Veblen’s Theory of the Leisure Class Revisited: Implications for Optimal Income Taxation
2013 (English)In: Social Choice and Welfare, ISSN 0176-1714, E-ISSN 1432-217x, Vol. 41, no 3, 551-578 p.Article in journal (Refereed) Published
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.
Place, publisher, year, edition, pages
Springer, 2013. Vol. 41, no 3, 551-578 p.
Research subject Economics
IdentifiersURN: urn:nbn:se:umu:diva-80663DOI: 10.1007/s00355-012-0701-3ISI: 000323254900005OAI: oai:DiVA.org:umu-80663DiVA: diva2:650705
FunderSwedish Research Council, 421-2010-1420Riksbankens Jubileumsfond