De Gustibus non est Taxandum: Heterogeneity in Preferences and Optimal Redistribution

The prominent but unproven intuition that preference heterogeneity reduces re-distribution in a standard optimal tax model is shown to hold under the plausible condition that the distribution of preferences for consumption relative to leisure rises, in terms of first-order stochastic dominance, with income. Given mainstream functional form assumptions on utility and the distributions of ability and preferences, a simple statistic for the effect of preference heterogeneity on marginal tax rates is derived. Numerical simulations and suggestive empirical evidence demonstrate the link between this potentially measurable statistic and the quantitative implications of preference heterogeneity for policy.

Positive and Normative Judgments Implicit in U.S. Tax Policy, and the Costs of Unequal Growth and Recessions

Calculating the welfare implications of changes to economic policy or shocks requires economists to decide on a normative criterion. One approach is to elicit the relevant moral criteria from real-world policy choices, converting a normative decision into a positive inference, as in the recent surge of “inverse-optimum” research. We find that capitalizing on the potential of this approach is not as straightforward as we might hope. We perform the inverse-optimum inference on U.S. tax policy from 1979 through 2010 and argue that the results either undermine the normative relevance of the approach or challenge conventional assumptions upon which economists routinely rely when performing welfare evaluations

Positive and Normative Judgments Implicit in U.S. Tax Policy, and the Costs of Unequal Growth and Recessions

Calculating the welfare implications of changes to economic policy or shocks to the economy requires economists to decide on a normative criterion. One way to make that decision is to elicit the relevant moral criteria from real-world policy choices, converting a normative decision into a positive inference exercise as in, for example, the recent surge of so-called “inverse-optimum” research. We find that capitalizing on the potential of this approach is not as straightforward as we might hope. We perform the inverse- optimum inference on U.S. tax policy from 1979 through 2010 and identify two broad explanations for its evolution. These explanations, however, either undermine the reliability of the inference exercise's conclusions or challenge conventional assumptions upon which economists routinely rely when performing welfare evaluations. We emphasize the need for better evidence on society's positive and normative judgments in order to resolve the questions these findings raise

Stuck in the Middle: Impacts of Grade Configuration in Public Schools

We examine the implications of separating students of different grade levels across schools for the purposes of educational production. Specifically, we find that moving students from elementary to middle school in 6th or 7th grade causes significant drops in academic achievement. These effects are large (about 0.15 standard deviations), present for both math and English, and persist through grade 8, the last year for which we have achievement data. The effects are similar for boys and girls, but stronger for student s with low levels of initial achievement. We instrument for middle school attendance using the grade range of the school students attended in grade 3, and employ specifications that control for student fixed effects. This leaves only one potential source of bias—correlation between grade range of a student’s grade 3 school and unobservable characteristics that cause decreases in achievement precisely when students are due to switch schools—which we view as highly unlikely. We find little evidence that placing public school students into middle schools during adolescence is cost-effective

Essays in Optimal Taxation

Policy often differs from the recommendations of theoretical optimal tax models in substantial and enduring ways. Such differences are sometimes surely because policy is suboptimal; however they may also be driven by alternative objectives which shape policy in practice, but which do not appear in the benchmark theoretical model. This dissertation considers three cases of such alternative objectives. The first chapter supposes that work subsidies like the Earned Income Tax Credit may be justified by corrective considerations, rather than the usual redistributive rationale for income taxation, if people are present biased and some benefits from work are delayed. The second chapter explores the role of income taxes in directing talented individuals into professions which are beneficial for the rest of society, such as teaching or medical research, and away from professions with negative externalities. The third paper considers the common concern that "sin taxes" on harmful goods—such as cigarettes or soda—are regressive, by incorporating redistributive concerns into a model of optimal corrective commodity taxation.Business Economic

De Gustibus non est Taxandum: Heterogeneity in Preferences and Optimal Redistribution

The prominent but unproven intuition that preference heterogeneity reduces redistribution in a standard optimal tax model is shown to hold under the plausible condition that the distribution of preferences for consumption relative to leisure rises, in terms of first-order stochastic dominance, with income. Given familiar functional form assumptions on utility and the distributions of ability and preferences, a simple statistic for the effect of preference heterogeneity on marginal tax rates is derived. Numerical simulations and suggestive empirical evidence demonstrate the link between this potentially measurable statistic and the quantitative implications of preference heterogeneity for policy

Village Water Ozonation System

The Village Water Ozonation System (VWOS) team’s core mission statement is to provide economically sustainable and culturally sensitive drinking water solutions for communities, to empower communities with the ability to properly maintain their drinking water supply, and to transform people’s lives by decreasing the occurrences of waterborne diseases. Currently, the VWOS team is partnering with Friends in Action to design and implement two drinking water treatment systems for the community living on Rama Cay, an island in the Bluefields Lagoon on the eastern coastline of Nicaragua. The wells on the island are contaminated with E. coli and other bacteria and contain high levels of salt that cause the water to be unhealthy, distasteful, and corrosive to metal equipment in the system. The team hopes to design a system that will disinfect the water, remove salinity from the well water with a safe and efficient disposal of all byproducts, and decrease corrosion agents. VWOS is partnering with Forward Edge International for the third time (Nicaragua 2009 and Mexico 2016) to design water treatment systems for communities in Oaxaca, Mexico and Kijabe, Kenya. The system for Oaxaca is ready for implementation and awaits availability to travel. The system for Kijabe is in the initial stage of communicating with the client on specifics for the design.https://mosaic.messiah.edu/engr2021/1018/thumbnail.jp

Village Water Ozonation System

The Village Water Ozonation System (VWOS) team’s core mission is to provide economically sustainable and culturally sensitive drinking water solutions for communities, to empower them with the ability to properly maintain their drinking water supply, and to transform people’s lives by decreasing the occurrences of waterborne diseases. Currently, the VWOS team is partnering with Friends in Action to implement two drinking water treatment systems this summer for the community living on Rama Cay, an island in Nicaragua. The wells on the island have a high salt content and are contaminated with bacteria which makes the water unsafe to drink; therefore, these two systems consist of a Reverse Osmosis unit, a UV light and other filters to ensure clean water. VWOS is also partnering with Forward Edge International to serve Mama Beth\u27s Children\u27s Home in Kijabe, Kenya. Mama Beth\u27s serves approximately 250 children every day but their water source is heavily contaminated with bacteria. VWOS is designing a chlorination system that will provide safe water for the students with plans to implement it in the summer of 2023. Funding for this work provided by The Collaboratory for Strategic Partnerships and Applied Research.https://mosaic.messiah.edu/engr2022/1021/thumbnail.jp