Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/190468
Authors: 
Simonovits, András
Year of Publication: 
2017
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2017/7
Abstract: 
We consider three transfer models with a representative individual who discounts the utility of the merit good with respect to the standard one's. In each model, a paternalistic government taxes the consumer and transfers him additional merit goods in return. The private purchase of the merit goods is cheaper than the transfer. Even if the optimal transfer system is welfare superior to the transfer-free system, a system with much lower transfer may be inferior, therefore this welfare gap should be jumped. Various pension modelers (e.g. Feldstein, 1985; van Groezen, Leers and Meijdam, 2003) overlooked this problem and drew wrong conclusions.
Subjects: 
transfers
pensions
taxes
social welfare
paternalism
JEL: 
D10
H55
J13
J14
J18
J26
ISBN: 
978-615-5594-89-2
Document Type: 
Working Paper
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