fiscal federalism: efficient or unfair?
TRANSCRIPT
Fiscal Federalism: Efficient or unfair?
Debra Hevenstone with Ben Jann
University of Bern
Rational Choice Seminar, VeniceNovember 27, 2012
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 1
/ 65
Background
Fiscal Federalism
(OECD data for the most recent year available 1997-2000)
010203040506070%
Bel
gium
Irel
and
UK
Por
tuga
lN
ethe
rland
sN
. Zea
land
Fra
nce
Italy
Spa
inN
orw
ayA
ustr
iaIc
elan
dS
wed
enF
inla
ndG
erm
any
Aus
tral
iaD
enm
ark
US
Sw
itzer
land
Can
ada
Sub-national revenues (% of total)Sub-national expenditures (% of total)
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 2
/ 65
Background Literature
Literature on Effects
Efficient public goods (“Vote with your feet!”)I Tailored to local preferences
Unfair public goodsI Economic segregationI Low taxes for the richI Fewer public goods for the poor
Public expendituresI Fiscal constraint (with Leviathan government)I Fiscal indiscipline (with vertical equalization)
(Tiebout, 1956; Musgrave, 1959; Grueber, 2006; Rodden, 2003; Brennan &Buchanan, 1980)
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 3
/ 65
Background Literature
Dynamics
Simple dynamics might determine effects (Hirschman 1970)I Exit: (Public) Goods improve when consumers exitI Voice: (Public) Goods improve when consumers contributeI Loyalty: the ratio of exit & voice
Plus more complex dynamicsI Individual preferences for wealthy neighborsI Politicians competing to attract the richI The wealthy like less public goodsI Pork barrel politicsI Veto playersI ...
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 4
/ 65
Background Literature
Project
QuestionI Can exit and voice generate characteristics of federal states?
F Lower less progressive taxes in rich areasF Lower spending in devolved statesF Rich want/consume fewer public goods
I Can policy impact whether public goods are fair or efficient?
Method: Agent based modeling (microsimulation)I Feedback between exit and voiceI Interaction between micro behaviors and macro conditions
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 5
/ 65
Background Literature
Similar Work: Kollman, 1997
How can politics yield efficient public goods allocation?
Match agents to geography via moving and voting on public goodsWhy? Tiebout matching can yield non-optimal equilibrium
I Political platforms1 Random policy permutations2 Random permutations with sample polling3 Genetic algorithm
I Voting1 Majority rule by issue2 Agents vote for single party platform3 Agents rank party platforms
FindingsI Party platforms yield more efficient public goods under federalism
Sorting can only yield gains
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 6
/ 65
Background Literature
Similar Work: Penn, 2003
Does secession encourage inequality?
Match people to political units through moving and votingPoint? Progressive taxation means match is also about fairness
I Voting1 Tax rates2 Secession
I Politics1 Local tax discretion2 Majority vs supermajority for secession
FindingsI More discretion & easier secession→ lower utility & more inequality
Sorting can only yield losses
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 7
/ 65
The Research Project Model Design
Model Design INITIALIZATION
1. Landscape: 100* 100 grid (10,000 parcels)2. Jurisdictions: 16 groups of 625 parcels3. Households: 9000 households with: incomes preferences for public goods
EXIT (MOVE)1. Household: Pick a random vacant parcel O�er bid that marginally improving utility2. Parcels of Land: Look through list of bids Accept highest bidder
VOICE (VOTE)1. Jurisdictions Propose high/low change in maximum tax rate Propose high/low change in tax progression People vote Local taxes are set2. Federal government Propose high/low change in maximum tax rate Propose high/low change in tax progression People vote Federal taxes are set Equalization grants processed
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 8
/ 65
The Research Project Model Design
Model Design
jurisdiction border
rich households
poorhouseholds
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 9
/ 65
The Research Project Model Design
Model Details
Agent CharacteristicsI IncomeI Public Goods PreferenceI Utility
F Cobb DouglasF Constant returns to scaleF Public and private goods consumption
Individual DynamicsI VotingI Moving
F Pick random vacant plotsF Offer a price that would increase utilityF Highest bidder moves
MacroI Tax FormI Federal Equalization
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 10
/ 65
The Research Project Model Design
Assumed Income DistributionCurrently using a lognormal
Simulated Distribution (lognormal µ =11,σ=1)Swiss Income Distribution (2009)
Testing: Pareto, Weibull, generalized beta, gamma ...
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 11
/ 65
The Research Project Model Design
Public Goods PreferencesRandomly assigned from a normal distribution (µ = .2, σ = .05)Private goods preference: (1- public goods preference)
local 0 to 19% of incomefederal 0 to 21% of incometotal 17 to 21% of income
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 12
/ 65
The Research Project Model Design
Key Point
Income and preferences are set exogenouslyAll other critical variables are set endogenously
I Results depend on income and preference distributions
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 13
/ 65
The Research Project Model Design
Assumed tax functional form
0
5
10
15
20
25
30%
0
Zurich
ZugGeneva
1million
aver
age
tax
Average tax rates by income (couple with no children)
income
tax = S(1− e−y/k )
y income
S parameter for tax level
k parameter for tax progression
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 14
/ 65
The Research Project Model Design
Assumed tax functional form
0
5
10
15
20
25
30%
0
Zurich
ZugGeneva
1million CHF
aver
age
tax
Average tax rates by income (couple with no children)
Geneva
05
101520253035%
data
Zurich Zug
k = 270,270S=.29p.c. income = 62,839
income
05
101520253035%
05
101520253035%
0 1 mil. 0 1 mil. 0 1 mil.k = 232,558S=.23p.c. income = 68,804
k = 192,308S=.12p.c. income = 93,753
tax = S(1− e−y/k )
y income
S parameter for tax level
k parameter for tax progression
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 14
/ 65
The Research Project Model Design
Voting and Voice
Government proposes a random + & − deviation inI Maximum tax rateI Progression
People vote1 “Average Man Voice”
A median voter model
2 “Rich Voice”Maximize constituent utility
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 15
/ 65
The Research Project Model Design
Swiss Case: VotingMaximum tax rate (“Steuerfuss”)
I Can be changed by people or politiciansProgression
I Primarily through politiciansI Though deductions can be set by people
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 16
/ 65
The Research Project Model Design
Model Design: Equalization
Federal RevenuesLocal Revenues
high taxcapacity area
low taxcapacity area
no equalization
verticalequalization
+ =
+ =
+ =
+ =
horizontalequalization (F)
= =
horizontalequalization (NF)
HorizontalI Between jurisdictionsI Based on the difference
between tax capacities
VerticalI From central governmentI Based on the ratio between
tax capacities
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 17
/ 65
Experiments
Experiments
Voice: Rich or Average
None
Horizontal w/ fed
Vertical w/ fed
Horizontal no fed
EqualizationParameter
0
Redistribution
0 .1 .2 .3 .4 .5 .6, .7.8 .9 1.0
0 .1 .2 .3 .4 .5 .6, .7.8 .9 1.0
0 .1 .2 .3 .4 .5 .6, .7.8 .9 1.0
68 settings, 10 runs per setting, 5000 time steps
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 18
/ 65
Emergence
Simple model, realistic outcomes
Model AssumptionsRealistic Outcomes (emergence)Unnecessary Assumptions
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 19
/ 65
Emergence Segregation
Realistic Outcomes: Segregation
Strictly local taxationno redistribution
Strictly local taxation horizontal equalization =.1
RICH VOICE
EQUAL VOICE
Strictly local taxationno redistribution
Strictly local taxation horizontal equalization =.1
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 20
/ 65
Emergence Constrained Spending
Realistic Outcomes: Federalism constrains spending
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 21
/ 65
Emergence Taxation and Public Goods
Realistic Outcomes: Rich have lower flatter taxes
Tax curves for richest and poorest jurisdictions, across all experiments
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 22
/ 65
Emergence Taxation and Public Goods
Realistic Outcomes: Rich have fewer public goods
Public goods by jurisdiction’s income rank, across all experiments
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 23
/ 65
Emergence Taxation and Public Goods
Realistic Outcomes: Applied taxes are regressive
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 24
/ 65
Emergence Taxation and Public Goods
Simple model, realistic outcomes
Model AssumptionsI Dynamics: Move & VoteI Parameters: Income & Preference Distributions
Realistic Outcomes (emergence)I Economic SegregationI Rich prefer lower flatter taxes, few public goodsI Devolved federalism constrains spending
Unnecessary AssumptionsI Preferences for wealthy neighborsI The wealthy like less public goodsI Veto-playersI Pork barrel politics
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 25
/ 65
Three Interesting Cases
Three interesting casesEqual Voice Rich Voice
Pure Federalism Ayn Rand ParadiseHorizontal (F) Optimal Hybrid (CH)Vertical Ayn Rand NightmareHorizontal (NF)
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 26
/ 65
Three Interesting Cases
Segregation
Economic Segregation Preference Segregation
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 27
/ 65
Three Interesting Cases Ayn Rand Paradise
Ayn Rand Paradise: Outline
TaxesPopulationPublic GoodsUtilityEfficiency
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 28
/ 65
Three Interesting Cases Ayn Rand Paradise
Ayn Rand Paradise: Taxes
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 29
/ 65
Three Interesting Cases Ayn Rand Paradise
Ayn Rand Paradise: Population
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 30
/ 65
Three Interesting Cases Ayn Rand Paradise
Ayn Rand Paradise: Public goods
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 31
/ 65
Three Interesting Cases Ayn Rand Paradise
Ayn Rand Paradise: Utility
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 32
/ 65
Three Interesting Cases Ayn Rand Paradise
Ayn Rand Paradise: Efficiency
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 33
/ 65
Three Interesting Cases Ayn Rand Paradise
Ayn Rand Paradise: SummarySegregation
I High by income & preferencesTaxes
I About equal ratesPopulation
I People want to live near the richPublic Goods
I Rich have somewhat moreUtility
I Rich jurisdictions have high utilities, the poor middlingEfficiency
I Some gains
The rich self-segregate, provide their own public goods, and maintainhigh utilities
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 34
/ 65
Three Interesting Cases Ayn Rand Nightmare
Ayn Rand Nightmare: Overview
TaxesPopulationPublic GoodsUtilityEfficiency
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 35
/ 65
Three Interesting Cases Ayn Rand Nightmare
Ayn Rand Nightmare: Taxes
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 36
/ 65
Three Interesting Cases Ayn Rand Nightmare
Ayn Rand Nightmare: Population
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 37
/ 65
Three Interesting Cases Ayn Rand Nightmare
Ayn Rand Nightmare: Public goods
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 38
/ 65
Three Interesting Cases Ayn Rand Nightmare
Ayn Rand Nightmare: Utility
Policy inverted the correlation between income and utilityIt is a plague to be rich or to live near a rich person!
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 39
/ 65
Three Interesting Cases Ayn Rand Nightmare
Ayn Rand Nightmare: Efficiency
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 40
/ 65
Three Interesting Cases Ayn Rand Nightmare
Ayn Rand Nightmare: Summary
SegregationI Neither by income nor preference
PopulationI Agents run away from the rich
TaxesI Largely federal and mildly progressive
Public GoodsI About equal, and sporadic
UtilityI Good for the poorest, bad for the rest
EfficiencyI No gains from preference sorting
The tyranny of the majority
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 41
/ 65
Three Interesting Cases Optimal Hybrid
Optimal Hybrid: Overview
TaxesPopulationPublic GoodsUtilityEfficiency
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 42
/ 65
Three Interesting Cases Optimal Hybrid
Optimal Hybrid: Taxes
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 43
/ 65
Three Interesting Cases Optimal Hybrid
Optimal Hybrid: Population
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 44
/ 65
Three Interesting Cases Optimal Hybrid
Optimal Hybrid: Public goods
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 45
/ 65
Three Interesting Cases Optimal Hybrid
Optimal Hybrid: Utility
Policy maximizes utility in all jurisdictionsThe rich have higher utilities at all equalization levels
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 46
/ 65
Three Interesting Cases Optimal Hybrid
Optimal Hybrid: Efficiency
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 47
/ 65
Three Interesting Cases Optimal Hybrid
Optimal Hybrid: Summary
TaxesI Primarily federal, local are regressive
PopulationI Shifts with equalization from rich to poor areas
Public GoodsI Rich consume less at all levels of equalization
UtilityI All groups achieve optimal utility
EfficiencyI Significant gains from preference sorting
A moderately segregated society with regressive taxation and efficientpublic goods provision, yielding Pareto and Rawlsian optimal utilities
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 48
/ 65
Conclusion
Conclusion
A simple model of using exit and voice might explainI Economic segregationI Constrained spending under federalismI Lower flatter taxes in rich areasI Less public goods consumption among the wealthyI Applied regressive taxation
Policy can generateI Tyranny of the majorityI Wealthy flightI Efficient and (somewhat) fair public goods provision
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 49
/ 65
Conclusion
Thank You
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 50
/ 65
Appendix Caveats
Appendix: Caveats
1 Model AssumptionsI Results stem from the exogenous income and preferenceI Different distributions might yield different results
2 Real WorldI “Loyalty”, or a lack of mobility, would temper these effectsI People are not that rational
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 51
/ 65
Appendix Appendix: Future Work
Future Work
Framing current results, targeting an audienceVaried income distributions and preference distributionsModel validation with empirical data
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 52
/ 65
Appendix Methods Appendix
Method Appendix: Income
Currently using Testingenormal(µ=11,σ2=.1) x ∗ −ln(uniform(0to1))
Empirical literatureI Pareto- fits the high end betterI Lognormal - fits the low end betterI Weibull, hybrid exponential decay with power decay, (generalized)
beta, gamma (Singh & Maddala, Nirei, Thorow, Salem & Mount, McDonald)
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 53
/ 65
Appendix Methods Appendix
Method Appendix: Cobb Douglas Utility
u` =
(gj
nj+
1nj
∑i
(yi ∗ ti)
)α`︸ ︷︷ ︸
public goods
∗ (y` ∗ (1− t`)− h`)1−α`︸ ︷︷ ︸private goods
` householdy` income of household`t` tax of household`h` housing cost of household `i index of householdsj jurisdictiongj grant to jurisdiction jnj number of households in jurisdiction jα` preference for public goods of household `1− α` preference for private goods of household `
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 54
/ 65
Appendix Methods Appendix
Method Moving
Pick an empty parcelCalculate price that would yield current utilityOffer a bid of 1 franc less
h2 = y − t2 −
((p1p2
)α(y − t1 − h1
)1−α) 1
1−α
− 1
Parcel offered to the highest bidder at the end of the roundOnly positive bids are takenWith one jurisdiction, all bids are -1 and no one moves
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 55
/ 65
Appendix Methods Appendix
Method Appendix: Commutability
Zurich
Commutable Distances
11 cantons wtihin commuting distance of Zurich
Zug
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 56
/ 65
Appendix Methods Appendix
Method Appendix: Equalization formulae
baseline horizontal NF horizontal vertical
rj rj + θhNj (x̄ − xj )︸ ︷︷ ︸horizontal grant
NjN Rf + rj + θhNj (x̄ − xj )︸ ︷︷ ︸
horizontal grant
rj + Rf Nj (1/cj )θv∑
i Ni (1/ci )θv︸ ︷︷ ︸vertical grant
Nj population in jN total populationRf total federal revenuerj revenue collected in jθh horizontal redistribution parameterxj jurisdiction’s per capita tax capacityx̄ national per capita tax capacityθv vertical redistribution parametercj jurisdiction j ’s relative per capita revenue (cj =
xjx̄j
)
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 57
/ 65
Appendix Convergence
Appendix: Convergence (rich voice, horizontal, no federal, .3)
Federal level convergence
economic segregation tax progression maximum tax
Jurisdiction level convergence
average income for average max tax for average maximum taxrich, poor, middle rich, poor,middle by preferences(average across 10 runs, for 1 experimental setting)Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?
Rational Choice Seminar, VeniceNovember 27, 2012 58/ 65
Appendix Housing Prices
Appendix: Housing Prices Problem 1, Convergence
Prices converge very slowly if at allA simulation of 30,000 ticks (vs 5,000)(equal voice, horizontal redistribution, equalization 0)
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 59
/ 65
Appendix Housing Prices
Appendix: Housing Prices Problem 2, Housing Pricesand Jurisdiction Attractiveness
Ayn Rand ParadiseI Rich jurisdictions pay less for housingI When they have more control and rich areas are more attractive
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 60
/ 65
Appendix Housing Prices
Appendix: Housing Prices Problem 2, cont.
Ayn Rand NightmareI Rich pay more for housingI When they have less control and their areas are unattractive!
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 61
/ 65
Appendix Housing Prices
Appendix: Housing Prices Problem 3
Equalization increases housing prices for the rich!Even though equalization makes these areas less attractive for theaverage agent
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 62
/ 65
Appendix Housing Prices
Appendix: Housing Prices
Optimal ScenarioI Rich pay same for housing at low equalization, more at high
equalization
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 63
/ 65
Appendix Appendix: Population swaps and equalization
Appendix: Population swaps as equalization shifts
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 64
/ 65
Appendix Appendix: Population swaps and equalization
Why population swaps as equalization shifts: Utilitycurves
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 65
/ 65
Appendix Appendix: Population swaps and equalization
Why population swaps as equalization shifts: Utilitycurves
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 65
/ 65
Appendix Appendix: Population swaps and equalization
Why population swaps as equalization shifts: Utilitycurves
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 65
/ 65
Appendix Appendix: Population swaps and equalization
Why population swaps as equalization shifts: Utilitycurves
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 65
/ 65
Appendix Appendix: Population swaps and equalization
Why population swaps as equalization shifts: Utilitycurves
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 65
/ 65
Appendix Appendix: Population swaps and equalization
Why population swaps as equalization shifts: Utilitycurves
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 65
/ 65
Appendix Appendix: Population swaps and equalization
Why population swaps as equalization shifts: Utilitycurves
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 65
/ 65
Appendix Appendix: Population swaps and equalization
Why population swaps as equalization shifts: Utilitycurves
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 65
/ 65
Appendix Appendix: Population swaps and equalization
Why population swaps as equalization shifts: Utilitycurves
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 65
/ 65
Appendix Appendix: Population swaps and equalization
Why population swaps as equalization shifts: Utilitycurves
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 65
/ 65
Appendix Appendix: Population swaps and equalization
Why population swaps as equalization shifts: Utilitycurves
Debra Hevenstone with Ben Jann (University of Bern)Fiscal Federalism: Efficient or unfair?Rational Choice Seminar, VeniceNovember 27, 2012 65
/ 65