Generalized Social Marginal Welfare Weights Imply Inconsistent Comparisons of Tax Policies

Itai Sher

American Economic Review, 2024, vol. 114, issue 11, 3551-77

Abstract: This paper concerns Saez and Stantcheva's (2016) generalized social marginal welfare weights, which aggregate losses and gains due to tax policies while incorporating nonutilitarian ethical considerations. The approach evaluates local tax changes without a global social objective. I show that local tax policy comparisons implicitly entail global comparisons. Moreover, whenever welfare weights do not have a utilitarian structure, these implied global comparisons are inconsistent. I argue that broader ethical values cannot in general be represented simply by modifying the weights placed on benefits to different people, and a more thoroughgoing modification of the utilitarian approach is required.

JEL-codes: D60 D63 D71 H21 H23 I31 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1257/aer.20211025

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