Economics Writers: Should Understand Collective Action Problems

Megan McArdle cites a story finding that a fund permitting Virginians to send more money to the government voluntarily raises little revenue. What lesson does she derive from this?

This is what economists call “revealed preference”. What most of us are really in favor of is higher taxes on other people. If we wanted higher taxes on ourselves, we’d give the money to charity.

If I may be permitted to state the obvious, it reveals no such thing (unless it’s supposed to reveal the trivial point that nobody would want to pay taxes if necessary public services could be funded with money grown by magic ponies.) For some reason, a lot of conservatives think “if you think taxes should be higher, why don’t you send more money to the government?” is some incredibly clever rejoinder, but it’s deeply silly. Rather, most people intuitively understand the concept of free riding: unless you’re Bill Gates, no money you send to the government is going to pay for the provision of an important public good, and moreover it would also be very unfair for you to pay for a public good while your similarly situated neighbor with the ability to pay takes advantage of the public good without contributing. Hence, those mean Upper West Side Liberals (TM) who drove Adam Bellow to edit unreadable books for a living don’t send unsolicited money to the government but are perfectly willing to support politicians who raise their taxes and oppose politicians who cut them. This behavior is, of course, perfectly rational.