Status preferences and optimal corrective taxes: A note

摘要: We take issue with the argument expounded, among others, by Layard (2006, Economic Journal) that status-seeking preferences justify heavier taxation of income because this serves to internalise negative externality pursuit status imposes on others. In a model where depends both and effort, we show optimal corrective tax rate is smaller than if non-monetary plays no role, subsidy work effort at margin may be called for. Additionally, demonstrate how elasticity labour supply parameters production function in such model, discuss potential implications for taxation.