Monday, January 7, 2013

Something Economists Can Agree On

It turns out economists can agree on something: why they disagree. Chicago Booth conducts an "Economic Experts Panel" that asks top economists from top departments their opinions on economic policy questions. Along with their answers, the economists say how confident they are of their answers. Weighted by confidence, 98% of economists either agreed or strongly agreed with the following statement:
Question C: Although they do not always agree about the precise likely effects of different tax policies, another reason why economists often give disparate advice on tax policy is because they hold differing views about choices between raising average prosperity and redistributing income.
None of the economists disagreed with the statement, and just a handful did not answer or had no opinion. Richard Thaler agreed, and wrote in the comment, "duh."

This just serves as a reminder, in the ongoing tax debates, of what we are actually debating. Not "taxes are good" versus "taxes are evil," but the relative benefits of raising average prosperity versus redistributing income. Raising average prosperity and redistributing income are not necessarily opposed, but different policies do a different balance of the two.

3 comments:

Unknown said...

Why do redistributionists never claim that Americans should be sending a large portion of our tax collections to Africa for an even greater increase in overall societal welfare?

Tom said...

Isn't this obvious?

The utility that we get from raising the living standard of our fellow countrymen is a lot higher than the utility gained from raising the living standard of someone living outside my country.

The closer people live to me and the more they operate in my sphere of interaction, the more I gain from increases to their standard of living.

Isn't this obvious?

Please do not confuse a desire for redistribution with general selflessness. It's confusing enough when we redistributionists do so.

moroni said...

Is AVERAGE prosperity really on anyone's radar? The lot of the poorest groups can fall even as AVERAGE prosperity rises (duh). The real debate is between tax policies that help increase the prosperity of all groups including the poor, and tax policies which merely aspire to help the poor at the expense of the not so poor but in reality leave everyone worse off.