Today on the New York Times “Economix” blog, University of Chicago professor Casey Mulligan proposes to answer the question “why people pay income taxes?” It turns out that they are more afraid of the Feds than they are irked that their money is being stolen by the government. More precisely, people are both afraid of the government and perceive the harm of taxes is not sufficient to warrant civil disobedience:
To the extent that much of the Treasury’s revenue arrives because taxpayers are honest, public policy might not want to take honesty for granted. For example, the Treasury may receive less revenue over time if taxpayers increasingly distrust government because they perceive their tax dollars are wasted.
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A Ph.D. dissertation being written by Mark Phillips, a University of Chicago student (and an I.R.S. intern) argues that a reasonable fear of penalty explains much of why taxpayers pay their income tax. He agrees that I.R.S. audits are rare, but that the audits are well targeted, so the agency would quickly detect many ways that taxpayers might consider underreporting.
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For now, it looks as though both honesty and incentives help bring revenue to the Treasury.
The underlying assumption is that government is a coercive authority that is tolerated as long as people think its authority is justified. This frames the debate on taxes in terms of a Hobbesian state read through Lockean individualism: the State’s authority is justified by how its expenditures amplify the individual. Transfer payments are immoral because they disempower some individuals at the expense of others. Military expenditures are justified because they incentivize a martial spirit that enhances the power and prestige of our nation, and consequently raises the status of citizens as individuals.
But what about incentives that are not predicated on the power of a coercive state? A deontological explanation would say that the affect of moral obligation to the State is sufficient to induce people to pay their taxes. Mulligan’s Neoclassical framework can’t recongnize the existence of moral obligation because the only valid (i.e. Economic) obligation is to maximize personal gain. The happy sideeffect of a gain in personal power is enhanced authority for the State. But From a deontological standpoint people pay taxes because it is the right thing to do, not because they have performed a cost-benefit analysis and determined that their utils — and loyalty to their country — are maximized at the current tax rate.
If Economics can’t theorize deontology, should it be making pronouncements on psychological questions like, “why do people pay taxes?”
It’s a new year for NSER and we have a new team coming in with many ambitious plans and a desire to not just match expectations but to surpass them and raise the benchmark. Let us start with an introduction of the new team:
We have two Chief Editors, Karthik Raghavan and Brandt Weathers, and three Associate Editors, Jacob Assa, Will Kenton and Noe Wiener.
Karthik studied Civil Engineering and Construction Management in India before joining the economics program at NSSR as a Masters student. His interests lie in understanding the complexities involved in developing sustainability solutions that are themselves sustainable. Having had no prior formal exposure to economics, he finds the philosophy of economics an absolutely fascinating area of study.
Brandt is a Masters student in economics at NSSR with an interest in economic history, political economy and anything that feels like a comparative advantage with heart. He schooled in Arizona but grew up in Texas and will be one of the two primary bloggers for NSER from this team.
Jacob is a Ph.D. student in economics at NSSR as well as a Statistician at the United Nations Department of Economic and Social Affairs. His interests include political economy, labor economics, economic development and the history of economic thought. He recently completed his M.A. in economics at NSSR with a mentored research paper on pension policies in the OECD.
Will is a first year Masters student in economics at NSSR. His areas of interest include the history of economics, the sociology of economics, and urban economics. Before coming to NSSR he earned a Ph D. in English from NYU where he studied Early Modern Politics and political history, the history of rhetoric, and aesthetics. He will be the other primary blogger for NSER from this team.
Noe is a Ph.D. student in economics at NSSR. His research interests include income distribution, labor and macroeconomics, classical political economy and social policy. Before coming to the New School, he studied social sciences in Geneva and Sydney.
Moving on to the good stuff, what is the NSER going to be doing this year? To skip to the punchline, we are going to be spending the whole year asking the question “What is Economics?” Our biggest goal this year will be to create a space composed primarily by and for students coming from a variety of academic disciplines; a space where they feel comfortable enough to share their own perspective on a field that can be quite intimidating. We believe that a dialogue across disciplines is critical for the evolution of economics as a field of inquiry and towards this end, we will be going beyond papers and will invite contributions in the form of blog posts, book reviews, opinion pieces, essays, investigative journalism, cartoons and even fictional work that highlights or talks about interesting issues centered on the question, “What is Economics?” Any contributions that we find interesting will go up on the website, and the most interesting and relevant ones, the ones that have the potential to spur off further discussions and debates, we will publish in the journal by the end of this year. We also hope to get the ball rolling on a long term idea to setup a discussion forum where students from around the world can conglomerate to dissect the worldly philosophy. In addition to the above, we are also trying to work out the details on a survey series as part of the next edition of the journal; keep your eye out for updates on this one.
The theme for the year is quite open to interpretation, and the more interesting your argument, the more we like you. For those who need help getting started, find below some questions that came up during our discussions. For those whose fingers are already twitching, we have really opened up the ways in which you can contribute, so take your pick and start writing (or drawing). Looking forward to your contributions,
Karthik
(For the NSER Editorial Team, 2011-12)
Did flawed economic theory contribute to the recent crisis? Are these problems due to an over-emphasis on math? Can these problems be solved by lowering the intensity of math or do we instead need more math? Perhaps it is neither more nor less, but the kind of math that needs to change? Do we need to be more normative about the economic world? Is economics a science or an art? Does economics show the way for the other social sciences to become more scientific and rigorous, or does economics need to borrow a page from the other social sciences? Is the problem in the theoretical approach in the way the math is constructed? Is it just the neo-classical way of thinking that is a problem? Do the other schools, be it Smithian, Ricardian, Malthusian, Neo-Ricardian, Neo-Malthusian, Keynesian, Post-Keynesian, Marxian, Marxist, Veblenian, Schumpetarian, Schumacherian, Gandhian, Alien offer better alternatives? What is a better alternative? Where does ecological economics fit into the grand scheme of things? Are sustainability measures that are being pushed by the economic world sustainable in the ecological world? Are the individual and the collective different? Does bargaining power matter? How does the equation change if all the power that the capitalist has is transferred to the workers? Is the problem with the people behaving irrationally, or is the problem with economics being too rational? Is rationality in the economic world and the real world the same thing? Is economics in general too complex? Is real life too complex for economics to handle? Does the study of human cognition and perception have anything to contribute to economics? Where do things such as culture fit in the economic world? Do we need institutional reforms or do we need more institutions to be created? Has economics as a science kept up with the latest in the natural sciences? Does economics emulate the natural sciences too much? Can economists learn anything useful from evolutionary biologists? Is there an East vs. West divide in the philosophy of economics? Is Westernization of the East happening too slowly, or do we need to look at the possibility of Easternizing the West? Are agricultural, industrial and knowledge economies the only ways in which an economy can be classified, or is there more to it? Does the common man struggling to put food on the table care about economics as a field of study? Where do moral norms and conventions fit in the economic world? What makes a certain profession ‘right’ and ‘wrong’ in the economic world and where and who draws the line? Is there a difference between economics and applied economics? What is the role of power in economics? WHAT IS ECONOMICS?
An epic undertaking by a (budding) sociologist to analyse and identify the triangle of nerd-geek-dorkery… Which is the more prevalent, are there sterotypes by subject, do some stand alone? The full analysis is here, and the method was to dig through a set of google searches for a given time-period, sort and count them for combinations with other words, and map them. I think it’s a great piece of picture and suggests that while the nerd and geek can interchange, and that some nerds are not geeks, the dork stands alone.
Graphics by http://www.futuraprime.net/ - sweet
While I doubt any single work could hope to resolve the epic nerd vs. geek vs. dork debate, I hope that this post has offered some modest evidence. First, I have shown that the dork truly stands alone. Except for Star Wars. Second, I have shown that most nerdy activities are also geeky and vice versa, and when one concept dominates there is no obvious pattern behind it – e.g. not all sciences are nerdy or geeky, and so on. Third, I have offered a small bit of evidence for the hypothesis that phonetics matter, that some phrases just sound better than others. -Dan Hirschman, a (budding) sociologist
An exciting day as the newest issue of the New School Economic Review is now available. The focus of the issue is on Crisis and Distribution, drawing on a conference hosted at the New School in Spring 2010, with conference contributions, talks and submitted papers. It’s a really exciting issue, which has been pushed through by this issue’s chief editor Miriam Rehm. We hope you enjoy it!
Download the whole issue here, or the paper you are interested in below:
It seems the profession has gotten itself onto the L.A. awards calendar as awards for ‘most influential economists‘ are handed out by the academy of insiders (50 invitees of the Economist) with a lifetime award for acting and a ‘break-out actor of the year’ award. Meanwhile a smaller trade body (the AEA‘s Chicago’ish contingent) has thrown in its lot for best American movie (or paper from the AEA).
So what’s the conclusion. Weeell… Someone with an economic or statistical background might balk at awarding the Academy’s lifetime award on the basis that the winner got seven votes, and second place came in with four… The best new actor won by receiving a massive – and I am sure representative – four votes in total. The best film, as within the standard Academy ‘Oscar’ Awards, can only be granted to a US production (from an AEA journal) and can only be voted for by those selected by the academy. But hey ho, don’t let me spoil the party; we all know the Oscars are political, but we all watch them – so perhaps one should treat these awards the same way: Good entertainment and a chance to hear of a film or actor you hadn’t yet seen. I mean, Hayek even snuck onto the AEA list…
Frantic work behind the scenes means that we can almost reveal the latest issue of the NSER, officially ready for Winter 2010 it has been held up by some little niggles, but thanks to the heroic efforts of this issue’s chief editor, Miriam Rehm, we are pretty much there.
And it’s a really exciting issue on crisis and distribution, drawing on the conference hosted at the New School in the spring of 2010, with both paper contributions and transcribed talks – with video’s here. More to come, but excited that we’re almost there !
A brilliant article to start any Monday morning is Peter Kennedy’s (2002 – ungated) paper on the ten commandments of econometrics, or rather how to make vices into virtues while working in the basement of the econometric house. My enthusiasm may be tinged with the applied econometricians early brush with data that refuses to talk back, but that only makes this paper more refreshing. The paper is packed full of enlightening, entertaining and useful quotes from across the applied and theoretical econometric literature, and condenses down to ten commandments.
1. Thou shalt use common sense and economic theory 2. Thou shalt ask the right questions 3. Thou shalt know the context 4. Thou shalt inspect the data 5. Thou shalt not worship complexity 6. Thou shalt look long and hard at thy results 7. Thou shalt beware the costs of data mining 8. Thou shalt be willing to compromise 9. Thou shalt not confuse significance with substance 10. Thou shalt confess in the presence of sensitivity
Ok, so admittedly having typed out the commandments it looks a lot less fun than it really is, but it really is a very good article. And Oxley’s (2002) three page follow-up Making and Breaking rules in applied econometrics, does its thing in style, reminding the reader that unlike Moses, Kennedy appears to have gotten everything down onto one tablet, so expect a sequel.
Work’s been atrocious so far in 2011, and so I find myself reading magazines in trains and other means of transport, and I fear a rant is coming:
Pretty but painful to read
I picked up my first copy of Wired Magazine (UK) which had a very cool front-page with UV colors, and I figured it would be a good read. Dear lord, they have a graphics designer who I feel a deep sympathy for, because over the first 76 pages there were 43 pages without any article content. That is 43 PAGES OF ONLY ADVERTS. Full page adverts. Anyone who knows anything about Edward Tufte’s idea that noise-to-signal ratios can be applied to visual presentations will tell you that more noise than signal is just bad design. Most other readers will just annoyed… Painfully so.
To the point...
The first 6 full pages were all adverts, and then the letters page even included a complaint from a frustrated reader who complained there were 7 full-page adverts at the start of the last issue. I guess they had listened – partly. The real tragedy is that the second half of the magazine, the last 76 pages, has some really interesting articles and only ten pages are advertisement. Frankly it doesn’t really matter, as I was too annoyed with the magazine by then, and retreated back to my issue of the Economist.
Which, in case you are wondering, was 76 pages long, with 7 pages of adverts and 3 pages of job adverts (in the first 2011 issue). Wired should learn from this and cut down on their number of adverts and perhaps position them at dividing points in the magazine. Sorry about the rant, but perhaps this will save someone a bit of frustration. Maybe.
Here is a wonderful concept by David McCandless: Make a visual impression of what all those billion’s of dollars discussed in the press, and put the pictures side by side to get a sense of perspective. Then animate it and hum the tetris soundtrack (you may have to do that yourself) and see what the $3bn OPEC climate change fund looks like, how big the national debt interest payments are and what the crisis really cost… Kudos.
The great and the good have answered the NSF to outline what the great challenges of our subject should be for the new year and next many years. This is what the people at the forefront are thinking, and it includes everything from development through aging, so well worth a look.
New School Economic Review
Welcome to the NSER, an economics journal which is free to access and download. This is also the home of our open blog which discusses topics in the news related to journal's focus on political economy, development, trade, philosophy of economics, and macroeconomics. Welcome.
Past journal issues: NSER 05: What is Economics? NSER 04: Crisis & Distribution NSER 03: Doing Great Research NSER 02: The Development Issue NSER 01: Heterodox Economics
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