Friday, March 12, 2010

NPR disses the Pigou Club

It is a rare opportunity when I find myself to the left of National Public Radio.  But sometimes it happens.

A blog reader alerts me to this NPR story, which says:
economists frown on what they call "Pigovian taxes," which are designed not only to raise revenue but put to governments in the position of trying to influence how people shop or behave.
I don't think economists are unanimous about this issue, but I believe most economists favor Pigovian taxes.

Moreover, the NPR story confuses Pigovian taxes with sin taxes.  Pigovian taxes try to correct for negative externalities--that is, the adverse effects of certain behavior on bystanders.  Sin taxes try to correct for behavior that some social planner deems as not sufficiently virtuous.

Click here for previous blog post on sin taxes.