There is substantial evidence that women tend to support different policies and political candidates than men. Many studies also document gender differences in a variety of important preference dimensions, such as risk-taking, competition and pro-sociality. However, the degree to which differential voting by men and women is related to these gaps in more basic preferences requires an improved understanding. We conduct an experiment in which individuals in small laboratory “societies” repeatedly vote for redistribution policies and engage in production. We find that women vote for more egalitarian redistribution and that this difference persists with experience and in environments with varying degrees of risk. This gender voting gap is accounted for partly by both gender gaps in preferences and by expectations regarding economic circumstances. However, including both these controls in a regression analysis indicates that the latter is the primary driving force. We also observe policy differences between male- and female-controlled groups, though these are substantially smaller than the mean individual differences—a natural consequence of the aggregation of individual preferences into collective outcomes.

Preferences over social ranks have emerged as potential drivers of weaker than expected support for redistributive interventions among those closest to the bottom of the income distribution. We compare preferences for alterations of the income distribution affecting the decision maker’s social rank, but not their income, and compare them with similar alterations leaving both rank and income unchanged. Our study fails to find evidence of last-place aversion in a replication of Kuziemko et al. (Q J Econ 129(1):105–149, 2014). However, using a modified design that holds ranks fixed across rounds we find support for both a discontinuously greater disutility from occupying the last as opposed to higher ranks, thus affecting only those closest to the bottom of the distribution, and for a general dislike of rank reversals affecting most ranks. We discuss implications for policy design in both public finance and management science.

Previous literature demonstrates that beliefs about the determinants of income inequality play a major role in individual support for income redistribution. This study investigates how people form beliefs regarding the extent to which work versus luck determines income inequality. Specifically, I examine whether people form self-serving beliefs to justify supporting personally advantageous redistributive policies. I use a laboratory experiment where I directly measure beliefs and manipulate the incentives to engage in self-deception. I first replicate earlier results demonstrating that (1) people attribute income inequality to work when they receive a high income and to luck when they receive a low income and (2) their beliefs about the source of income inequality influence their preferences over redistributive policies. However, I do not find that people’s beliefs about the causes of income inequality are further influenced by self-serving motivations based on a desire to justify favorable redistributive policies. I conclude that, in my experiment, self-serving beliefs about the causes of income inequality are driven primarily by overconfidence and self-image concerns and not to justify favorable redistributive policies.

We report experimental evidence showing a positive effect of redistribution on economic efficiency via the self-enforcement of property rights, and identify which status groups benefit more and which less. We model an economy in which wealth is produced if players voluntarily comply with the—efficient but inequitable—prevailing social order. We vary exogenously whether redistribution is feasible, and how it is organized. We find that redistribution benefits all status groups as property disputes recede. It is most effective when transfers are not discretionary but instead imposed by some exogenous administration. In the absence of coercive means to enforce property rights, it is the higher status groups, not the lower status groups, who benefit from redistribution being compulsory rather than voluntary.

In 2023, the U.S. Office of Management and Budget (OMB) issued guidance documents that specified new procedures for assessing prospective government regulations (Circular A-4) and economic policies more generally (Circular A-94). These revisions to long-standing guidance were not minor updates but shifted policy analyses from an efficiency-oriented perspective to a redistributive approach. OMB broadened the guidelines for reporting distributional consequences of policies and also specified how policy impacts on different income groups should be weighted. The weights assume that the social welfare function is governed by the sum of identical individual utility functions, each of which exhibits a substantial rate of diminishing marginal utility of income. The resulting weights provide a premium for households below the median-income level and a considerable penalty for those at higher-income levels. Application of the weights to property losses creates potentially substantial inefficiencies. If based on current empirical evidence on the income elasticity of the value of a statistical life rather than assuming that there is a complete offset of the weights, application of the weights to mortality risk valuation would generate inequities in protection.

Both Republican and Democratic administrations make regulatory and funding decisions with close reference to benefit–cost analysis (BCA). With respect to regulation, there has been a great deal of academic discussion of BCA and its limits, but almost no attention has been paid to the role of BCA in government funding. That is a serious gap, not least in connection with climate-related risks, such as wildfire, drought, extreme heat, and flooding. Office of Management and Budget (OMB) Circular A-94 sets out guidelines for the BCA required when people are applying to many federal discretionary grant programs. Through Circular A-94, OMB has long required applicants to demonstrate that the benefits of their projects would exceed the costs. But under Circular A-94 as it stood for many years, efficiency-based BCA could produce results that fail to maximize welfare and that are also highly inequitable. The 2023 revision of Circular A-94 focuses more directly on welfare and equity, which are now – not uncontroversially – being brought directly into policy. At the same time, the new Circular A-94 raises fresh questions about how best to promote welfare, and to consider equity, in practice. This article explains the economic foundations for promoting welfare through distributional weighting – and how the old BCA guidance fell short. It then offers recommendations on how to operationalize distributional weighting on the ground specifically for government spending programs – and for BCA more broadly.

This paper examines the impact of cross-ownership on the strategic incentive of environmental corporate social responsibility (ECSR) within a green managerial delegation contract in a triopoly market engaged in price competition. It demonstrates that bilateral cross-ownership between insiders provides weak incentives to undertake ECSR, which has a non-monotone relationship with cross-ownership shares, while it provides strong incentives for outsiders, which increases the ECSR level as cross-ownership increases. It also compares unilateral cross-ownership and finds that a firm that owns shares in its rival has a greater incentive to undertake ECSR than its partially-owned rival, while an outsider has more incentive than firms in bilateral scenarios. These findings reveal that a firm's incentive to increase a market price through ECSR critically depends on its cross-ownership share, while it decreases environmental damage and increases social welfare when the environmental damage is serious.

This article examines the G-Fund, which is one of the five funds in the federal government employee retirement Thrift Savings Plan. The G-Fund is held as internal debt by the U.S. Department of Treasury. Our examination shows that the fund balance is exclusively composed of 1-day notes that are redeemed/reissued every business day, generating $55 trillion in annual debt reissuance. We also show that the fund balance drops substantially as resources are transferred to the general fund when the government is constrained by a debt ceiling and returns to pre-constraint levels when the ceiling is expanded/suspended.

Recently, in their 2019 paper, Poyago-Theotoky and Yong consider a managerial Cournot duopoly with pollution externalities and emission taxes and propose an explicit environmental incentive in a managerial compensation contract. The authors compare several exogenous equilibria emerging in the symmetric sub-games in which the owner offers either the environmental delegation contract or the standard sales delegation contract: abatement and social welfare (resp. emission taxes) under environmental delegation are higher (resp. lower) than under sales delegation. The present work extends their model using a game-theoretic approach to analyse the asymmetric sub-games, in which only one firm adopts the environmental contract, and adds the contract decision stage. Results show that the environmental contract never emerges as the unique sub-game perfect Nash equilibrium of this non-cooperative managerial decision game. Indeed, if the green R&D technology is efficient, the sales contract emerges as the unique Pareto-inefficient Nash equilibrium. Otherwise, if the green R&D technology is inefficient, multiple Nash equilibria in pure strategies exist (coordination game). Our findings offer direct policy implications.

A uniform value of a statistical life (VSL) is part of established practice within the federal government. Some people have applauded a uniform VSL on the ground that it respects the equality of persons; takes harm to poor people as seriously as it does harm to wealthy people; avoids expressive harms; and builds appropriate wealth redistribution into regulatory policy. Other people have strenuously objected to a uniform VSL, emphasizing that to reduce mortality risks, poor people are willing to pay less than rich people are, and urging that poor people should not have to pay more than they are willing to pay. Whether a uniform VSL is in the interest of poor people depends on whether we are dealing with subsidies or regulations. In the case of subsidies, a uniform VSL is highly likely to benefit poor people. If we are dealing with regulations, we cannot know whether a uniform VSL helps or harms poor people without knowing the incidence of costs (and benefits).

In path-breaking work, Weingast et al. argue that there is a positive relationship between legislature size and inefficiency in public expenditures. Their proposition is currently known as the ‘law of 1/n’ and has been widely debated in political science and public administration. However, recent studies have questioned the validity of the theory. In this letter, we conduct the first meta-analysis that assesses the generality of the ‘law of 1/n’. Based on a sample of thirty articles, we find no robust evidence suggesting that legislature size has either a positive or a negative effect on government budgets. Yet, the aggregate results mask considerable heterogeneity. Our findings provide moderate support for the ‘law of 1/n’ in unicameral legislatures and in upper houses, but they also indicate that studies using panel/fixed-effects models or regression-discontinuity designs report negative public spending estimates. We find only limited evidence that electoral systems impact public spending, which suggests that proportional representation systems may not be more prone to overspending than majoritarian ones.

This paper studies the implications of distortions in intertemporal margins for the conduct of climate policy. We do so by introducing a framework that combines a standard two-period overlapping generations (OLG) model with a tractable model of household heterogeneity, in which over-accumulation of capital arises from uninsurable idiosyncratic labor income risk. We illustrate that market-based climate policies must be adjusted when the government cannot provide full insurance to households by taxing only capital and is constrained to transfer resources across generations for risk-sharing. In a numerical exercise, we find that idiosyncratic risk leads to an optimal capital income tax rate of 35 per cent and a carbon price 7.5 per cent lower than its first best.

The vulnerability of small firms to price shocks may partly explain why fossil fuel subsidy removals in developing countries are so difficult to implement. This paper analyzes the effects of fuel and electricity price increases on profits of micro- and small-sized enterprises in Mexico. Using representative cross-sectional data, simulations of profit losses hint at potentially large short-term effects. First-order profit losses of a 1 per cent price increase are 0.2 per cent for fuels and 0.07 per cent for electricity, but are higher than 1 per cent for fuels in the transport sector. These effects are larger for formal than for informal firms, with energy-using low-profit firms being most vulnerable. Second-order impacts – predicted using estimated input-demand elasticities – indicate that firms react to price shocks by substituting labor for energy, while the self-employed appear to increase their own labor input. Reduced-form regressions show that some firms pass on higher fuel costs to customers.

The gap in the life expectancy of the elderly across educational groups is high, and this will probably increase over the coming decades. In this article, we use a computable overlapping generations model economy to show that the long-term link between heterogeneity in longevity and education could translate into an implicit tax/subsidy on the expected lifetime benefits to lifetime payroll taxes ratio, with rates around 10%, and that such rates pervert redistributive objectives of pension systems. We then analyze some parametric changes aimed at restoring the progressiveness of these systems in the long run, and find that a higher minimum pension or changes in the pension benefit formula go a long way as tools to restore the system's long-term progressivity.

Environmental policies are characterized by salient short-term costs and long-term benefits that are difficult to observe and to attribute to the government's efforts. These characteristics imply that citizens’ support for environmental policies is highly dependent on their trust in the government's capability to implement solutions and commitment to investments in those policies. Using novel survey data from Mexico City, we show that trust in the government is positively correlated with citizens’ willingness to support an additional tax approximately equal to a day's minimum wage to improve air quality and greater preference for government retention of revenues from fees collected from polluting firms. We find similar correlations using the perceived quality of public goods as a measure of government competence. These results provide evidence that mistrust can be an obstacle to better environmental outcomes.

Carbon taxes are likely to play a key role in meeting greenhouse gas emission targets that are consistent with the Paris Agreement. In this article, we assess the macroeconomic effects of a carbon tax on the global economy, paying particular attention to the terms-of-trade implications for importers and exporters of fossil fuels. We use a modified version of the National Institute’s Global Econometric Model, NiGEM. In the stylized scenarios, all countries and regions impose a permanent and uniform carbon tax immediately. Our simulations show that demand for fossil fuels falls substantially in response to the tax, global (pre-tax) prices of fossil fuels decline, and the tax can raise substantial revenue for the government. The overall impact on GDP growth and inflation in each country depends on the fossil fuel intensity of output, the net losses/gains in terms of trade and the macroeconomic policy reaction.

A four-pronged approach to climate policy is presented consisting of carbon pricing, subsidies for renewable energies, transformative green investments and climate finance and engendering flywheel effects. Then, a variety of societal and political challenges and obstacles faced by such a climate policy and what can be done to overcome them are discussed. These range from stranded assets, the very long time scales needed to adapt and deal with global warming, intergenerational conflict, international free-rider problems, carbon leakage, green paradoxes, policy failure and capture, adverse income distributional effects and spatial scarcity to the problem of climate deniers and sceptics. The paper also discusses the various tools that are needed for the analysis of both ideal and workable climate policies, and the need to collaborate with complexity scholars, political scientists, sociologists and psychologists.

This article develops a non-cooperative game with managerial quantity-setting firms in which owners choose whether to delegate output and abatement decisions to managers through a contract based on emissions (conventionally denoted as ‘green’ delegation, GD) instead of sales (sales delegation, SD), and the government levies an emissions tax to incentivise firms’ emissions-reduction actions. First, it compares the Nash equilibrium outcomes between GD and SD and then contrasts them also with profit maximisation (PM). A plethora of Nash equilibria emerges, especially in the case GD versus PM (the ‘green delegation game’), depending on the public awareness toward environmental quality, ranging from the coordination game to the ‘green’ prisoner's dilemma. Second, though the contract under GD incentivises managers for emissions, the environmental damage is lower than under SD. This is because the optimal tax more than compensates the incentive for emissions. These findings suggest that designing GD contracts paradoxically favours environmental quality.

The presence of nonzero conjectural variations in pollution abatement and output make emission taxes less effective with respect to reducing emissions. This has implications for the characterization of the optimal emission tax, particularly in an international context where there are large asymmetries in pollution intensities. A higher degree of collusion in output between polluting firms results in higher emissions taxes in the non-cooperative equilibrium. In contrast, a higher degree of collusion in abatement between polluting firms results in lower emissions taxes in the non-cooperative equilibrium. These results rely on the presence of nonzero conjectural variations and large asymmetries in pollution intensities across countries. The analysis is relevant to the design of international environmental policy, including cases where countries face increasing global competition and damages from rising global emissions.