Subsidized Housing Vouchers and Social Welfare Quiz

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In the context of neoclassical economics, which statement about policy interventions altering neighborhood choices is correct?

They are only desirable if they lead to better outcomes for children.

They decrease social welfare unless there are externalities involved. (correct)

Such interventions always increase social welfare.

Policy interventions have no impact on social welfare.

What externalities may families not consider when choosing where to live, based on the text?

Increased tax revenue from children as adults.

Benefits to other citizens from better outcomes for children.

Intergenerational externalities due to underinvestment in children.

All families consider all externalities. (correct)

According to behavioral models, what is the implication of encouraging families to move to areas with better outcomes for children?

It has no effect on their private welfare.

It decreases their private welfare.

It increases their private welfare. (correct)

It has negative externalities on other families.

What do behavioral models imply about the desirability of policies encouraging families to move to lower-poverty areas?

They are desirable as they increase social welfare. Signup and view all the answers

How do neoclassical and behavioral models differ regarding the welfare implications of moving families to areas with better outcomes for children?

Neoclassical models suggest it decreases social welfare, while behavioral models find it increases private welfare. Signup and view all the answers

What aspect of neoclassical models can incorporating behavioral features help improve?

Enhancing predictions about the effects of economic incentives Signup and view all the answers

According to Friedman, why can the behavior of an expert billiards player be accurately modeled using complex mathematical formulas?

Because the expert billiards player knows and applies these formulas Signup and view all the answers

What can behavioral economics help econometricians create to identify policy impacts?

Control groups (counterfactuals) Signup and view all the answers

In the context of public policy, what type of taxes did the transition from linear to non-linear tax policies signify?

A move from simple to more complex taxes Signup and view all the answers

Why does the text mention that some ideas related to psychology and economics were discussed qualitatively by the founders of classical economics?

To highlight the lack of formal mathematical models in classical economics Signup and view all the answers

What is one conceptual difference between externalities and internalities?

Externalities involve exogenously affecting other agents' utilities, while internalities involve agents making decisions themselves. Signup and view all the answers

What traditional approach is commonly used to increase retirement savings as mentioned in the text?

Subsidizing savings in retirement accounts. Signup and view all the answers

Why does the text mention a need for a stronger rationale when dealing with internalities?

Because agents themselves make choices. Signup and view all the answers

What policy tool is mentioned in the text to increase college enrollment rates?

Information provision Signup and view all the answers

Why does the United States federal government spend over $100 billion per year on retirement savings subsidies?

To grant favorable tax treatment to encourage saving. Signup and view all the answers

According to the passage, how does behavioral economics differ from traditional economic models in analyzing public policy?

It accounts for the divergence between an agent's experienced utility and decision utility. Signup and view all the answers

What parallel does the passage draw between behavioral models and non-welfarist approaches to optimal policy?

They both recognize a divergence between the policymaker's and agent's objectives. Signup and view all the answers

Which of the following life decisions does the passage suggest can be better informed by insights from behavioral economics?

How much to save for retirement. Signup and view all the answers

According to the passage, what techniques does behavioral economics use to identify agents' experienced utilities?

Techniques similar to those used in the literature on externalities. Signup and view all the answers

Which of the following best describes the objective of the passage?

To illustrate how behavioral economics can inform policy in specific domains. Signup and view all the answers

What is the primary purpose of using traditional policy tools or nudges in the context of behavioral models?

To align agents' decision utilities with their experienced utilities Signup and view all the answers

What assumption is made in the text to simplify the analysis of neighborhood choice?

There is a continuum of neighborhoods that differ in their impacts on children's long-term outcomes Signup and view all the answers

What does the variable 'p' represent in the context of the neighborhood choice model?

The price of one unit of neighborhood quality Signup and view all the answers

Which statement best captures the potential implications of non-standard preferences, as mentioned in the text?

Non-standard preferences, such as tastes for fairness, can generate new welfare implications even when agents maximize their experienced utility Signup and view all the answers

Based on the information provided, which statement is true about the implications of behavioral models for optimal policy?

Formalizing and quantifying the implications of behavioral models for optimal policy requires considering specific choices and models Signup and view all the answers

In the context of the passage, what does the parameter ηi represent?

The payment received by agent i Signup and view all the answers

What does it imply if an agent i earns rents according to the passage?

Agent i's pay is above marginal product Signup and view all the answers

What does the term 'job creators' refer to in the passage?

Agents whose economic activity benefits others through increased employment Signup and view all the answers

Based on the passage, what happens if an agent i's pay is below marginal product?

Agent i creates a negative spillover on others Signup and view all the answers

What does the gap between pay and marginal product indicate according to the passage?

Whether agent i earns rents or not Signup and view all the answers

According to the passage, which of the following best explains why redistributive concerns tend to dominate efficiency arguments in the case of income and estate taxes?

People place greater value on reducing inequality than maximizing economic efficiency. Signup and view all the answers

Based on the passage, what can be inferred about the role of surveys in understanding economic policies and preferences?

Surveys are a complementary tool to traditional revealed preference methods. Signup and view all the answers

Which of the following statements best reflects the emphasis on survey quality mentioned in the passage?

Ensuring high-quality survey design and representative sampling is crucial for meaningful results. Signup and view all the answers

According to the passage, what can be inferred about the relationship between tax policies and inequality?

Progressive taxation policies are often motivated by concerns about inequality. Signup and view all the answers

Based on the information provided, which of the following statements can be inferred about the role of government trust in shaping tax policy preferences?

The passage does not provide enough information to make inferences about government trust and tax policy preferences. Signup and view all the answers

What is the primary reason for the partisan gaps in policy views and underlying reasoning about taxes?

Republicans and Democrats have fundamentally different understandings of the current tax system. Signup and view all the answers

Which perspective on tax policies focuses on the trade-offs between efficiency and redistribution?

The Economist perspective Signup and view all the answers

Based on the text, what can be inferred about the instructional videos used in the experiment?

They aimed to increase knowledge and understanding by explaining mechanisms and reasoning. Signup and view all the answers

Which statement best describes the Redistribution perspective on tax policies?

It concentrates on the winners and losers of each tax policy. Signup and view all the answers

Based on the information provided, what can be inferred about the potential impact of the instructional videos on tax policy preferences?

The impact of the videos on tax policy preferences cannot be inferred from the information provided. Signup and view all the answers

What is the primary purpose of asking respondents about their views on the current tax system and support for specific policy actions?

To evaluate the fairness of the current tax system from the perspective of different income groups. Signup and view all the answers

Based on the information provided, which of the following statements best represents the role of the government in addressing income inequality through tax policy?

The government has the necessary tools and ability to reduce income inequality, but the extent of their effectiveness is unclear. Signup and view all the answers

Which of the following statements best reflects the potential impact of increasing income taxes on high-income earners, as suggested by the text?

It would primarily benefit lower-income groups while having a negligible effect on higher-income groups. Signup and view all the answers

What is the purpose of asking respondents about the fairness of taxing away the income of different groups?

To gauge public perception of the equity and redistributive effects of tax policies across income groups. Signup and view all the answers

Based on the information provided, which of the following statements best represents the potential role of behavioral economics in informing tax policy?

Behavioral economics can help policymakers design tax incentives to encourage specific economic behaviors, such as retirement savings. Signup and view all the answers

Which factor may influence a respondent's view on the fairness of estate taxation from the parents' perspective?

The ability of parents to pass on wealth to their children tax-free Signup and view all the answers

Based on the text, what conflicting concern may arise when considering estate taxation from the children's perspective?

The notion that wealth transfer perpetuates inequality of opportunity Signup and view all the answers

Which parameter in the framework captures behavioral responses that reduce the bequest tax base?

$e$, representing the elasticity of bequests with respect to taxes Signup and view all the answers

Based on the information provided, which statement best reflects a potential concern regarding estate taxation from the perspective of promoting equality of opportunity?

Estate taxation may perpetuate inequality by allowing some to inherit substantial wealth. Signup and view all the answers

According to the framework presented in the text, which parameter captures respondents' trust or distrust in the government's role in estate taxation?

$\gamma$, representing views of government Signup and view all the answers