What Does Happiness Research Tell Us About Taxation?

David A. Weisbach

in Law and Happiness

Published by University of Chicago Press

Published in print April 2010 | ISBN: 9780226676005
Published online February 2013 | e-ISBN: 9780226676029 | DOI:
What Does Happiness Research Tell Us About Taxation?

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This chapter analyses the consequences of happiness research for taxation. It focuses on the finding that happiness depends on status as well as income, examining how adding status concerns to standard optimal tax models changes the results. It then compares the empirical findings of the happiness literature to see whether they provide the type of data needed to parameterize the models, arguing that the models need different types of data than most happiness studies emphasize. The chapter also looks at Robert Frank's arguments for a progressive consumption tax based on the findings of the happiness research. It finds that these claims are not supported by the current models or empirical data. Finally, the chapter considers a number of other potential implications of happiness research for taxation, including marriage penalties or bonuses, special tax rates for the disabled, and age-dependent taxation.

Keywords: taxation; happiness; tax models; progressive consumption tax; empirical data; tax rates; marriage penalties; age-dependent taxation; status; income

Chapter.  13529 words. 

Subjects: Economics

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