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An Experimental Economics Investigation of the Land Value Tax: Efficiency, Acceptability, and Positional Goods

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  • Duke, Joshua M.
  • Gao, TianHang

Abstract

This research offers the first economic experiment investigating the land tax, where landowners invest under different property tax regimes. A voting treatment assesses the relative acceptability of land value taxation. Results show a land tax produced greater overall welfare in only 37.5% of the experiment sessions. Systematic overinvestment arises from the positional-good characteristic of residential land investment, but this effect vanishes when the positional-good indicator is removed. The experiments show that the participants unexpectedly voted in favor of the land tax, suggesting that the efficiency and acceptability of the land tax may be more complex than in nonbehavioral economics modeling.
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Suggested Citation

  • Duke, Joshua M. & Gao, TianHang, 2017. "An Experimental Economics Investigation of the Land Value Tax: Efficiency, Acceptability, and Positional Goods," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258227, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea17:258227
    DOI: 10.22004/ag.econ.258227
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    File URL: https://ageconsearch.umn.edu/record/258227/files/Abstracts_17_05_22_12_06_54_56__128_4_205_173_0.pdf
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    Cited by:

    1. Buchholz, Matthias & Danne, Michael & Musshoff, Oliver, 2022. "An experimental analysis of German farmers’ decisions to buy or rent farmland," Land Use Policy, Elsevier, vol. 120(C).
    2. Johanna Jauernig & Stephan Brosig & Silke Hüttel, 2023. "Profession and residency matter: Farmers' preferences for farmland price regulation in Germany," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(3), pages 816-834, September.
    3. Joshua M. Duke & TianHang Gao, 2023. "Land Value Taxation: A Spatially Explicit Economic Experiment with Endogenous Institutions," The Journal of Real Estate Finance and Economics, Springer, vol. 67(4), pages 673-694, November.
    4. Johanna Jauernig & Stephan Brosig & Silke Hüttel, 2023. "Profession and residency matter: Farmers' preferences for farmland price regulation in Germany," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(3), pages 816-834, September.

    More about this item

    Keywords

    Institutional and Behavioral Economics; Land Economics/Use; Community/Rural/Urban Development;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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