The Effects of Temptation on the Optimal Provision of Education
AbstractThis paper provides a framework for analyzing optimal government transfers of education when individuals are tempted to underinvest in education. The government may devise a transfer using a combination of free compulsory education, vouchers and price subsidies. I show that government intervention is needed if there is no deadweight loss associated with taxation. If there is a loss from taxation, government intervention is needed only if the level of temptation is sufficiently high. For high levels of temptation, free compulsory education or vouchers are optimal, whereas price subsidies may be optimal for intermediate levels of temptation.
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Bibliographic InfoPaper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 05-030.
Date of creation: Sep 2005
Date of revision:
Temptation; Education Policy; Hyperbolic Discounting; Self-Control;
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H4 - Public Economics - - Publicly Provided Goods
- H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
- I28 - Health, Education, and Welfare - - Education - - - Government Policy
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