When the Joneses' consumption hurts: Optimal public good provision and nonlinear income taxation

A-Tier
Journal: Journal of Public Economics
Year: 2008
Volume: 92
Issue: 5-6
Pages: 986-997

Authors (2)

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

This paper considers a model with nonlinear income taxation and public good provision when people care about their relative consumption compared to others. The standard optimality expressions are modified by terms that reflect the extent to which people care about relative consumption. The extent to which the public good provision rule should be modified is shown to depend critically on the preference elicitation format. The modified tax formulas imply substantially higher marginal income tax rates than in the conventional case, under plausible assumptions and available empirical estimates regarding comparison consumption concerns.

Technical Details

RePEc Handle
repec:eee:pubeco:v:92:y:2008:i:5-6:p:986-997
Journal Field
Public
Author Count
2
Added to Database
2026-01-25