Public safety under imperfect taxation

Nicolas Treich and Yuting Yang
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Yuting Yang: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: Standard benefit-cost analysis often ignores distortions caused by taxation and the heterogeneity of taxpayers. In this paper, we theoretically and numerically explore the effect of imperfect taxation on the public provision of mortality risk reductions (or public safety). We show that this effect critically depends on the source of imperfection as well as on the individual utility and survival probability functions. Our simulations based on the calibration of distributional weights and applied to the COVID-19 example suggest that the value per statistical life, and in turn the optimal level of public safety, should be adjusted downwards because of imperfect taxation. However, we also identify circumstances under which this result is reversed, so that imperfect taxation cannot generically justify less public safety.

Keywords: Public safetyE; Environmental health; Imperfect taxation; Value per statistical life; Distortionary taxation; Wealth inequality; Risk aversion (search for similar items in EconPapers)
Date: 2021-03
New Economics Papers: this item is included in nep-env and nep-upt
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Published in Journal of Environmental Economics and Management, 2021, 106, ⟨10.1016/j.jeem.2021.102421⟩

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Journal Article: Public safety under imperfect taxation (2021)
Working Paper: Public Safety under Imperfect Taxation (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03158749

DOI: 10.1016/j.jeem.2021.102421

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