De Gustibus non est Taxandum: Heterogeneity in Preferences and Optimal Redistribution

Benjamin Lockwood and Matthew Weinzierl ()

No 17784, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The prominent but unproven intuition that preference heterogeneity reduces re-distribution in a standard optimal tax model is shown to hold under the plausible condition that the distribution of preferences for consumption relative to leisure rises, in terms of first-order stochastic dominance, with income. Given mainstream functional form assumptions on utility and the distributions of ability and preferences, a simple statistic for the effect of preference heterogeneity on marginal tax rates is derived. Numerical simulations and suggestive empirical evidence demonstrate the link between this potentially measurable statistic and the quantitative implications of preference heterogeneity for policy.

JEL-codes: H2 H21 (search for similar items in EconPapers)
Date: 2012-01
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published as Benjamin B. Lockwood & Matthew Weinzierl, 2015. "De Gustibus non est Taxandum: Heterogeneity in preferences and optimal redistribution," Journal of Public Economics, vol 124, pages 74-80.

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Related works:
Journal Article: De Gustibus non est Taxandum: Heterogeneity in preferences and optimal redistribution (2015)
Working Paper: De Gustibus non est Taxandum: Heterogeneity in Preferences and Optimal Redistribution (2014)
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