Archives for deadweight loss



The Deadweight Loss of David Foster Wallace’s Tax

In his posthumous novel The Pale KingDavid Foster Wallace describes a fictional progressive sales tax in Illinois that imposes higher rates the larger the amount purchased.  Sounds good and fair — tax those who make larger purchases. Not surprisingly, it generates a substantial deadweight loss: People buy a few things, take them to their cars, then come back and buy more.  Auto dealers sell parts separately to reduce the average tax rate on consumers. If this sales tax was real, the deadweight loss would be borne especially heavily by low-wage people.  Those who feel pinched for cash but whose time is less valuable would be more likely to engage in tax-avoiding activities like repeated small purchases.  (HT to TW)



‘Tis the Season to Get What You Don’t Want

Picture this: Christmas morning, tchotchke-free. This week on the Freakonomics Radio Marketplace segment, Stephen Dubner proposes an idea that might finally put an end to holiday deadweight loss. Remember that patchouli-infused candle your loving aunt gave you last year? You wouldn’t dream of paying more than $1.99 for it, and she paid $30. That’s $28.01 […] Read More »



What Did You Get For Christmas Last Year? Introducing the Freakonomics Personal Gift Registry

Christmas is prime time to think about deadweight loss. Scroogenomics aside, tell the world what you really want this year using the Freakonomics Personal Gift Registry. Read More »



The Deadweight Loss of Brett Favre

If you’re looking for a silver lining in this bad economy and especially in a dismal Christmas retail season, you can at least console yourself with the thought that there will be less deadweight loss this year than in past Christmases — that is, less inefficiency generated by people spending money to buy things for […] Read More »