ExternalitiesLecture3

ExternalitiesLecture3 - 1 Externalities 3: Outline...

Info iconThis preview shows pages 1–15. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 Externalities 3: Outline Distributional Consequences of Gasoline Taxes (Poterba) Per-Mile Insurance Premiums (Edlin) Economics of Climate Change The role of emissions trading Alternative Mechanisms to Control Global Warming (Nordhaus) Quantity regulation v. carbon taxes 2 Recall: Gasoline taxes (at substantially higher rates) enjoy widespread support among economists as an efficient response to environmental and other externalities But, they are politically unpopular . . . One reason is that these taxes are allegedly regressive i.e. constitute a larger fraction of income for households with lower incomes 3 Poterba Why might expenditure be a better measure of lifetime well-being than current income? Life-cycle model of consumption and savings 4 Life-Cycle Model $ Time School Working Life Retirement Death 5 Life-Cycle Model: Income $ Time School Working Life Retirement Death 6 Life-Cycle Model: Consumption $ Time School Working Life Retirement Death 7 Life-Cycle Model: Consumption $ Time School Working Life Retirement Death Saving Dissaving Dissaving 8 Poterba Why might expenditure be a better measure of lifetime well-being than current income? Life-cycle model of consumption and savings Consumption is based on lifetime income, while income can fluctuate over time 9 Poterba Compares the distribution of gasoline tax burdens across households when they are ranked by: Income Expenditure Finds that this makes a substantial difference to whether the gasoline tax is regressive or not 10 Poterba 11 Poterba 12 Poterba 13 Example Imagine 2 individuals (A and B) Each lives for 2 periods Each earns lifetime income = 100 A earns $50 in period 1 and $50 in period 2 B earns $10 in period 1 and $90 in period 2 Assume no discounting Gasoline expenditure = $5 for each individual in each period ($10 in total) 14 (Gasoline Expenditure)/Income Period 1 2 Income High 10% 5.56% Low 50% 10% 15...
View Full Document

This note was uploaded on 04/08/2008 for the course ECON 253 taught by Professor Damika during the Spring '08 term at UConn.

Page1 / 37

ExternalitiesLecture3 - 1 Externalities 3: Outline...

This preview shows document pages 1 - 15. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online