On the (Ir)Relevance of Distribution and Labor Supply Distortion to Government Policy

摘要

When assessing government policies, economists are guided by certain basic principles. To determine the provision of public goods, economists use cost-benefit analysis: A public good should be provided if, and to the degree that, its benefits—the sumof all individuals' benefits—exceed its costs, in accordance with what is known as the "Samuelson rule." To solve problems involving negative externalities, economists favor internalization: Actors should be made to bear the full social costs of theirdecisions, such as by imposing taxes equal to the marginal external cost of their activities—"Pigouvian taxation."