Taxation and the Contribution of Behavioral Economics

Authored by: Simon James

Handbook of Contemporary Behavioral Economics

Print publication date:  July  2006
Online publication date:  January  2015

Print ISBN: 9780765613028
eBook ISBN: 9781315703879
Adobe ISBN: 9781317469162


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Taxation has been the subject of a great deal of study in the tradition of neoclassical economics. By examining the rational self-interested response of individuals in different situations, mainstream economics has been able to provide a great deal of understanding of the effects of taxation in areas such as the supply of labor, saving, and enterprise. However, even in such clearly defined “economic” areas, behavioral economics can offer further insights and explanatory power beyond that provided by conventional economic theories. For example, even in modern times, labor market and household investment decisions might still be influenced by a range of social factors such as traditional gender roles (James 1992, 1995a, 1996).

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