| 1. |
- Aronsson, Thomas, 1963-, et al.
(author)
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Adaptation, Anticipation-Bias and Optimal Income Taxation
- 2012
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Reports (other academic/artistic)abstract
- Adaptation is omnipresent but people systematically fail to correctly anticipate the degree to which they adapt. This leads individuals to make inefficient intertemporal decisions. This paper concerns optimal income taxation to correct for such anticipation-biases in a framework where consumers adapt to earlier consumption levels through a habit-formation process. The analysis is based on a general equilibrium OLG model with endogenous labor supply and savings where each consumer lives for three periods. Our results show how a paternalistic government may correct for the effects of anticipation-bias through a combination of time-variant marginal labor income taxes and savings subsidies. Furthermore, the optimal policy mix remains the same, irrespective of whether consumers commit to their original life-time plan for work hours and savings decided upon in the first period of life or re-optimize later on when realizing the failure to adapt.
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| 2. |
- Aronsson, Thomas, 1963-, et al.
(author)
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Adaptation, taxation and public goods
- 2014
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Reports (other academic/artistic)abstract
- This paper shows how the first-best and second-best rules for optimal public good provision depend on the adaptation to private and public consumption. Adaptation in private consumption typically leads to over-provision relative to the Samuelson condition, while adaptation in public consumption works the other way around. The two sources of adaptation only cancel out in the extreme case of full adaptation.
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| 3. |
- Aronsson, Thomas, 1963-, et al.
(author)
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Climate change and psychological adaptation : a behavioral environmental economics approach
- 2014
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Reports (other academic/artistic)abstract
- Economic models of climate policy (or policies to combat other environmental problems) typically neglect psychological adaptation to changing life circumstances. People may adapt or become more sensitive, to different degrees, to a deteriorated environment. The present paper addresses these issues in a simple model of tax policy to combat climate change and elaborates on the consequences for optimal climate policies, and argues from a normative point of view that psychological adaptation needs to be taken into account by a pure welfarist government, which aims at internalizing an intertemporal externality.
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| 4. |
- Aronsson, Thomas, 1963-, et al.
(author)
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Climate change and psychological adaptation : A behavioral environmental economics approach
- 2018
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In: Journal of Behavioral and Experimental Economics. - : Elsevier. - 2214-8043 .- 2214-8051. ; 74, s. 79-84
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Journal article (peer-reviewed)abstract
- Economic models of climate policy (or policies to combat other environmental problems) typically neglect psychological adaptation to changing life circumstances. People may adapt, to different degrees, to a deteriorated environment. The present paper addresses these issues in a model of optimal tax policy to combat climate change and discusses the consequences for optimal climate policies. Furthermore, from a normative-methodological point of view, we argue that psychological adaptation needs to be taken into account even by a pure welfarist policy maker, who aims at internalizing an intertemporal externality.
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| 5. |
- Aronsson, Thomas, 1963-, et al.
(author)
-
Consumption adaptation, anticipation-bias, and optimal income taxation
- 2017
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In: Journal of Public Economic Theory. - Hoboken : Wiley-Blackwell. - 1097-3923 .- 1467-9779. ; 19:3, s. 713-731
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Journal article (peer-reviewed)abstract
- Adaptation is omnipresent but people systematically fail to correctly anticipate the degree to which they adapt, leading them to make irrational intertemporal decisions. This paper concerns optimal income taxation to correct for such anticipation-biases in a framework where consumers adapt to earlier consumption levels. The analysis is based on a general equilibrium OLG model with endogenous labor supply and savings where each consumer lives for three periods. The results show how a paternalistic government may correct for the effects of anticipation-bias through a combination of time-variant-marginal labor income taxes and savings subsidies/taxes. The optimal policy mix remains the same, irrespective of whether consumers commit to their original life time plan for work hours and consumption or reoptimize later on when realizing that they have already adapted more than expected.
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| 6. |
- Aronsson, Thomas, 1963-, et al.
(author)
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Globalization, Time-Preferences, and Populist Voting
- 2020
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Reports (other academic/artistic)abstract
- Societies see growing support for populist politicians who advocate an end to globalization. Our behavioral economics model links impatience to voters’ appraisals of an income shock due to globalization that is associated with short-run costs and delayed gains. The model shows that impatient individuals may reject further globalization if they are subject to borrowing constraints. Using German data, we confirm that impatient voters choose right-wing antiglobalist parties. Similarly, we show for the United Kingdom that a preference for immediate gratification increases the support for right-wing anti-globalist parties as well as for Brexit. A policy implication of our study is that governments may use up-front redistribution to gain voters’ support for further globalization.
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| 7. |
- Aronsson, Thomas, 1963-, et al.
(author)
-
Habit Formation and the Pareto-Efficient Provision of Public Goods
- 2017
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Reports (other academic/artistic)abstract
- This paper examines the implications of habit formation in private and public consumption for the Pareto-efficient provision of public goods, based on a two-period model with nonlinear taxation. If the public good supply is time-invariant, the presence of habit formation generally alters the standard rules for public good provision. In contrast, if the public good is a flow-variable such that the government directly decides on the level of the public good in each period, habit formation leads to a modification of the first best Samuelson condition only if the degrees of habituation differ for private and public consumption. Since habit formation affects the incentives to relax the self-selection constraint through public good provision, however, habituation alters the second-best analogue to the Samuelson condition also when the degrees of habituation in private and public consumption coincide.
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| 8. |
- Aronsson, Thomas, 1963-, et al.
(author)
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Habit formation and the pareto-efficient provision of public goods
- 2022
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In: Social Choice and Welfare. - : Springer-Verlag New York. - 0176-1714 .- 1432-217X. ; 59, s. 669-681
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Journal article (peer-reviewed)abstract
- This paper examines the implications of habit formation in private and public goods consumption for the Pareto-efficient provision of public goods, based on a two-period model with nonlinear taxation. Under weak leisure separability, and if the public good is a flow-variable such that the government directly decides on the level of the public good in each period, habit formation leads to a modification of the policy rule for public good provision if, and only if, the degrees of habituation differ for private and public good consumption. By contrast, if the public good supply is time-invariant, the presence of habit formation generally alters the policy rule for public good provision.
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