Archive for January 6th, 2012

The other day, Greg Mankiw published an interesting post on his blog:

De Gustibus non est Taxandum

Mankiw quotes Daniel Kahneman’s book Thinking, Fast and Slow and discusses the effect of differences in ambitions (i.e. heterogeneous preferences) on individual’s labor market outcome. Furthermore, Mankiw points to a recent paper by Lockwood and Weinzierl about preference heterogeneity. Therein, the authors conclude:

Attributing a portion of the observed variation in incomes to preferences rather than ability reduces the optimal extent of redistribution.

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