Attention Variation and Welfare: Theory and Evidence from a Tax Salience Experiment

This article shows that accounting for variation in mistakes can be crucial for welfare analysis. Focusing on consumer under-reaction to not-fully-salient sales taxes, we show theoretically that the efficiency costs of taxation are amplified by differences in under-reaction across individuals and ac...

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Bibliographic Details
Published in:The Review of economic studies 2018-10, Vol.85 (4 (305)), p.2462-2496
Main Authors: TAUBINSKY, DMITRY, REES-JONES, ALEX
Format: Article
Language:English
Subjects:
Accounting
Attention
Consumers
Costs
Efficiency
Errors
Individual differences
Sales
Sales taxes
Salience
Shopping
Tax rates
Taxation
Welfare
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