Address: Department of Economics University
of California Santa Barbara, CA 93106
Tel (805) 893-4791 Fax (805) 893-8830
Education: Ph.D., University of Lund, Sweden, 1975 (Economics) M.A., University of California, Los Angeles, 1972 (Economics) B.A., University of California, Los Angeles, 1971 (Economics)
Areas: Public Finance, Evolutionary Economics
Past Positions: University of Lund, 1973-84 and 1986-7; University of Western Ontario, Canada, 1976-78; President's Council of Economic Advisers, 1985-86.
(1) In "Calculation of a Population Externality," forthcoming in American Economic Journal: Economic Policy, Henning Bohn and I quantify the harm a birth imposes on everyone else (the "population externality") if emissions turn out to be a serious problem. Link to appendix.
(2) In "Revenue Extraction by Median Voters," Henning Bohn and I study how the desire to pay lower taxes implies political pressure to redistribute in favor of median-income households, which means that revenue is extracted from high-income households. We assume taxpayers elect representatives who set tax policy, policy is incentive-compatible, and "minimum-utility" constraints limit what can be taken from the poor. To model political competition, we assume individuals differ only in income-earning ability (productivity) and we consider elections between two exogenously given candidates, each of whom if elected would maximize the utility of individuals with known, specific productivity. We show that a candidate who would set tax policy to maximize the utility of median-productivity individuals is a Condorcet winner, meaning the candidate would beat any candidate with a different objective. In this way, revenue extraction by median-income voters is a Condorcet outcome. Resulting policy broadly resembles U.S. policy: taxes are progressive with high marginal rates at the lower and upper ends of the income distribution, and most revenue comes from high-income taxpayers.
Search and the Organization of Marketplaces. Malmö, Sweden 1975 (dissertation).
"Löntagarfonder -- påverkar de makten över företagen och aktiekapitalbildningen?" with I. Hansson, Ekonomisk debatt, 5, 1975, 310-17.
"Consumer Protection in a Market Where Sellers have Better Information than Buyers," in G. Skogh (ed.) Law and Economics, Studentlitteratur, Lund, 1978, 155-64.
"Liability, Insurance, and the Regulation of Traffic Accidents," with G. Skogh, in G. Skogh (ed.) Law and Economics, Studentlitteratur, Lund, 1978, 203-10.
"Search and the Spatial Organization of Trading," in S. Lippman and J.J. McCall (eds.), Studies in the Economics of Search, North Holland Publishing Co., 1979, 17-33.
"A Confusion in the Treatment of Bilateral Monopoly," Canadian Journal of Economics, 12, February 1979, 100-104.
"Marginalskatterna och den obeskattade sektorn," Ekonomisk debatt, No. 2, 1980, 129-33.
"The Effects of Traffic Safety Regulation in Sweden," with B. Lindgren, Journal of Political Economy, 88, April 1980, 412-27.
"Swedish Tax Rates, Labor Supply, and Tax Revenues," Journal of Political Economy, 89, October 1981, 1020-38.
"Consumer Protection in Markets with Informationally Weak Buyers," Bell Journal of Economics, 12, Autumn 1981, 562-73.
"A Contractarian Theory of Property Rights and Crime," with G. Skogh, Scandinavian Journal of Economics, 84, March 1982, 27-40.
"An Economic Analysis of Crime Rates, Punishment, and the Social Consequences of Crime," with G. Skogh, Public Choice, 38, No. 2, 1982, 171-79.
"Tax Limitations and Tax Levels," published as part of a panel discussion in National Tax Association--Tax Institute of America: Proceedings of the Seventy-fifth Annual Conference, 1983, 95-97.
"Taxation, Government Spending, and Labor Supply: A Diagrammatic Exposition," with I. Hansson, Economic Inquiry, 21, October 1983, 584-87.
"Pareto-Optimal Deductibles in Property-Liability Insurance: The Case of Homeowner Insurance in Sweden," Scandinavian Actuarial Journal, 1983, 227-38.
"The Swedish Tax System: What Can We Learn From It?" in W. Block and M. Walker (eds.) Taxation: An International Perspective, Fraser Institute, 1984.
"Welfare Costs per Dollar of Additional Tax Revenue in the U.S.," American Economic Review, 74, June 1984, 352-62.
"Measuring the Social Costs of Taxation," National Tax Association-Tax Institute of America: Proceedings of the Seventy-sixth Conference, 1984, 163-67.
"Voting Competitions with Interested Politicians: Platforms Don't Converge to the Preferences of the Median Voter," with I. Hansson, Public Choice, 44, 1984, 431-41.
"Short-run Politicians and Long-run Tax Revenue," with N. Raymon, Scandinavian Journal of Economics, 86, 1984, 314-25.
"Tax Revenue and the Marginal Cost of Public Funds in Sweden," with I. Hansson, Journal of Public Economics, 24, August 1985, 331-53.
Review of King and Fullerton (eds.), The Taxation of Income from Capital, with I. Hansson, in Journal of Political Economy, 93, August 1985, 826-31.
"Progressive Taxation as Social Insurance and as a Median-Voter Outcome: An Empirical Assessment," with I. Hansson, Scandinavian Journal of Economics, 87, 1985, 487-99.
Review of Holland (ed.), Measuring Profitability and Capital Costs, in Journal of Economic Literature, 23 June 1985, 634-36.
"Optimal Inflation and Labor Taxes," with M. Bordo, Quarterly Review of Economics and Business, 26, Summer 1986, 6-13.
"The Fisher Hypothesis and International Capital Markets," with I. Hansson, Journal of Political Economy, 94, December 1986, 1330-37.
"Issues in the Measurement and Interpretation of Effective Tax Rates," with D. Bradford, National Tax Journal, 39, September 1986, 307-16.
"The Welfare Costs of Deficit Finance," with I. Hansson, Economic Inquiry, 25, July 1987, 479-96.
"The Suboptimality of Local Taxation under Two-Tier Fiscal Federalism," with I. Hansson, European Journal of Political Economy, 3, No. 3, 1987, 407-11.
"The Public Finance of a Protective Tariff: The Case of an Oil Import Fee," with D. Bizer, American Economic Review, 77, December 1987, 1019-22.
Review of Economic Consequences of Tax Simplification, in Journal of Money, Credit, and Banking, 20, May 1988, 287-90.
"The Marginal Cost of Public Funds -- Methods and Prospects," with I. Hansson, in Aldo Chiancone and Ken Messere (eds.) Changes in Revenue Structures, Wayne State University Press, Detroit, 1989, 231-42.
"Why is Investment Subsidized," with I. Hansson, International Economic Review, 30, August 1989, 549-59.
"Social Security As Trade Among Living Generations," with I. Hansson, American Economic Review, 79, December 1989, 1182-95.
"Public Policy Evaluation When Taxes Matter: The Importance of Second Best," with I. Hansson, in H. Carlsson and B. Larsson (eds.) Problems of the Mixed Economy: Cooperation, Efficiency, and Stability, North-Holland, 1990, 149-56.
"On the Cost of Rivalry," with G. Skogh, in H. Carlsson and B. Larsson (eds.) Problems of the Mixed Economy: Cooperation, Efficiency, and Stability, North-Holland, 1990, 89-95.
"Varför är skatterna så höga i Sverige?" ("Why Are Taxes So High in Sweden?") with I. Hansson, in L. Jonung (ed.) Nya fält för marknadsekonomien, SNS Förlag, Stockholm, 1990, 44-53.
"Sweden: Tax Reform in a High-Tax Environment," with I. Hansson, in M. Boskin and C. McLure (eds.) World Tax Reform: Case Studies of Developed and Developing Economies, ICS Press, San Francisco, 1990, 127-148.
"Malthusian Selection of Preferences," with I. Hansson, American Economic Review, 80, June 1990, 529-44.
"Evolution of Preferences: Altruism and Socialization," with I. Hansson, Journal of Evolutionary Economics, 2, 1992, 301-312.
"Taxes and Aggregate Labor Supply: A Cross-Country General-Equilibrium Study," with I. Hansson, Scandinavian Journal of Economics, 95, 1993, 311-26.
"The Efficiency of a Lotttery," with B. Rodgers, Public Finance Quarterly, 23, 1995, 242-54.
"Econometric Estimation of Foresight: Tax Policy and Investment in the U.S.," with D. Steigerwald, Review of Economics and Statistics, 79, Feb. 1997, 32-40.
"Bertrand versus Cournot Revisited," with C-Z. Qin, Economic Theory, 10, 1997, 497-507.
"Are Cournot and Bertrand Equilibria Evolutionary Stable Strategies?" with C-Z. Qin, Journal of Evolutionary Economics, 7, Feb. 1997, 41-47.
"Economic Natural Selection in Bertrand and Cournot Settings," with B. Hehenkamp and C-Z. Qin, Journal of Evolutionary Economics, 9, 1999, 211-24.
"Peaking of fiscal sizes of government," with Å. Hansson, European Journal of Political Economy, 19, Nov 2003, 669-684.
"Calculation of a Population Externality," with H. Bohn, American Economic Journal: Economic Policy, forthcoming.