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Veblen's theory of the leisure class revisited: implications for optimal income taxation

Aronsson, Thomas, 1963- (author)
Umeå universitet,Nationalekonomi
Johansson-Stenman, Olof, 1966 (author)
Gothenburg University,Göteborgs universitet,Institutionen för nationalekonomi med statistik,Department of Economics,Department of Economics, School of Business, Economics and Law, University of Gothenburg, 40530, Göteborg, Sweden
 (creator_code:org_t)
2012-10-23
2013
English.
In: Social Choice and Welfare. - : Springer Science and Business Media LLC. - 0176-1714 .- 1432-217X. ; 41:3, s. 551-578
  • Journal article (peer-reviewed)
Abstract Subject headings
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  • Several previous studies have demonstrated the importance of relative consumption comparisons for public policy. Yet, almost all of them have ignored the role of leisure for status comparisons. Inspired by Veblen (The theory of the leisure class. Macmillan, New York, 1899), this paper assumes that people care about their relative consumption and that leisure has a displaying role in making relative consumption more visible, based on a two-type model of optimal income taxation. While increased importance of relative consumption typically implies higher marginal income tax rates, in line with previous research, the effect of leisure-induced consumption visibility is to make the income tax more regressive in terms of ability.

Subject headings

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv (hsv//swe)
SOCIAL SCIENCES  -- Economics and Business (hsv//eng)
SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)
SOCIAL SCIENCES  -- Economics and Business -- Economics (hsv//eng)

Keyword

PUBLIC GOOD PROVISION
RELATIVE INCOME
POSITIONAL EXTERNALITIES
CONSPICUOUS CONSUMPTION
SOCIAL NORMS
HAPPINESS
POLICY
GOODS
TAX
INEQUALITY
IGLITZ JE
1982
JOURNAL OF PUBLIC ECONOMICS
V17
P213
Economics

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