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'Silly'? A Case for Heightening Taxes on the Tall

by Travis Pantin
Thu, 13 Dec 2007 at 9:12 PM

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Tall people earn higher wages on average than short people do, according to a 2004 study by economists Timothy Judge and Daniel Cable.

On his blog, Greg Mankiw, a professor of economics at Harvard, points his readers to a research paper where he takes this phenomenon to its logical utilitarian conclusion: "The income tax system [should] include a tax credit for short taxpayers and a tax surcharge for tall ones" in order to compensate for the injustice done to short people by a set of genes they could not choose.

However, if that strikes you as a profoundly silly idea, then Mr. Mankiw thinks you should admit to yourself that the standard utilitarian framework fails to capture our intuitive notions of distributive justice, and is therefore fundamentally flawed. He sees this argument as a challenge to the entire body of literature on optimal income taxation.

On another blog, Robin Hanson calls Mr. Mankiw's bluff. "Let me state loudly and clearly," he writes, "the economic theory is solid, so I support a revenue-neutral height tax as improving the status quo."

Mr. Hanson explains himself thus: "Elite academics, including economists, seem to me to display a huge status-quo bias. All policies outside a certain range of familiar possibilities seem 'silly' to ordinary people. So no matter how strong the supporting arguments, elite academics feel they must reject such proposals, so as not to seem silly themselves. Thus basically only eccentric academics … endorse such proposals."

Mr. Hanson, it seems, is not afraid to seem silly.

Economics of the right and left
In another post, Mr. Mankiw explains how the economic left differs from the economic right in terms of policy views. Mr. Mankiw himself tends toward the right.

He presents a series of concise juxtapositions that shed light on the fundamental principles that separate the two camps.

Mr. Mankiw writes: "The right sees people as largely rational, doing the best they can given the constraints they face. The left sees people making systematic errors and believe that it is the government role's to protect people from their own mistakes."

Mark Thoma, a left-leaning professor of economics and a blogger at the University of Oregon, objects. He writes, "I wouldn't agree. … I believe people are rational maximizers in the economic arena, or at least well-modeled that way, though problems such as limited or asymmetric information can confound choices."

Another point of issue, "and perhaps the most important one," according to Mr. Mankiw, concerns the question of how to make sure that income is fairly distributed. "Is the market-based distribution of income fair or unfair, and if unfair, what should the government do about it?"

Mr. Thoma responds: "Fair or unfair depends upon how well markets are functioning. If you do not believe that markets are competitive, or that opportunity is equal, then the intervention and redistribution may be correcting the outcome toward what a perfectly competitive, equal opportunity system would produce rather than away from it."

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