American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Generalized Social Marginal Welfare Weights Imply Inconsistent Comparisons of Tax Policies
American Economic Review
vol. 114,
no. 11, November 2024
(pp. 3551–77)
Abstract
This paper concerns Saez and Stantcheva's (2016) generalized social marginal welfare weights, which aggregate losses and gains due to tax policies while incorporating nonutilitarian ethical considerations. The approach evaluates local tax changes without a global social objective. I show that local tax policy comparisons implicitly entail global comparisons. Moreover, whenever welfare weights do not have a utilitarian structure, these implied global comparisons are inconsistent. I argue that broader ethical values cannot in general be represented simply by modifying the weights placed on benefits to different people, and a more thoroughgoing modification of the utilitarian approach is required.Citation
Sher, Itai. 2024. "Generalized Social Marginal Welfare Weights Imply Inconsistent Comparisons of Tax Policies." American Economic Review, 114 (11): 3551–77. DOI: 10.1257/aer.20211025Additional Materials
JEL Classification
- D60 Welfare Economics: General
- D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D71 Social Choice; Clubs; Committees; Associations
- H21 Taxation and Subsidies: Efficiency; Optimal Taxation
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- I31 General Welfare; Well-Being