Saturday, June 20, 2009

Taxing Height Again

Professor Mankiw and Dr. Weinzierl continue their campaign.


Kevin Denny said...

Since there isn't the remotest chance that a tax on height will be introduced one has to ask why are economists - & good ones at that- talking about it? Perhaps it is essentially a rhetorical device to explore implications of optimal tax theory. Maybe its just good clean fun: economists like paradoxes and pushing the envelope generally. But could there be a cost to this (aside from the time spent on blogging)? The man/woman/dog on the street probably thinks economists are dismal scientists/lousy forecasters/merchants of doom etc etc. Do we really want to add "crackpot" to the list?

Liam Delaney said...

Kevin - it is, of course, a thought experiment to examine the basis of taxation. It is an interesting one.

Kevin Denny said...

Why height then? There are better known & more established predictors of earnings like people's sex for instance or sexual orientation if you want to be clever.
I am not sure what this thought experiment adds to the debate on implementing optimal tax. After all, who needs wacky thought experiments when you can discuss the real thing?

Liam Delaney said...

you are falling into their trap kevin. the point of this is that everytime this comes on the blog, somebody gives a suggestion which, on reflection, fails the criteria for optimal taxation in ways that height does not. For example, sexual orientation has obvious measurement problems that height does not. Worth thinking more about the taxing sex example.

Cathy Redmond said...

Another paper in relation to heights by Deaton and Arora.

This paper analyses the relationship between height and well-being. They use data on nearly half a million adults. Respondents are asked to place themselves on a step on a ladder numbered zero to ten, where ten is the "worst possible life for you" and ten is the "best possible life for you".

They find that moving from below average height to above average height has the same effect as (on placement on ladder) as an 18% increase in family income for women, and a 24% increase for men. (Or an additional inch of height has the same effect on reported life evaluation as a 3.8% increase in family income for women and 4.4% for men).