Assume the Positional: Comment on Robert Frank
AbstractWe examine Robert Frankâ€™s arguments for taxation to mitigate positional externalities. The scarcity that characterizes positional goods is real, but various mechanisms reduce the potential waste, and Frank overstates the case for a governmental solution. The plausibility of Frankâ€™s arguments for extensive market failure requires various assumptions, including the usefulness of happiness comparisons over time, the widespread existence of winner-take-all markets, the failure of voluntary evolution to internalize externalities, and that both â€œleisureâ€ and governmental activities are significantly less positional than the full-range of activities Frank proposes to tax. Each assumption is shaky. Frankâ€™s policy solutions overlook standard public choice arguments against government expansion and shrug off the Smithian burden of proof incumbent on those proposing coercion.
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Bibliographic InfoArticle provided by Econ Journal Watch in its journal Econ Journal Watch.
Volume (Year): 3 (2006)
Issue (Month): 3 (September)
Positional goods; positional arms race; leisure; taxation; happiness;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
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- Gasana, Parfait U., 2009. "Relative status and interdependent effects in consumer behavior," The Journal of Socio-Economics, Elsevier, vol. 38(1), pages 52-59, January.
- Robert H. Frank, 2006. "Taking Libertarian Concerns Seriously: Reply to Kashdan and Klein," Econ Journal Watch, Econ Journal Watch, vol. 3(3), pages 435-451, September.
- João Bernardino & Tanya Araújo, 2010. "On Positional Consumption and Technological Innovation- an Agent-based Approach," Working Papers 2010/04, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon..
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