The Behavioral Economics of Tax Policy (or Tax Policy for Imperfect Humans)

2020 ◽  
Author(s):  
Leonard E. Burman ◽  
Joel Slemrod
Keyword(s):  
Behavioral Economics ◽  
Economic Model ◽  
Tax Policy

What is behavioral economics? The standard economic model assumes that individuals and businesses are rational, well informed, and good at math. Individuals make themselves and their families as happy as they can over the course of a lifetime subject to the resources they have at...

Personality, Relationships, and Decision Making with Relational Dynamics

2015 ◽  
Vol 4 (4) ◽  
pp. 52-74 ◽  
Author(s):  
David S. Bathory
Keyword(s):  
Game Theory ◽  
Decision Making ◽  
Behavioral Economics ◽  
Personality Disorders ◽  
Economic Model ◽  
Economic Models ◽  
Relational Dynamics ◽  
Dsm V ◽  
Human Decision ◽  
Variable Probability

Within the field of Economics there is great interest in predicting the future. In creating Economic Models the rationale has been to create fixed equations that can account for all variables associated with the issues of capital, labor, wages, prices, tariffs and taxes but few models explored the human variable. Probability Statistics bases decision making models upon mathematical predictions. Game Theory is an economic model that begins to explain the rationale of human decision making, but fails to account for flawed thinking and pathology. Relational Dynamics attempts to provide a means of understanding the strategies used in communication and decision making. Within humanity, not all decisions are made rationally and to account for illogical choices, psychology has provided theories of pathology to explain human idiosyncrasies. This paper will explore personality disorders as described by the DSM V and Relational Dynamics in an attempt to understand how pathology influences relationships, decision making and behavioral economics.

scholarly journals Behavioral Economics and Tax Policy

2009 ◽  
Author(s):  
William Congdon ◽  
Jeffrey Kling ◽  
Sendhil Mullainathan
Keyword(s):  
Behavioral Economics ◽  
Tax Policy

scholarly journals Behavioral Economics and Tax Policy

2009 ◽  
Vol 62 (3) ◽  
pp. 375-386 ◽  
Author(s):  
William J. Congdon ◽  
Jeffrey R. Kling ◽  
Sendhil Mullainathan
Keyword(s):  
Behavioral Economics ◽  
Tax Policy

scholarly journals The Importance of Fairness in Tax Policy

2014 ◽  
Vol 3 (1) ◽  
pp. 1-12 ◽  
Author(s):  
Simon James
Keyword(s):  
Behavioral Economics ◽  
Tax Policy ◽  
Explanatory Power ◽  
Value Added ◽  
Tea Party ◽  
Natural Experiments ◽  
Mainstream Economic ◽  
Perceptions Of Fairness ◽  
Boston Tea Party ◽  
Unexpected Outcomes

One of the key areas where behavioral economics offers major insights into developing successful policy involves issues of fairness. Taxation offers many examples, ranging from the Boston Tea Party of 1773 to the UK's unsuccessful community charge, often called the ‘poll tax', of the early 1990s, where a failure to appreciate fully taxpayers' perceptions of fairness led to unexpected outcomes. The use of behavioral economics to supplement mainstream economic analysis might not only reduce the risks of such tax disasters but also improve the development of tax reform more generally. This paper shows how such additional explanatory power contributes to our understanding of the success or failure of UK tax policy arising from the ‘natural experiments' of the successful introduction of value added tax in 1973 and the contrasting difficulties associated with the community charge in 1990 and, more recently, the abolition of the 10% rate of income tax in 2008.

Tax Policy and Presidential Leadership: Ideas, Interests, and the Quality of Advice

1995 ◽  
Vol 9 (2) ◽  
pp. 287-330 ◽  
Author(s):  
M. Stephen Weatherford ◽  
Thomas B. Mayhew
Keyword(s):  
Rational Choice ◽  
Economic Model ◽  
Tax Policy ◽  
Presidential Leadership ◽  
Political Outcomes ◽  
The Impact

How do “ideas” help to account for political outcomes? The age-old question of the role of ideas has been given new life recently, partly in response to the imposing structure of theory that has been built around economic or rational choice explanations, with their emphasis on interests and material circumstances rather than ideas. Few outside of the most abstract economic model-builders hold that ideas have no impact on policies, but there is little agreement on how that impact occurs or on the observable criteria that would establish (or contradict) the impact of ideas.

scholarly journals The R.B.Q. (Rational, Behavioral and Quantified) Model

Ekonomika ◽  
2019 ◽  
Vol 98 (1) ◽  
pp. 6-18 ◽  
Author(s):  
Constantinos Challoumis
Keyword(s):  
Full Article ◽  
Economic Analysis ◽  
Behavioral Economics ◽  
Economic Model ◽  
Critical Examination ◽  
Behavioral Economic ◽  
Economic Theories ◽  
Quantification Method ◽  
Methodological Approaches

[full article and abstract in English] This paper is about the classic methods used in the analysis of economics. More precisely, the R.B.Q. (Rational, Behavioral, and Quantified) model is about rational economics and behavioral economic analysis in conjunction with the quantification procedure (Q.E. method). Therefore, in this work are submitted the most common methodological approaches used in economics including a form of their combination. What follows is a critical examination that extendedly scrutinizes the terminology of axiomatic methods. One of the aims of this paper to represent the special characteristics of rational economics in comparison to the case of behavioral economics. Then provided is an analysis wherein the issues relevant to this are represented, and on the basis of which the main differences between the two concepts are showed. Hence, the aim here is to show the crucial attributes of these concepts. This study also uses a quantification method to show the behavior of these two economic theories within their relation to one another, demonstrating a complete view of them in a single economic model.

Personality, Relationships, and Decision Making with Relational Dynamics

2016 ◽  
pp. 1405-1422
Author(s):  
David S. Bathory
Keyword(s):  
Game Theory ◽  
Decision Making ◽  
Behavioral Economics ◽  
Personality Disorders ◽  
Economic Model ◽  
Economic Models ◽  
Relational Dynamics ◽  
Dsm V ◽  
Human Decision ◽  
Variable Probability

Within the field of Economics there is great interest in predicting the future. In creating Economic Models the rationale has been to create fixed equations that can account for all variables associated with the issues of capital, labor, wages, prices, tariffs and taxes but few models explored the human variable. Probability Statistics bases decision making models upon mathematical predictions. Game Theory is an economic model that begins to explain the rationale of human decision making, but fails to account for flawed thinking and pathology. Relational Dynamics attempts to provide a means of understanding the strategies used in communication and decision making. Within humanity, not all decisions are made rationally and to account for illogical choices, psychology has provided theories of pathology to explain human idiosyncrasies. This paper will explore personality disorders as described by the DSM V and Relational Dynamics in an attempt to understand how pathology influences relationships, decision making and behavioral economics.

Paternalism and Well-Being

2015 ◽  
Author(s):  
Julian Le Grand ◽  
Bill New
Keyword(s):  
Twentieth Century ◽  
Behavioral Economics ◽  
Economic Model ◽  
Alternative Model ◽  
Well Being ◽  
Technical Ability ◽  
Classical Economic ◽  
Do So

This chapter examines arguments over government paternalism derived from considerations of individual well-being. It begins with a discussion of the classical economic model of rationality and the emergence of an alternative model during the twentieth century. It then reviews an increasing volume of evidence from behavioral economics and psychology of the so-called “reasoning failure”: the fact that individuals, in trying to achieve the end of improving their well-being, tend to make mistakes and do so in a systematic way. Four possible sources for such failure are discussed: limited technical ability, limited imagination, limited willpower, and limited objectivity. The chapter concludes by rejecting ends-related paternalism but accepting the well-being case for means-related paternalism.

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