax structure. Using the Fehr and Schmidt model, we devise a simple test for the presence of social preferences in voting for alternative tax structures. The experimental results show that individuals demonstrate concern for their own payoff and inequality aversion in choosing between alternative tax structures. However, concern for redistribution decreases as the deadweight loss from progressive taxation increases. Our findings have important implications for tax policy design.

Suggested Citation

Ackert, Lucy F. and Martinez-Vazquez, Jorge and Rider, Mark, Social Preferences and Tax Policy Design: Some Experimental Evidence. Economic Inquiry, Vol. 45, No. 3, pp. 487-501, July 2007. Available at SSRN: https://ssrn.com/abstract=994424 or http://dx.doi.org/10.1111/j.1465-7295.2007.00048.x

Lucy F. Ackert (Contact Author)

Kennesaw State University - Michael J. Coles College of Business ( email )

1000 Chastain Road
Department of Economics and Finance
Kennesaw, GA 30144
United States
770-423-6111 (Phone)
770-499-3209 (Fax)

Jorge Martinez-Vazquez

Georgia State University - Andrew Young School of Policy Studies ( email )

University Plaza
PO Box 3992
Atlanta, GA 30302-3992
United States
404-651-3990 (Phone)
404-651-3996 (Fax)

Mark Rider

Georgia State University - Department of Economics ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

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