Veblen’s theory of the leisure class revisited: implications for optimal income taxation

Thomas Aronsson () and Olof Johansson-Stenman ()

Social Choice and Welfare, 2013, vol. 41, issue 3, 578 pages

Abstract: Several previous studies have demonstrated the importance of relative consumption comparisons for public policy. Yet, almost all of them have ignored the role of leisure for status comparisons. Inspired by Veblen (The theory of the leisure class. Macmillan, New York, 1899 ), this paper assumes that people care about their relative consumption and that leisure has a displaying role in making relative consumption more visible, based on a two-type model of optimal income taxation. While increased importance of relative consumption typically implies higher marginal income tax rates, in line with previous research, the effect of leisure-induced consumption visibility is to make the income tax more regressive in terms of ability. Copyright Springer-Verlag Berlin Heidelberg 2013

Keywords: D62; H21; H23; H41 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (7)

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Working Paper: Veblen’s Theory of the Leisure Class Revisited: Implications for Optimal Income Taxation (2010)
Working Paper: Veblen’s Theory of the Leisure Class Revisited: Implications for Optimal Income Taxation (2010)
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DOI: 10.1007/s00355-012-0701-3

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