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Aronsson, Thomas
Publications (10 of 107) Show all publications
Aronsson, T., Johansson-Stenman, O. & Wendner, R. (2019). Charity as income redistribution: a model with optimal taxation, status, and social stigma.
Open this publication in new window or tab >>Charity as income redistribution: a model with optimal taxation, status, and social stigma
2019 (English)Report (Other academic)
Abstract [en]

In light of the increasing inequality in many countries, this paper analyzes redistributive charitable giving from the rich to the poor in a model of optimal nonlinear income taxation. Our framework integrates (i) public and private redistribution, (ii) the warm glow of giving and stigma of receiving charitable donations, and (iii) status concerns emanating from social comparisons with respect to charitable donations and private consumption. Whether charity should be taxed or supported largely depends on the relative strengths of the warm glow of giving and the stigma of receiving charity, respectively, and on the positional externalities caused by charitable donations. In addition, imposing stigma on the mimicker (which relaxes the self-selection constraint) strengthens the case for subsidizing charity. We also consider a case where the government is unable to target the charitable giving through a direct tax instrument, and we examine how the optimal marginal income tax structure should be adjusted in response to charitable giving. Numerical simulations demonstrate that the quantitative effects of the aforementioned mechanisms can be substantial.

Publisher
p. 50
Series
Umeå economic studies, ISSN 0348-1018 ; 961
Keywords
conspicuous consumption, conspicuous charitable giving, social status, optimal income taxation, warm glow, stigma
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-164198 (URN)
Funder
Swedish Research Council
Available from: 2019-10-16 Created: 2019-10-16 Last updated: 2019-10-21Bibliographically approved
Aronsson, T., Johansson-Stenman, O. & Wendner, R. (2019). Charity, status, and optimal taxation: welfarist and paternalist approaches.
Open this publication in new window or tab >>Charity, status, and optimal taxation: welfarist and paternalist approaches
2019 (English)Report (Other academic)
Abstract [en]

This paper deals with tax policy responses to charitable giving, defined in terms of voluntary contributions to a public good, to which the government also contributes through public revenue; the set of tax instruments contains general, nonlinear taxes on income and charitable giving. In addition to consumption, leisure and a public good, individuals obtain utility from the warm glow of giving and social status generated by their relative contributions to charity as well as their relative consumption compared with others. We analyze the conditions under which it is optimal to tax or subsidize charitable giving and derive corresponding optimal policy rules. Another aim of the paper is to compare the optimal tax policy and public good provision by a conventional welfarist government with those by two kinds of paternalist governments: The first kind does not respect the consumer preferences for status in terms of relative giving and relative consumption, while the second kind in addition does not respect preferences for warm glow of giving. The optimal policy rules for marginal taxation and public good provision are similar across governments, except for the stronger incentive to tax charitable giving at the margin under the more extensive kind of paternalism. Numerical simulations supplement the theoretical results.

Publisher
p. 67
Series
Umeå economic studies, ISSN 0348-1018 ; 959
Keywords
conspicuous consumption, conspicuous charitable giving, optimal taxation, warm glow
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-164196 (URN)
Funder
Marianne and Marcus Wallenberg Foundation
Available from: 2019-10-16 Created: 2019-10-16 Last updated: 2019-10-21Bibliographically approved
Aronsson, T., Johansson-Stenman, O. & Sjögren, T. (2019). Social Comparisons and Optimal Taxation in a Small Open Economy. Scandinavian Journal of Economics, 121(4), 1500-1532
Open this publication in new window or tab >>Social Comparisons and Optimal Taxation in a Small Open Economy
2019 (English)In: Scandinavian Journal of Economics, ISSN 0347-0520, E-ISSN 1467-9442, Vol. 121, no 4, p. 1500-1532Article in journal (Refereed) Published
Abstract [en]

In this paper, we analyze how international capital mobility affects the optimal labor and capital income tax policy in a small open economy when consumers care about relative consumption. The main results crucially depend on whether the government can tax returns on savings abroad. If the government can use flexible residence-based capital income taxes, then the optimal policy rules from a closed economy largely carry over to the case of a small open economy. If it cannot, then capital income taxes become completely ineffective. The labor income taxes must then indirectly also reflect the corrective purpose that the absent capital income tax would have had.

Place, publisher, year, edition, pages
John Wiley & Sons, 2019
Keywords
capital mobility, optimal taxation, positional goods, relative consumption, smallopen economy
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-145728 (URN)10.1111/sjoe.12308 (DOI)000483820800006 ()
Available from: 2018-03-15 Created: 2018-03-15 Last updated: 2019-11-22Bibliographically approved
Aronsson, T. & Schöb, R. (2018). Climate change and psychological adaptation: A behavioral environmental economics approach. Journal of Behavioral and Experimental Economics, 74, 79-84
Open this publication in new window or tab >>Climate change and psychological adaptation: A behavioral environmental economics approach
2018 (English)In: Journal of Behavioral and Experimental Economics, ISSN 2214-8043, E-ISSN 2214-8051, Vol. 74, p. 79-84Article in journal (Refereed) Published
Abstract [en]

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.

Place, publisher, year, edition, pages
Elsevier, 2018
Keywords
Behavioral environmental economics, Climate change, Intertemporal externalities, Adaptation, Taxation
National Category
Economics
Identifiers
urn:nbn:se:umu:diva-148716 (URN)10.1016/j.socec.2018.03.005 (DOI)000432773100009 ()2-s2.0-85044940129 (Scopus ID)
Funder
Swedish Research Council, 421-2010-1420
Available from: 2018-06-25 Created: 2018-06-25 Last updated: 2018-06-25Bibliographically approved
Aronsson, T., Backlund, K. & Löfgren, K.-G. (2018). Environmental policy, sustainability, and welfare: an economic analysis. Edward Elgar Publishing
Open this publication in new window or tab >>Environmental policy, sustainability, and welfare: an economic analysis
2018 (English)Book (Refereed)
Place, publisher, year, edition, pages
Edward Elgar Publishing, 2018. p. 189
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-145729 (URN)978-1-78195-510-9 (ISBN)978-1-78195-511-6 (ISBN)978-1-78195-512-3 (ISBN)
Available from: 2018-03-15 Created: 2018-03-15 Last updated: 2018-06-09Bibliographically approved
Aronsson, T. & Johansson-Stenman, O. (2018). Paternalism against Veblen: Optimal Taxation and Non-respected Preferences for Social Comparisons. American Economic Journal: Economic Policy, 10(1), 39-76
Open this publication in new window or tab >>Paternalism against Veblen: Optimal Taxation and Non-respected Preferences for Social Comparisons
2018 (English)In: American Economic Journal: Economic Policy, ISSN 1945-7731, E-ISSN 1945-774X, Vol. 10, no 1, p. 39-76Article in journal (Refereed) Published
Abstract [en]

This paper compares optimal nonlinear income tax policies of welfarist and paternalist governments, where the latter does not respect individual preferences regarding relative consumption. Consistent with previous findings, relative consumption concerns typically induce a welfarist government to increase the marginal tax rates to internalize positional externalities. Remarkably, the optimal marginal tax rules are often very similar in the paternalist case, where such externalities are not taken into account. We identify several cases where the marginal tax rules are indeed identical between the governments. Numerical simulations show that marginal and average tax levels and the overall redistribution are often also similar.

National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-132964 (URN)10.1257/pol.20150369 (DOI)000424292800002 ()
Funder
Swedish Research Council, 2016-02371
Available from: 2017-03-27 Created: 2017-03-27 Last updated: 2018-06-09Bibliographically approved
Aronsson, T. & Blomquist, S. (2018). Uncertain Length of Life, Retirement Age, and Optimal Pension Design.
Open this publication in new window or tab >>Uncertain Length of Life, Retirement Age, and Optimal Pension Design
2018 (English)Report (Other academic)
Series
Umeå economic studies, ISSN 0348-1018 ; 957
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-145736 (URN)
Available from: 2018-03-15 Created: 2018-03-15 Last updated: 2018-06-09
Aronsson, T. & Schöb, R. (2017). Consumption adaptation, anticipation-bias, and optimal income taxation. Journal of Public Economic Theory, 19(3), 713-731
Open this publication in new window or tab >>Consumption adaptation, anticipation-bias, and optimal income taxation
2017 (English)In: Journal of Public Economic Theory, ISSN 1097-3923, E-ISSN 1467-9779, Vol. 19, no 3, p. 713-731Article in journal (Refereed) Published
Abstract [en]

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.

Place, publisher, year, edition, pages
Hoboken: Wiley-Blackwell, 2017
Keywords
optimal paternalism, relative income, public goods, sin taxes, utility, happiness, economists, disability, provision, jealousy
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-124570 (URN)10.1111/jpet.12227 (DOI)000404443300008 ()
Funder
Riksbankens Jubileumsfond, RS10-1319:1
Available from: 2016-08-16 Created: 2016-08-16 Last updated: 2018-06-07Bibliographically approved
Aronsson, T. & Granlund, D. (2017). Federal subsidization of state expenditure to reduce political budget cycles. International Tax and Public Finance, 24(3), 536-545
Open this publication in new window or tab >>Federal subsidization of state expenditure to reduce political budget cycles
2017 (English)In: International Tax and Public Finance, ISSN 0927-5940, E-ISSN 1573-6970, Vol. 24, no 3, p. 536-545Article in journal (Refereed) Published
Abstract [en]

In this note, we analyze whether a federal transfer system can be designed to increase welfare when state governments create political budget cycles. The results show how the federal government can counteract the welfare costs of these cycles, without hindering politicians from signaling their type, by announcing a transfer scheme to subsidize expenditures that voters do not consider when voting.

Place, publisher, year, edition, pages
Dordrecht: Springer, 2017
Keywords
Political economy, Intergovernmental transfer, Budget cycle
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-120775 (URN)10.1007/s10797-016-9404-5 (DOI)000400197100008 ()
Funder
Riksbankens Jubileumsfond, RS10-1319:1
Available from: 2016-05-20 Created: 2016-05-20 Last updated: 2018-06-07Bibliographically approved
Aronsson, T. & Johansson-Stenman, O. (2017). Genuine saving and positional externalities. International Economic Review, 58(4), 1155-1190
Open this publication in new window or tab >>Genuine saving and positional externalities
2017 (English)In: International Economic Review, ISSN 0020-6598, E-ISSN 1468-2354, Vol. 58, no 4, p. 1155-1190Article in journal (Refereed) Published
Abstract [en]

Much evidence suggests that people are concerned with their relative consumption. Yet, positional externalities have so far been ignored in savings-based indicators of sustainable development. This article examines the implications of relative consumption concerns for measures of sustainable development by deriving analogues to genuine saving when people are concerned with their relative consumption. Unless the positional externalities have been internalized, an indicator of such externalities must be added to genuine saving to arrive at the proper measure of welfare change. We also show how relative consumption concerns affect the way public investment ought to be reflected in genuine saving.

Place, publisher, year, edition, pages
John Wiley & Sons, 2017
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-124567 (URN)10.1111/iere.12248 (DOI)000416331700004 ()
Funder
Swedish Research Council, 421-2010-1420
Available from: 2016-08-16 Created: 2016-08-16 Last updated: 2018-06-07Bibliographically approved
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