Assume the Positional: Comment on Robert Frank
We 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.
Volume (Year): 3 (2006)
Issue (Month): 3 (September)
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- Steven J. Davis & Magnus Henrekson, 2004.
"Tax Effects on Work Activity, Industry Mix and Shadow Economy Size: Evidence from Rich-Country Comparisons,"
NBER Working Papers
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- Mark Aguiar & Erik Hurst, 2006. "Measuring trends in leisure: the allocation of time over five decades," Working Papers 06-2, Federal Reserve Bank of Boston.
- Mark Aguiar & Erik Hurst, 2006. "Measuring Trends in Leisure: The Allocation of Time Over Five Decades," NBER Working Papers 12082, National Bureau of Economic Research, Inc.
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