Brown Bag Seminar: Who should get money? Estimating welfare weights in the U.S.

Abstract: How does society deciding whether a reform is desirable weigh the gains to some individuals in society against the losses to others? We identify the welfare weights assigned by the general population of the U.S. to individuals in society using two real-stakes experiments. Welfare weights measure the value of providing an additional dollar of consumption to individuals. These weights are general enough to capture various ideals and can be directly used to evaluate reforms. We find that the welfare weights of the general population of the U.S. are slightly more progressive than the welfare weights implied by the existing policies in the U.S. and are much less progressive than the welfare weights commonly used in the optimal policy literature. We explore the implications for optimal labor income taxes.