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Behavioral economics questions the basic underpinnings of economic theory, showing that people often do not act consistently in their own self-interest when making economic decisions. While these findings have important theoretical implications, they also provide a new lens for examining public policies, such as taxation, public spending, and the provision of adequate pensions. How can people be encouraged to save adequately for retirement when evidence shows that they tend to spend their money as soon as they can? Would closer monitoring of income tax returns lead to more honest taxpayers or a more distrustful, uncooperative citizenry? Behavioral Public Finance, edited by Edward McCaffery and Joel Slemrod, applies the principles of behavioral economics to government's role in constructing economic and social policies of these kinds and suggests that programs crafted with rational participants in mind may require redesign. Behavioral Public Finance looks at several facets of economic life and asks how behavioral research can increase public welfare. Deborah A. Small, George Loewenstein, and Jeff Strnad note that public support for a tax often depends not only on who bears its burdens, but also on how the tax is framed. For example, people tend to prefer corporate taxes over sales taxes, even though the cost of both is eventually extracted from the consumer. James J. Choi, David Laibson, Brigitte C. Madrian, and Andrew Metrick assess the impact of several different features of 401(k) plans on employee savings behavior. They find that when employees are automatically enrolled in a retirement savings plan, they overwhelmingly accept the status quo and continue participating, while employees without automatic enrollment typically take over a year to join the saving plan. Behavioral Public Finance also looks at taxpayer compliance. While the classic economic model suggests that the low rate of IRS audits means far fewer people should voluntarily pay their taxes than actually do, John Cullis, Philip Jones, and Alan Lewis present new research showing that many people do not underreport their incomes even when the probability of getting caught is a mere one percent. Human beings are not always rational, utility-maximizing economic agents. Behavioral economics has shown how human behavior departs from the assumptions made by generations of economists. Now, Behavioral Public Finance brings the insights of behavioral economics to analysis of policies that affect us all.

Table of Contents

  1. Cover
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  1. Title Page, Copyright
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  1. Contents
  2. pp. v-vi
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  1. Contributors
  2. pp. vii-viii
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  1. PART I. Psychology, Economics, and Econometrics
  2. p. 1
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  1. Chapter 1. Toward an Agenda for Behavioral Public Finance
  2. pp. 3-31
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  1. Chapter 2. Statistical, Identifiable, and Iconic Victims
  2. pp. 32-46
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  1. Chapter 3. Distinguishing Between Cognitive Biases
  2. pp. 47-81
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  1. PART II. Behavior and Policy
  2. p. 83
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  1. Chapter 4. Masking Redistribution (or Its Absence)
  2. pp. 85-112
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  1. Chapter 5. Mispredicting Utility and the Political Process
  2. pp. 113-140
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  1. Chapter 6. Hyperopia in Public Finance
  2. pp. 141-171
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  1. PART III. Tax Compliance
  2. p. 173
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  1. Chapter 7. Value Added Tax Compliance
  2. pp. 175-205
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  1. Chapter 8. Trust and Taxation
  2. pp. 206-232
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  1. Chapter 9. Tax Evasion: Artful or Artless Dodging?
  2. pp. 233-258
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  1. PART IV. Retirement Behavior
  2. p. 259
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  1. Chapter 10. Accounting for Social Security Benefits
  2. pp. 261-303
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  1. Chapter 11. Saving for Retirement on the Path of Least Resistance
  2. pp. 304-351
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  1. PART V. Reservations
  2. p. 353
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  1. Chapter 12. Second-Order Rationality
  2. pp. 355-389
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  1. Index
  2. pp. 391-403
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Additional Information

ISBN
9781610443852
Print ISBN
9780871545978
MARC Record
OCLC
646988498
Pages
416
Launched on MUSE
2012-01-01
Language
English
Open Access
N
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