Benjamin Edelman, Michael Ostrovsky, Michael Schwarz, Thank Drew Fudenberg, Louis Kaplow, Robin Lee, ...
We investigate the “generalized second-price ” (GSP) auction, a new mechanism used by search engines to sell online advertising. Although GSP looks similar to the Vickrey-Clarke-Groves (VCG)...
Legal change, whether through legislation, regulation, or court decision, is a common phenomenon, and virtually all reform creates both gains and losses for those who under the prior regime took...
Taxing Leisure Complements (2008)
Ever since Corlett and Hague (1953), it has been understood that it tends to be optimal on second-best grounds to (relatively) tax complements to leisure and subsidize substitutes because doing so...
Optimal Policy with Heterogeneous Preferences (2008)
Optimal policy rules--including those regarding income taxation, commodity taxation, public goods, and externalities--are typically derived in models with homogeneous preferences. This article...
Optimal Policy with Heterogeneous Preferences (2008)
Optimal policy rules--including those regarding income taxation, commodity taxation, public goods, and externalities--are typically derived in models with homogeneous preferences. This article...
Optimal Policy with Heterogeneous Preferences (2008)
Optimal policy rules--including those regarding income taxation, commodity taxation, public goods, and externalities--are typically derived in models with homogeneous preferences. This article...
Optimal Policy with Heterogeneous Preferences (2008)
Optimal policy rules--including those regarding income taxation, commodity taxation, public goods, and externalities--are typically derived in models with homogeneous preferences. This article...
Optimal Policy with Heterogeneous Preferences (2008)
Optimal policy rules--including those regarding income taxation, commodity taxation, public goods, and externalities--are typically derived in models with homogeneous preferences. This article...
Optimal Policy with Heterogeneous Preferences (2008)
Optimal policy rules--including those regarding income taxation, commodity taxation, public goods, and externalities--are typically derived in models with homogeneous preferences. This article...
A Note on Antitrust Issues in the Licensing of Intellectual Property (2008)
Intellectual property licensing is becoming an increasingly important economic activity, and licensing practices pose ever more complex antitrust issues. This note discusses Richard Gilbert and Carl...
The value of a statistical life and the coefficient of relative risk aversion (2008)
Steven Shavell, Andrei Shleifer, The John, Louis Kaplow, Louis Kaplow, ...
expressed herein are those of the authors and not necessarily those of the National Bureau of Economic
2.1. Definition of market power 1079 2.2. Single-firm pricing model accounting for rivals 1080
Optimal taxation concerns how various forms of taxation should be designed to maximize social welfare. The task requires an integrated consideration of the revenue-raising and distributive objectives...
Optimal taxation concerns how various forms of taxation should be designed to maximize social welfare. The task requires an integrated consideration of the revenue-raising and distributive objectives...
The Practice of Justice 1 (2007)
Simeon Djankov, Rafael La Porta, Florencio Lopez-de-silanes, Andrei Shleifer, Louis Kaplow, Bert Kritzer, ...
In cooperation with Lex Mundi member law firms in 109 countries, we measure and describe the exact procedures used by litigants and courts to evict a tenant for non-payment of rent and to collect a...
This paper has been prepared for a forthcoming volume of the Handbook of Public Economics, (2007)
Alan J. Auerbach, James R. Hines, Kenneth Judd, Louis Kaplow, Gareth Myles, Michel Strawczynski, ...
helpful comments on a previous draft. Taxation and Economic Efficiency This paper analyzes the distortions created by taxation and the features of tax systems that minimize such distortions (subject...
Primary Goods, Capabilities,...or Well-Being? (2007)
Theories of distributive justice and of the aggregate social good typically require a method of assessing each individual's situation. Among the common measures are primary goods, capabilities, and...
Primary Goods, Capabilities,...or Well-Being? (2007)
Theories of distributive justice and of the aggregate social good typically require a method of assessing each individual's situation. Among the common measures are primary goods, capabilities, and...
This is a survey of the economic principles that underlie antitrust law and how those principles relate to competition policy. We address four core subject areas: market power, collusion, mergers...
This is a survey of the economic principles that underlie antitrust law and how those principles relate to competition policy. We address four core subject areas: market power, collusion, mergers...
This is a survey of the economic principles that underlie antitrust law and how those principles relate to competition policy. We address four core subject areas: market power, collusion, mergers...
Choosing Expensive Tastes (2006)
Canadian Journal of Philosophy - Volume 36, Number 3, September 2006
Myopia and the Effects of Social Security and Capital Taxation on Labor Supply (2006)
Myopia is increasingly believed to be a significant determinant of behavior and also plays a central role in justifications for social security and policies toward the taxation of capital. It is...
Myopia and the Effects of Social Security and Capital Taxation on Labor Supply (2006)
Myopia is increasingly believed to be a significant determinant of behavior and also plays a central role in justifications for social security and policies toward the taxation of capital. It is...
Optimal Control of Externalities in the Presence of Income Taxation (2006)
A substantial literature examines second-best environmental policy, focusing particularly on how the Pigouvian directive that marginal taxes should equal marginal external harms needs to be modified...
Optimal Income Transfers (2006)
A substantial literature addresses the design of transfer programs and policies, including the negative income tax, other means-tested transfers, the earned income tax credit, categorical assistance,...
Discounting Dollars, Discounting Lives: Intergenerational Distributive Justice and Efficiency (2006)
The view that intergenerational distributive justice and efficiency should be treated separately is familiar, yet controversial. This article elaborates the often-implicit justifications for separate...
Capital Levies and Transition to a Consumption Tax (2006)
The merits of capital levies depend on the likelihood of repetition, the extent of anticipation, and its effects on distribution. The relevance of these features, which in varying degrees is...
Optimal Control of Externalities in the Presence of Income Taxation (2006)
A substantial literature examines second-best environmental policy, focusing particularly on how the Pigouvian directive that marginal taxes should equal marginal external harms needs to be modified...
Optimal Income Transfers (2006)
A substantial literature addresses the design of transfer programs and policies, including the negative income tax, other means-tested transfers, the earned income tax credit, categorical assistance,...
Discounting Dollars, Discounting Lives: Intergenerational Distributive Justice and Efficiency (2006)
The view that intergenerational distributive justice and efficiency should be treated separately is familiar, yet controversial. This article elaborates the often-implicit justifications for separate...
Capital Levies and Transition to a Consumption Tax (2006)
The merits of capital levies depend on the likelihood of repetition, the extent of anticipation, and its effects on distribution. The relevance of these features, which in varying degrees is...
This Handbook entry presents a conceptual, normative overview of the subject of taxation. It emphasizes the relationships among the main functions of taxation - notably, raising revenue,...
This Handbook entry presents a conceptual, normative overview of the subject of taxation. It emphasizes the relationships among the main functions of taxation - notably, raising revenue,...
Choosing Expensive Tastes (2005)
Expensive tastes play an important role in contemporary theories of distributive justice. In particular, some suggest that individuals are not entitled to compensation for low well-being that is...
Choosing Expensive Tastes (2005)
Expensive tastes play an important role in contemporary theories of distributive justice. In particular, some suggest that individuals are not entitled to compensation for low well-being that is...
Income Taxation and Optimal Government Policy (2005)
Various economic literatures address the question whether first-best prescriptions for government policy require modification because redistributive income taxation distorts labor supply and cannot...
Pareto Principle and Competing Principles (2005)
The Pareto principle, the seemingly incontrovertible dictum that if all individuals prefer some regime to another then so should society, may conflict with competing principles. Arrow's impossibility...
Income Taxation and Optimal Government Policy (2005)
Various economic literatures address the question whether first-best prescriptions for government policy require modification because redistributive income taxation distorts labor supply and cannot...
Pareto Principle and Competing Principles (2005)
The Pareto principle, the seemingly incontrovertible dictum that if all individuals prefer some regime to another then so should society, may conflict with competing principles. Arrow's impossibility...
Benjamin Edelman, Michael Ostrovsky, Michael Schwarz, Thank Drew Fudenberg, Louis Kaplow, Robin Lee, ...
We investigate the “generalized second-price ” (GSP) auction, a new mechanism used by search engines to sell online advertising. Although GSP looks similar to the Vickrey-Clarke-Groves (VCG)...
On the (Ir)Relevance of Distribution and Labor Supply Distortion to Government Policy (2004)
Should the assessment of government policies, such as the provision of public goods and the control of externalities, deviate from first-best principles to account for distributive effects and for...
On the (Ir)Relevance of Distribution and Labor Supply Distortion to Government Policy (2004)
Should the assessment of government policies, such as the provision of public goods and the control of externalities, deviate from first-best principles to account for distributive effects and for...
On the Desirability of Commodity Taxation Even When Income Taxation is Not Optimal (2004)
An important result due to Atkinson and Stiglitz (1976) is that differential commodity taxation is not optimal in the presence of an optimal nonlinear income tax (given weakseparability of utility...
On the Desirability of Commodity Taxation Even When Income Taxation is Not Optimal (2004)
An important result due to Atkinson and Stiglitz (1976) is that differential commodity taxation is not optimal in the presence of an optimal nonlinear income tax (given weakseparability of utility...
Notes on Welfarist Versus Deontological Principles (2004)
Kaplow, Louis, Shavell, Steven
Our thesis in Fairness versus Welfare is that social policies should be assessed entirely on the basis of how they affect individuals' well-being. This claim implies that no independent weight should...
Notes on Welfarist Versus Deontological Principles (2004)
Kaplow, Louis, Shavell, Steven
Our thesis in Fairness versus Welfare is that social policies should be assessed entirely on the basis of how they affect individuals' well-being. This claim implies that no independent weight should...
Any Non-Welfarist Method of Policy Assessment Violates the Pareto Principle: Reply (2004)
Kaplow, Louis, Shavell, Steven
In our 2001 article in the Journal of Political Economy, we show that any non-welfarist method of policy assessment violates the Pareto principle. In their Comment, Fleurbaey, Tungodden, and Chang...
Any Non-Welfarist Method of Policy Assessment Violates the Pareto Principle: Reply (2004)
Kaplow, Louis, Shavell, Steven
In our 2001 article in the Journal of Political Economy, we show that any non-welfarist method of policy assessment violates the Pareto principle. In their Comment, Fleurbaey, Tungodden, and Chang...
Concavity of Utility, Concavity of Welfare, and Redistribution of Income (2003)
The marginal social value of income redistribution is understood to depend on both the concavity of individuals' utility functions and the concavity of the social welfare function. In the pertinent...
Concavity of Utility, Concavity of Welfare, and Redistribution of Income (2003)
The marginal social value of income redistribution is understood to depend on both the concavity of individuals' utility functions and the concavity of the social welfare function. In the pertinent...
The Value of a Statistical Life and the Coefficient of Relative Risk Aversion (2003)
Individuals' risk preferences are estimated and employed in a variety of settings, notably including choices in financial, labor, and product markets. Recent work, especially in financial economics,...
The Value of a Statistical Life and the Coefficient of Relative Risk Aversion (2003)
Individuals' risk preferences are estimated and employed in a variety of settings, notably including choices in financial, labor, and product markets. Recent work, especially in financial economics,...
Taxation and Redistribution: Some Clarifications (2003)
This essay revisits certain basic features of tax systems as they relate to redistribution. It focuses on how the actual differences between proportional and graduated taxes with regard to...
Public Goods and the Distribution of Income (2003)
This article addresses conceptual issues concerning the distributive incidence of public goods. Solutions depend on the specific purposes for asking the question of distributive incidence - notably,...
Taxation and Redistribution: Some Clarifications (2003)
This essay revisits certain basic features of tax systems as they relate to redistribution. It focuses on how the actual differences between proportional and graduated taxes with regard to...
Public Goods and the Distribution of Income (2003)
This article addresses conceptual issues concerning the distributive incidence of public goods. Solutions depend on the specific purposes for asking the question of distributive incidence - notably,...
Fairness versus Welfare: Notes on the Pareto Principle, Preferences, and Distributive Justice (2003)
Kaplow, Louis, Shavell, Steven
In Fairness versus Welfare, we advance the thesis that social policies should be assessed based entirely on their effects on individuals' well-being. This thesis implies that no independent weight...
Transition Policy: A Conceptual Framework (2003)
Legal change, whether through legislation, regulation, or court decision, is a common phenomenon, and virtually all reform creates both gains and losses for those who under the prior regime took...
Fairness versus Welfare: Notes on the Pareto Principle, Preferences, and Distributive Justice (2003)
Kaplow, Louis, Shavell, Steven
In Fairness versus Welfare, we advance the thesis that social policies should be assessed based entirely on their effects on individuals' well-being. This thesis implies that no independent weight...
Transition Policy: A Conceptual Framework (2003)
Legal change, whether through legislation, regulation, or court decision, is a common phenomenon, and virtually all reform creates both gains and losses for those who under the prior regime took...
Louis Kaplow, Steven Shavell, Louis Kaplow, Steven Shavell, Jel No. D, Louis Kaplow, ...
Business at Harvard Law School for financial support. We have benefited from exchanges with Richard Craswell concerning his Comment and from research assistance of Zachary Price. Page and note...
Why Measure Inequality? (2002)
A large body of literature is devoted to the measurement of income inequality, yet little attention is given to the question, Why measure inequality? However, the reasons for measurement bear...
Why Measure Inequality? (2002)
A large body of literature is devoted to the measurement of income inequality, yet little attention is given to the question, Why measure inequality? However, the reasons for measurement bear...
Human Nature and the Best Consequentialist Moral System (2002)
Kaplow, Louis, Shavell, Steven
In this article, we ask what system of moral rules would be best from a consequentialist perspective, given certain aspects of human nature. This question is of inherent conceptual interest and is...
All Individuals May Be Made Worse Off Under Any Nonwelfarist Principle (2002)
Kaplow, Louis, Shavell, Steven
Nonwelfarist principles - notably, deontological principles - are often advanced to guide moral decisions. The types of choices addressed by such principles typically seem, on their face, to involve...
All Individuals May Be Made Worse Off Under Any Nonwelfarist Principle (2002)
Kaplow, Louis, Shavell, Steven
Nonwelfarist principles - notably, deontological principles - are often advanced to guide moral decisions. The types of choices addressed by such principles typically seem, on their face, to involve...
Human Nature and the Best Consequentialist Moral System (2002)
Kaplow, Louis, Shavell, Steven
In this article, we ask what system of moral rules would be best from a consequentialist perspective, given certain aspects of human nature. This question is of inherent conceptual interest and is...
On the Superiority of Corrective Taxes to Quantity Regulation (2002)
Kaplow, Louis, Shavell, Steven
The traditional view of economists has been that corrective taxes are superior to direct regulation of harmful externalities when the state's information about control costs is incomplete. In recent...
Moral Rules and the Moral Sentiments: Toward a Theory of an Optimal Moral System (2001)
Kaplow, Louis, Shavell, Steven
We examine how moral sanctions and rewards, notably the moral sentiments involving feelings of guilt and virtue, would be employed to govern individuals' behavior if the objective were to maximize...
Moral Rules and the Moral Sentiments: Toward a Theory of an Optimal Moral System (2001)
Kaplow, Louis, Shavell, Steven
We examine how moral sanctions and rewards, notably the moral sentiments involving feelings of guilt and virtue, would be employed to govern individuals' behavior if the objective were to maximize...
Coase versus the coasians (2001)
Edward Glaeser, Simon Johnson, Andrei Shleifer, Simeon Djankov, Oliver Hart, ...
Who should enforce laws or contracts: judges or regulators? Many Coasians, though not Coase himself, advocate judicial enforcement. We show that the incentives facing judges and regulators crucially...
Notions of Fairness versus the Pareto Principle: On the Role of Logical Consistency (2000)
Kaplow, Louis, Shavell, Steven
Most legal academics and policymakers believe that weight should be accorded to conceptions of fairness in evaluating legal policies. In other writings, we have demonstrated that adherence to any...
Notions of Fairness versus the Pareto Principle: On the Role of Logical Consistency (2000)
Kaplow, Louis, Shavell, Steven
Most legal academics and policymakers believe that weight should be accorded to conceptions of fairness in evaluating legal policies. In other writings, we have demonstrated that adherence to any...
A Framework for Assessing Estate and Gift Taxation (2000)
Whether and how estates and gifts should be taxed has long been a controversial subject, and the approach to estate and gift taxation varies among developed countries. Arguments for and against...
A Framework for Assessing Estate and Gift Taxation (2000)
Whether and how estates and gifts should be taxed has long been a controversial subject, and the approach to estate and gift taxation varies among developed countries. Arguments for and against...
Principles of Fairness versus Human Welfare: On the Evaluation of Legal Policy (2000)
Kaplow, Louis, Shavell, Steven
Our thesis is that the assessment of a legal policy should depend exclusively on its effects on human welfare, that is, on the well-being of individuals. In particular, no independent evaluative...
Horizontal Equity: New Measures, Unclear Principles (2000)
Alan Auerbach and Kevin Hassett offer a new measure of horizontal equity (HE) that is designed to overcome deficiencies in prior indexes. There is, however, a fundamental problem that their effort...
Principles of Fairness versus Human Welfare: On the Evaluation of Legal Policy (2000)
Kaplow, Louis, Shavell, Steven
Our thesis is that the assessment of a legal policy should depend exclusively on its effects on human welfare, that is, on the well-being of individuals. In particular, no independent evaluative...
Horizontal Equity: New Measures, Unclear Principles (2000)
Alan Auerbach and Kevin Hassett offer a new measure of horizontal equity (HE) that is designed to overcome deficiencies in prior indexes. There is, however, a fundamental problem that their effort...
Kaplow, Louis, Shavell, Steven
In our 1994 article in this Journal, we demonstrated that legal rules should not be adjusted to disfavor the rich and favor the poor in order to redistribute income, because the income tax and...
Kaplow, Louis, Shavell, Steven
In our 1994 article in this Journal, we demonstrated that legal rules should not be adjusted to disfavor the rich and favor the poor in order to redistribute income, because the income tax and...
Tax Avoidance, Evasion, and Administration (2000)
Brian Erard, Firouz Gahvari, Roger Gordon, Jim Hines, Jonathan Kesselman, Louis Kaplow, ...
Forthcoming in the Handbook of Public Economics, edited by Alan Auerbach and Martin
The Conflict between Notions of Fairness and the Pareto Principle (1999)
Kaplow, Louis, Shavell, Steven
Most legal academics and policymakers believe that weight should be accorded to conceptions of fairness in evaluating legal policies. We explain, however, that adherence to any notion of fairness...
Any Non-Individualistic Social Welfare Function Violates the Pareto Principle (1999)
Kaplow, Louis, Shavell, Steven
The public at large, many policymakers, and some economists hold views of social welfare that attach some importance to factors other than individuals' utilities. This note shows that any such...
The Conflict between Notions of Fairness and the Pareto Principle (1999)
Kaplow, Louis, Shavell, Steven
Most legal academics and policymakers believe that weight should be accorded to conceptions of fairness in evaluating legal policies. We explain, however, that adherence to any notion of fairness...
Any Non-Individualistic Social Welfare Function Violates the Pareto Principle (1999)
Kaplow, Louis, Shavell, Steven
The public at large, many policymakers, and some economists hold views of social welfare that attach some importance to factors other than individuals' utilities. This note shows that any such...
Economic Analysis of Law (1999)
Kaplow, Louis, Shavell, Steven
This is a survey of the field of economic analysis of law, focusing on the work of economists. The survey covers the three central areas of civil law - liability for accidents (tort law), property...
Economic Analysis of Law (1999)
Kaplow, Louis, Shavell, Steven
This is a survey of the field of economic analysis of law, focusing on the work of economists. The survey covers the three central areas of civil law - liability for accidents (tort law), property...
The Conflict between Notions of Fairness and the Pareto Principle (1999)
Louis Kaplow, Steven Shavell, Jel Classes K
Most legal academics and policymakers believe that weight should be accorded to conceptions of fairness in evaluating legal policies. We explain, however, that adherence to any notion of fairness...
A Note on the Optimal Supply of Public Goods and the Distortionary Cost of Taxation (1998)
In a recent article, I demonstrated that, under standard simplifying assumptions, it is possible to finance a public good in a manner such that a Pareto improvement results whenever the simple...
A Note on the Optimal Supply of Public Goods and the Distortionary Cost of Taxation (1998)
In a recent article, I demonstrated that, under standard simplifying assumptions, it is possible to finance a public good in a manner such that a Pareto improvement results whenever the simple...
General characteristics of rules (1998)
This chapter addresses two fundamental characteristics of rules. The first concerns the degree of precision, detail, or complexity they embody: how finely are different sorts of behavior to be...
A Note on Antitrust Issues in the Licensing of Intellectual Property (1997)
Intellectual property licensing is becoming an increasingly important economic activity, and licensing practices pose ever more complex antitrust issues. This note discusses Richard Gilbert and Carl...
Transfer Motives and Tax Policy (1997)
This paper considers the optimal tax treatment of voluntary transfers to individuals in a framework that integrates redistributive income taxation and estate and gift taxation. Under this...
A Note on Antitrust Issues in the Licensing of Intellectual Property (1997)
Intellectual property licensing is becoming an increasingly important economic activity, and licensing practices pose ever more complex antitrust issues. This note discusses Richard Gilbert and Carl...
Transfer Motives and Tax Policy (1997)
This paper considers the optimal tax treatment of voluntary transfers to individuals in a framework that integrates redistributive income taxation and estate and gift taxation. Under this...
On the Superiority of Corrective Taxes to Quantity Regulation (1997)
Kaplow, Louis, Shavell, Steven
The traditional view of economists has been that corrective taxes are superior to direct regulation of harmful externalities when the state's information about control costs is incomplete. In recent...
On the Superiority of Corrective Taxes to Quantity Regulation (1997)
Kaplow, Louis, Shavell, Steven
The traditional view of economists has been that corrective taxes are superior to direct regulation of harmful externalities when the state's information about control costs is incomplete. In recent...
Thesis (Ph. D.)--Harvard University, 1987.
Thesis (Ph. D.)--Harvard University, 1987.
On the Superiority of Corrective Taxes to Quantity Regulation
The traditional view of economists has been that corrective taxes are superior to direct regulation of harmful externalities when the state's information about control costs is incomplete. In recent...
This Handbook entry presents a conceptual, normative overview of the subject of taxation. It emphasizes the relationships among the main functions of taxation -- notably, raising revenue,...
Optimal Law Enforcement with Self-Reporting of Behavior.
Kaplow, Louis, Shavell, Steven
Self-reporting--the reporting by parties of their own behavior to an enforcement authority--is a commonly observed aspect of law enforcement, such as in the context of environmental and safety...
Any Non-welfarist Method of Policy Assessment Violates the Pareto Principle
The public at large, many policymakers, and a number of economists hold views of social welfare that are non-welfarist. That is, they attach some importance to factors other than the effects of...
Myopia and the Effects of Social Security and Capital Taxation on Labor Supply
Myopia is increasingly believed to be a significant determinant of behavior and also plays a central role in justifications for social security and policies toward the taxation of capital. It is...
Discounting Dollars, Discounting Lives: Intergenerational Distributive Justice and Efficiency
The view that intergenerational distributive justice and efficiency should be treated separately is familiar, yet controversial. This article elaborates the often-implicit justifications for separate...
A substantial literature addresses the design of transfer programs and policies, including the negative income tax, other means-tested transfers, the earned income tax credit, categorical assistance,...
This is a survey of the economic principles that underlie antitrust law and how those principles relate to competition policy. We address four core subject areas: market power, collusion, mergers...
Optimal Distribution and Taxation of the Family
Income tax burdens on family units are adjusted to reflect differences in ability to pay attributable to whether the unit consists of a single individual or a married couple and how many dependents...
Optimal Taxation with Costly Enforcement and Evasion
This paper analyzes the relationship between optimal taxation -- where the literature considers raising revenue with minimum distortion -- and optimal tax enforcement where much of the literature...
Optimal Sanctions When the Probability of Apprehension Varies Among Individuals
Lucian Arye Bebchuk, Louis Kaplow
This paper explores how optimal enforcement is affected by the fact that not all individuals are equally easy to apprehend. When the probability of apprehension is the same for all individuals,...
A substantial literature addresses the design of transfer programs and policies, including the negative income tax, other means-tested transfers, the earned income tax credit, categorical assistance,...
Accuracy in the Determination of Liability
Many legal rules, notably rules of procedure and evidence, are concerned with achieving accuracy in the outcome of adjudication. In this article, we study accuracy in the conventional model of law...
Human Capital and the Income Tax
This article examines how to treat human capital -- perhaps the vast majority of the capital stock -- under an ideal, Haig-Simons income tax. Innate ability, investments in human capital, and...
Optimal Insurance Contracts When Establishing The Amount of Losses is Costly
The problem of establishing the amount of losses covered by public and private insurance is often characterized by asymmetric information, in which the claimant already knows the extent of a loss but...
Accuracy in the Assessment of Damages
Assessment of damages is a principle issue in litigation and, in light of this, we consider the social justification for, and the private benefits of, accurate measurement of harm. Greater accuracy...
On the (Ir)Relevance of Distribution and Labor Supply Distortion to Government Policy
Should the assessment of government policies, such as the provision of public goods and the control of externalities, deviate from first-best principles to account for distributive effects and the...
Incentives and Government Relief for Risk.
Government relief is offered for a wide range of risks--natural disaster, economic dislocation, sickness, and injury. This article explores the effect of such relief on incentives and the allocation...
Optimal Distribution and the Family.
Income tax burdens, welfare payments, and social security benefits depend on the composition of family units. Substantial controversy exists over the appropriate forms of adjustment, as reflected by...
Government Relief for Risk Associated with Government Action.
A significant source of risk arises from uncertainty concerning future government policy. Government action--tax reform, deregulation, judicial decisions, budgetary shifts--produces gains and losses...
Kaplow, Louis, Shavell, Steven, A. J. Auerbach, M. Feldstein
This is a survey of economic analysis of law, that is, of the emerging field under which the standard tools of microeconomics are employed to identify the effects of legal rules and their social...
The Value of a Statistical Life and the Coefficient of Relative Risk Aversion
Individuals’ risk preferences are estimated and employed in a variety of settings, notably including choices in financial, labor, and product markets. Recent work, especially in financial...
A large body of literature is devoted to the measurement of income inequality, yet little attention is given to the question, Why measure inequality? However, the reasons for measurement bear...
Shifting Plaintiffs' Fees versus Increasing Damage Awards
Shifting victorious plaintiffs' fees to defendants and increasing damage awards are alternative ways to achieve similar results: increasing plaintiffs' incentives to sue and raising defendants'...
Accuracy, Complexity, and the Income Tax.
The complexity of the income tax is an unending source of complaint, and compliance costs are estimated to be very large. Yet most recognize that some degree of complexity is necessary if income is...
A Model of the Optimal Complexity of Legal Rules.
Legal rules often are complex in order to distinguish different types of behavior that may have different consequences. Greater complexity thus allows better control of behavior. But more complex...
The Conflict between Notions of Fairness and the Pareto Principle.
Kaplow, Louis, Shavell, Steven
Most legal academics and policy makers believe that notions of fairness should be accorded positive weight in evaluating legal policies. We explain, however, that ascribing importance to any notion...
Kaplow, Louis, A. Mitchell Polinsky, Steven Shavell
This Handbook entry presents a conceptual, normative overview of the subject of taxation. It emphasizes the relationships among the main functions of taxation--notably, raising revenue,...
Kaplow, Louis, Shapiro, Carl, A. Mitchell Polinsky, Steven Shavell
This is a survey of the economic principles that underlie antitrust law and how those principles relate to competition policy. We address four core subject areas: market power, collusion, mergers...
Optimal Policy with Heterogeneous Preferences
Optimal policy rules--including those regarding income taxation, commodity taxation, public goods, and externalities--are typically derived in models with homogeneous preferences. This article...
Optimal Insurance Contracts When Establishing the Amount of Losses Is Costly
The problem of establishing the amount of losses covered by public and private insurance is often characterized by asymmetric information, in which the claimant already knows the extent of a loss but...
Optimal Policy with Heterogeneous Preferences
Optimal policy rules--including those regarding income taxation, commodity taxation, public goods, and externalities--are typically derived in models with homogeneous preferences. This article...
Horizontal Equity: Measures in Search of a Principle
Horizontal equity -- the command that equals be treated equally -- has received increased attention, particularly in attempts to measure the desirability of tax reform proposals. This paper questions...
Legal Advice about Acts Already Commited
Much legal advice is provided after individuals have committed acts -- when they come before a tribunal -- rather than at the time they decide how to act. This paper considers the effects and social...
Incentives and Government Relief for Risk
Government relief is offered for a wide range of risks - - natural disaster, economic dislocation, sickness and injury. This paper explores the effect of such relief on incentives and the allocation...
Whether personal income tax deductions are appropriate refinements to the concept of income or unwarranted tax expenditures continues to be the subject of debate. The casualty loss and medical...
The Optimal Probability and Magnitude of Fines for Acts that Definitely are Undesirable
Even when society would wish to deter all acts of some type, such as tax evasion and many common crimes, the benefits from deterrence often will be insufficient to justify the expenditures on...
Optimal Sanctions When Individuals are Imperfectly Informed About the Probability of Apprehension
Lucian Arye Bebchuk, Louis Kaplow
This paper considers optimal enforcement when individuals may be imperfectly informed about the probability of apprehension. When individuals are perfectly informed, optimal sanctions are maximal...
Private Versus Socially Optimal Provision of Ex Ante Legal Advice
This article considers whether the demand for legal advice about potential liability for future acts is socially excessive. using the standard model of accidents, we find that the answer depends on...
Government Relief for Risk Associated with Government Action
A significant source of risk arises from uncertainty concerning future government policy. Government action - - tax reform, deregulation, judicial decisions, budgetary shifts - - produces gains and...
Shifting Plaintiffs' Fees versus Increasing Damage Awards
Shifting successful plaintiffs' fees to defendants and increasing damage awards are alternative ways to achieve similar results: increasing plaintiffs' incentives to sue and raising defendants'...
The Efficiency of the Legal System versus the Income Tax in Redistributing Income
Should legal rules be chosen only on the basis of their efficiency or also on the basis of their distributional effects? This article demonstrates that redistribution accomplished through legal rules...
Optimal Law Enforcement with Self-Reporting of Behavior
Self-reporting -- the reporting by parties of their own behavior to an enforcement authority -- is a commonly observed aspect of law enforcement, as in the context of environmental and safety...
Taxation and Risk Taking: A General Equilibrium Perspective
Taxation and risk taking are examined in a general equilibrium model that incorporates uncertain government revenue in a nonrestrictive manner and allows the government to influence its revenue...
A Model of the Optimal Complexity of Rules
Rules often are complex in order to distinguish different types of behavior that may have different consequences. Greater complexity thus allows better control of behavior. But individuals may need...
Altruistically motivated gifts involve a species of consumption externality. Donors obtain an altruistic benefit from the effect of their gifts on donees' utility but do not take into account that...
A Fundamental Objection to Tax Equity Norms: A Call for Utilitarianism
Anti-utilitarian norms often are used in assessing tax systems. Two motivations support this practice. First, many believe utilitarianism to be insufficiently egalitarian. Second, utilitarianism does...
A Note on Taxation as Social Insurance for Uncertain Labor Income
Various authors, notably Eaton and Rosen (1980a) and Varian (1980), have proposed that income taxation may be justified to some extent on the ground that it serves as social insurance against...
How Tax Complexity and Enforcement Affect the Equity and Efficiency of The Income Tax
Much criticism of the income tax involves administration: the enormous complexity of the system is responsible for large compliance costs, public and private, and the tax gap is large despite...
Does taxation for public goods generally involve a distortionary cost? Are Pigouvian taxes desirable because they raise revenue without having to resort to distortionary taxes? Should decisions...
Regional Cost-of-Living Adjustments in Tax-Transfer Schemes
The federal income tax and major welfare programs do not take into account significant cost-of-living variations among regions. This article considers what adjustments might be appropriate in light...
On the Superiority of Corrective Taxes to Quantity Regulation
The traditional view of economists has been that corrective taxes are superior to direct" regulation of harmful externalities when the state's information about control costs is incomplete. " In...
This is a survey of the field of economic analysis of law, focusing on the work of economists. The survey covers the three central areas of civil law liability for accidents (tort law), property law,...
Any Non-Individualistic Social Welfare Function Violates the Pareto Principle
The public at large, many policymakers, and some economists hold views of social welfare that attach some importance to factors other than individuals' utilities. This note shows that any such...
Transfer Motives and Tax Policy
This paper considers the optimal tax treatment of voluntary transfers to individuals in a" framework that integrates redistributive income taxation and estate and gift taxation. Under this"...
Accuracy, Complexity, and the Income Tax
The complexity of the income tax is an unending source of complaint. Compliance costs have received increasing attention and are estimated to be large. Yet most recognize that some degree of...
Horizontal Equity: New Measures, Unclear Principles
Alan Auerbach and Kevin Hassett offer a new measure of horizontal equity (HE) that is designed to overcome deficiencies in prior indexes. There is, however, a fundamental problem that their effort...
A Framework for Assessing Estate and Gift Taxation
Whether and how estates and gifts should be taxed has long been a controversial subject, and the approach to estate and gift taxation varies among developed countries. Arguments for and against...
Moral Rules and the Moral Sentiments: Toward a Theory of an Optimal Moral System
We examine how moral sanctions and rewards, notably the moral sentiments involving feelings of guilt and virtue, would be employed to govern individuals' behavior if the objective were to maximize...
A large body of literature is devoted to the measurement of income inequality, yet little attention is given to the question, Why measure inequality? However, the reasons for measurement bear...
Transition Policy: A Conceptual Framework
Legal change, whether through legislation, regulation, or court decision, is a common phenomenon, and virtually all reform creates both gains and losses for those who under the prior regime took...
Fairness Versus Welfare: Notes on the Pareto Principle, Preferences, and Distributive Justice
In Fairness versus Welfare, we advance the thesis that social policies should be assessed based entirely on their effects on individuals' well-being. This thesis implies that no independent weight...
Public Goods and the Distribution of Income
This article addresses conceptual issues concerning the distributive incidence of public goods. Solutions depend on the specific purposes for asking the question of distributive incidence notably,...
The Value of a Statistical Life and the Coefficient of Relative Risk Aversion
Individuals' risk preferences are estimated and employed in a variety of settings, notably including choices in financial, labor, and product markets. Recent work, especially in financial economics,...
Concavity of Utility, Concavity of Welfare, and Redistribution of Income
The marginal social value of income redistribution is understood to depend on both the concavity of individuals' utility functions and the concavity of the social welfare function. In the pertinent...
On the Undesirability of Commodity Taxation Even When Income Taxation is Not Optimal
An important result due to Atkinson and Stiglitz (1976) is that differential commodity taxation is not optimal in the presence of an optimal nonlinear income tax (given weak separability of utility...
On the (Ir)Relevence of Distribution and Labor Supply Distortion of Government Policy
Should the assessment of government policies, such as the provision of public goods and the control of externalities, deviate from first-best principles to account for distributive effects and for...
Capital Levies and Transition to a Consumption Tax
The merits of capital levies depend on the likelihood of repetition, the extent of anticipation, and its effects on distribution. The relevance of these features, which in varying degrees is...
Optimal Control of Externalities in the Presence of Income Taxation
A substantial literature examines second-best environmental policy, focusing particularly on how the Pigouvian directive that marginal taxes should equal marginal external harms needs to be modified...
Kaplow, Louis, Shavell, Steven
In our 1994 article in this journal, we demonstrated that legal rules should not be adjusted to disfavor the rich and favor the poor in order to redistribute income, because the income tax and...
Fairness versus Welfare: Notes on the Pareto Principle, Preferences, and Distributive Justice
Fairness versus Welfare, we advance the thesis that social policies should be assessed entirely on the basis of their effects on individuals’ well-being. This thesis implies that no independent...
Moral Rules, the Moral Sentiments, and Behavior: Toward a Theory of an Optimal Moral System
How should moral sanctions and moral rewards—the moral sentiments involving feelings of guilt and of virtue—be employed to govern individuals’ behavior if the objective is to maximize social...
Accuracy in the Assessment of Damages.
Kaplow, Louis, Shavell, Steven
Assessment of damages is a principal issue in litigation and, in light of this, we consider the social justification for, and the private benefits of, accurate measurement of harm. Greater accuracy...
Ever since Corlett and Hague (1953), it has been understood that it tends to be optimal on second-best grounds to (relatively) tax complements to leisure and subsidize substitutes because doing so...
Optimal Policy with Heterogeneous Preferences
Optimal policy rules—including those regarding income taxation, commodity taxation, public goods, and externalities—are typically derived in models with homogeneous preferences. This article...