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Ben Lockwood is an assistant professor of Business Economics and Public Policy at the University of Pennsylvania’s Wharton School. His research specializes in public economics, with a focus on issues of optimal taxation and inequality. He has studied the use of taxes both for redistribution and as an instrument to change behavior. Recent work explores the use of work subsidies such as the Earned Income Tax Credit to accomplish redistribution while encouraging work, and the growing use of soda and sweetened beverage taxes to improve health outcomes. He has also studied the use of income taxes to encourage talented individuals to pursue professions beneficial to society.
Professor Lockwood did his graduate work at Harvard University. His research has been published in leading journals including the Quarterly Journal of Economics, the Journal of Political Economy, the Journal of Public Economics, and the Journal of Monetary Economics.
Hunt Allcott, Benjamin B. Lockwood, Dmitry Taubinsky (2019), Regressive Sin Taxes, with an Application to the Optimal Soda Tax, Quarterly Journal of Economics.
Abstract: A common objection to “sin taxes”—corrective taxes on goods that are thought to be overconsumed, such as cigarettes, alcohol, and sugary drinks—is that they often fall disproportionately on low-income consumers. This paper studies the interaction between corrective and redistributive motives in a general optimal taxation framework and delivers empirically implementable formulas for sufficient statistics for the optimal commodity tax. The optimal sin tax is increasing in the price elasticity of demand, increasing in the degree to which lower-income consumers are more biased or more elastic to the tax, decreasing in the extent to which consumption is concentrated among the poor, and decreasing in income effects, because income effects imply that commodity taxes create labor supply distortions. Contrary to common intuitions, stronger preferences for redistribution can increase the optimal sin tax, if lower-income consumers are more responsive to taxes or are more biased. As an application, we estimate the optimal nationwide tax on sugar-sweetened beverages, using Nielsen Homescan data and a specially designed survey measuring nutrition knowledge and self-control. Holding federal income tax rates constant, our estimates imply an optimal federal sugar-sweetened beverage tax of 1 to 2.1 cents per ounce, although optimal city-level taxes could be as much as 60% lower due to cross-border shopping.
Hunt Allcott, Benjamin B. Lockwood, Dmitry Taubinsky (Under Review), Should We Tax Soda? An Overview of Theory and Evidence.
Abstract: Taxes on sugar-sweetened beverages (SSBs) are growing in popularity and have generated an active public debate. Are they a good idea? If so, how high should they be? Are such taxes regressive? Americans and some others around the world consume a remarkable amount of SSBs, and the evidence suggests that this generates signiﬁcant health costs. Building on recent work by Allcott, Lockwood, and Taubinsky (2018) and others, we review the basic economic principles for an optimal sin tax on SSBs. The optimal tax depends on (1) externalities: uninternalized costs to the health system from SSB consumption; (2) internalities: costs consumers impose on themselves by overconsuming sweetened beverages due to poor nutrition knowledge or lack of self-control; and (3) regressivity: how much the ﬁnancial burden and the internality beneﬁts from the tax fall on the poor. We then summarize the empirical evidence on the key parameters that determine how large the tax should be, which suggests that SSB taxes can be welfare enhancing. We end with seven concrete suggestions for policymakers considering an SSB tax.
Hunt Allcott, Benjamin B. Lockwood, Dmitry Taubinsky (2018), Ramsey Strikes Back: Optimal Commodity Taxes and Redistribution in the Presence of Salience Effects, American Economic Association Papers and Proceedings, 108, pp. 88-92. 10.1257/pandp.20181040
Abstract: An influential result in modern optimal tax theory, the Atkinson and Stiglitz (1976) theorem, holds that for a broad class of utility functions, all redistribution should be carried out through labor income taxation, rather than diﬀerential taxes on commodities or capital. An important requirement for that result is that commodity taxes are known and fully salient when consumers make income-determining choices. This paper allows for the possibility consumers may be inattentive to (or unaware of) some commodity taxes when making choices about income. We show that commodity taxes are useful for redistribution in this setting. In fact, the optimal commodity taxes essentially follow the classic “many person Ramsey rule” (Diamond 1975), scaled by the degree of inattention. As a result, to the extent that commodity taxes are not (fully) salient, goods should be taxed when they are less elastically consumed, and when they are consumed primarily by richer consumers. We extend this result to the setting of corrective taxes, and show how nonsalient corrective taxes should be adjusted for distributional reasons.
Abstract: Taxation affects the allocation of talented individuals across professions by blunting material incentives and thus magnifying nonpecuniary incentives of pursuing a “calling.” Estimates from the literature suggest that high-paying professions have negative externalities, whereas low-paying professions have positive externalities. A calibrated model therefore prescribes negative marginal tax rates on middle-class incomes and positive rates on the rich. The welfare gains from implementing such a policy are small and are dwarfed by the gains from profession-specific taxes and subsidies. These results depend crucially on externality estimates and labor substitution patterns across professions, both of which are very uncertain given existing empirical evidence.
Benjamin B. Lockwood and Matthew Weinzierl (2016), Positive and normative judgments implicit in U.S. tax policy, and the costs of unequal growth and recessions, Journal of Monetary Economics, 77, pp. 30-47.
Benjamin B. Lockwood and Matthew Weinzierl (2015), De Gustibus non est Taxandum: Heterogeneity in preferences and optimal redistribution, Journal of Public Economics, 124, pp. 74-80.
Jonah Rockoff and Benjamin B. Lockwood (2010), Stuck in the Middle: Impacts of Grade Configuration in Public Schools, Journal of Public Economics, 94 (11-12), pp. 1051-1061.
MGEC 611 – Microeconomics for Managers
The first part of this course will examine the rationale for and economic impact (e.g. on saving, labor supply, etc.) of social insurance programs such as social security, unemployment insurance and disability insurance. The next major part of the course will explore these same issues for government interventions in health insurance markets. The course will then cover research on public goods, externalities, fiscal federalism, and econmic stimulus (including the government's recent response to the "Great Recession") before proceeding to an exploration of the government's role in K-12 and high education. Both theoretical and empirical evidence will be covered along with a mix of classic studies and more cutting-edge research. Throughout the course we will discuss the tradoffs - for example between the protection and distortion of social insurance programs -- that influence government's optional role. While the focus will be on evidence from the U.S., some research from other industrialized and developing countries will also be covered.
This course establishes the micro-economic foundations for understanding business decision-making. The course will cover consumer theory and market demand under full information, market equilibrium and government intervention, production theory and cost optimization, producing in perfectly competitive and monopoly markets, vertical relations, and game theory, including simultaneous, sequential, and infinitely repeated games. Finally, we will wrap up game theory with an application to auctions. Students are expected to have mastered these materials before enrolling in the second quarter course: Microeconomics for Managers: Advanced Applications.
This course will cover the economic foundations of business strategy and decision-making in market environments with other strategic actors and less than full information, as well as advanced pricing strategies. Topics include oligopoly models of market competition, creation, and protection, sophisticated pricing strategies for consumers with different valuations or consumers who buy multiple units (e.g. price discrimination, bundling, two-part tariffs), strategies for managing risk and making decisions under uncertainty, asymmetric information and its consequences for markets, and finally moral hazard and principle-agent theory with application to incentive contacts.
New Wharton research analyzes the results of a tax on sugary beverages to determine the optimal rate.Knowledge @ Wharton - 2019/05/24