Nber Working Paper Series Merit Motives and Government Intervention: Public Finance in Reverse

نویسندگان

  • Casey B. Mulligan
  • Tomas J. Philipson
چکیده

A common view in public finance is that there is an efficiency-redistribution tradeoff in which distortions are tolerated in order to redistribute income. However, the fact that so much publicand private redistributive activity involves in-kind transfers rather than cash may be indicative of merit motives on the part of the payers rather than a preference for the well-being of the recipients. Efficiency-enhancing public policy in a merit good economy has the primary purpose of creating distortions and may only redistribute income from rich to poor in order to create those distortions – the reverse of the conventional efficiency-redistribution tradeoff. We discuss why the largest programs on the federal and local level in the US – including Social Security, Medicare and Medicaid, and Public Schooling – seem consistent with the reverse tradeoff rather than the classic one. Transfers are not lump sum in a merit good economy, and explicitly accounting for this when calculating tax incidence reduces the estimated progressivity of government policy. As one example, we calibrate the conventional life-cycle model to show how the amount of over-saving induced on the poor by Social Security hurts them at least as much as the “progressive” benefits help them. When the distortions outweigh fiscal transfers in this manner, the classic efficiency-redistribution tradeoff cannot justify the program and the program is far less progressive than conventional analysis suggests. Casey B. Mulligan Tomas J. Philipson Department of Economics The Harris School of Public Policy Studies, The University of Chicago Department of Economics, and The Law School 1126 East 59th Street University of Chicago Chicago, IL 60637 1155 East 60th Street and NBER Chicago, IL 60637 [email protected] and NBER [email protected]

برای دانلود رایگان متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

ثبت نام

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

منابع مشابه

The Failure of Public Finance

A number of explanations are commonly presented in public finance texts a s reasons why government intervention in the economy will improve performance. This paper questions the validity of each of\them. The paper examines the merit goods argument, equity considerations, growth and development and stabilization and finds the arguments offered in their behalf to be unpersuasive. Public finance a...

متن کامل

Nber Working Paper Series Urban Public Finance

America’s local governments spend about one-eighth of our national income, one-fourth of total government spending, and employ over 14 million people. This paper surveys the large and growing economics literature on local governments and their finances. A primary difference between local and national government is the ease of labor mobility within countries, which disciplines local governments ...

متن کامل

Nber Working Paper Series a Welfare Criterion for Models with Distorted Beliefs

This paper proposes a welfare criterion for economies in which agents have heterogeneously distorted beliefs. Instead of taking a stand on whose belief is correct, our criterion asserts that an allocation is belief-neutral efficient (inefficient) if it is efficient (inefficient) under any convex combination of agents' beliefs. While this criterion gives an incomplete ranking of social allocatio...

متن کامل

Nber Working Paper Series the Effects of Government-sponsored Venture Capital: International Evidence

This paper examines the impact of government-sponsored venture capitalists (GVCs) on the success of enterprises. Using international enterprise-level data, we identify a surprising non-monotonicity in the effect of GVC on the likelihood of exit via initial public offerings (IPOs) or third party acquisitions. Enterprises that receive funding from both private venture capitalists (PVCs) and GVCs ...

متن کامل

The Implications of Insurance for the Efficacy of Fiscal Policy

Various tax policies provide consumers with forms of insurance. Social security has the payoff characteristics of an annuity. The income tax provides consumers with a degree of Income insurance because the government shares part of the individual's income risk. Redistributive taxes can be used to spread aggregate income risks across different generations The effects of these and other tax polic...

متن کامل

ذخیره در منابع من


  با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید

عنوان ژورنال:

دوره   شماره 

صفحات  -

تاریخ انتشار 2000