Friday, November 23, 2007

Does your neighbor's BMW make you feel bad?

Some economists, such as Cornell's Robert Frank, have pushed the argument that higher tax rates are good because they discourage people from working too hard. This argument makes sense if a person's hard work and resulting high consumption conveys a negative externality on his neighbors.

David Henderson dissects the argument.

Meanwhile, neuroeconomists offer some support.

Here is a previous post on the topic.