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Social Preferences And Tax Policy Design: Some Experimental Evidence

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  • LUCY F. ACKERT
  • JORGE MARTINEZ‐VAZQUEZ
  • MARK RIDER

Abstract

This article reports the results of a set of experiments designed to examine whether a taste for fairness affects people’s preferred tax structure. Using the Fehr and Schmidt model, we devise a simple test for the presence of social preferences in voting for alternative tax structures. The experimental results show that individuals demonstrate concern for their own payoff and inequality aversion in choosing between alternative tax structures. However, concern for redistribution decreases as the deadweight loss from progressive taxation increases. Our findings have important implications for tax policy design. (JEL C92, D63, H21, H23)

Suggested Citation

  • Lucy F. Ackert & Jorge Martinez‐Vazquez & Mark Rider, 2007. "Social Preferences And Tax Policy Design: Some Experimental Evidence," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 487-501, July.
  • Handle: RePEc:bla:ecinqu:v:45:y:2007:i:3:p:487-501
    DOI: 10.1111/j.1465-7295.2007.00048.x
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    File URL: https://doi.org/10.1111/j.1465-7295.2007.00048.x
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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