Irish Liberty Forum

Archive for the ‘taxation’ Category

More on Inequality and Misuse of Statistics

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Ever taken a statistics course? Most stats lecturers devote a special moment to highlight how statistics can be misused. For instance my tutor once showed us a graph like this:



We can clearly see that there’s a correlation between ice-cream consumption and deaths by drowning. But what can we infer from this? It’s possible that eating ice-cream causes drowning (due to stomach cramps while swimming). It’s also vaguely possible that drowning deaths cause increased ice-cream consumption (mourning relatives might go for an ice-cream to cheer themselves up). However the most sensible explanation is that both ice-cream consumption and drowning deaths increase is due to another factor: the weather. People eat more ice-cream and go swimming more often in summer.

However, such a straightforward explanation is hardly ever seen in economics. The empirical approach often remains unquestioned. Consider this syllogism: in the past, taxes were low. Today, taxes are high. We were poor in the past but now we are rich. Therefore, increasing taxes causes prosperity. Such a view is completely ridiculous, yet almost completely unquestioned.

Or take the suggestion in the graph below. Income inequality sharply increased before two major recessions. Therefore it’s fair to assume that one causes the other.

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Written by 20000miles

October 9, 2009 at 5:51 am

Happiness Economics Butchers Marginal Utility Theory

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There’s a new wave of economic thought gaining popularity. It’s called Happiness Economics, and it attempts to place happiness at the centre of economics and public policy. Although it is replete with fallacies, I shall focus on the movement’s treatment of utility and value. I will attempt to highlight it’s theoretical misunderstandings and argue that empirical evidence does not support redistributive measures.

Here is one of the theoretical insights from Richard Layard’s Happiness: Lessons From A New Science:

In fact, the benefit from extra income is less the richer the person, so if money is transferred from a rich person to a poorer one, the poorer person gains more happiness than the rich person loses.  Thus a country will have a higher level of average happiness the more equally its income is distributed.

We can see where Layard is coming from if we consider the following propositions:

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Written by 20000miles

March 23, 2009 at 10:57 pm

Posted in economics, money, taxation

Getting the message?

with 6 comments

I was having a little browse of, where someone asked the question:

Just wondering if anyone has any thoughts on this topic. As being discussed on todays news and suggested today that if we as the general public pay more in PRSI would get a first class free health care system?

Fourteen posts later, not a single person has indicated that paying more PRSI would help. They aren’t calling for the type of deregulation that I would favour, but there is a consensus that the problems with the public service are both deep and structural. One individual sent a particularly striking message:

I pay VHI for medical treatment because otherwise my family will be left to die on waiting lists.
I pay tolls to drive on roads that a third world nation would be ashamed of.
I pay into fundraising at my kids school and still have to pay grinds for them to get a decent education
I pay bin charges to a private company because my council just stopped doing it
I pay sky for my TV because the Irish system is 20 years out of date
I pay for a private pension because the state one results in poverty
I pay for bottled water because my tap water is poisoned
I pay eircom phone watch to look after my house because the guards dont bother
I pay for taxis etc for my kids because public transportation doesn’t exist
I pay stamp duty on my new house because the government thinks if I managed to scrape together enough money to buy a house then they didn’t tax me enough the first time.

Can anyone tell me why I pay tax anymore?

Written by Graham

April 17, 2008 at 11:59 am

Posted in health, Ireland, taxation

From the most feared organisation in the land…

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Written by Graham

February 22, 2008 at 5:25 pm