Arnaldur Stefánsson defends his thesis September 6

2019-08-30

Arnaldur Stefánsson defends his thesis Essays in Public Finance and Behavioral Economics Friday September 6 at 1:15, Lecture Hall 2, Ekonomikum, Kyrkogårdsgatan 10. Arnaldur's thesis consists of five self-contained essays. The essays cover different fields of public finance and behavioral economics, addressing how individuals make decisions and respond to policy instruments, and the implications of this behavior for the government.

Arnaldur Stefánsson

The external reviewer is Professor Mats Persson, Institute for International Economics, Stockholm University.

The members of the examining committee are Professor Peter Juslin, Department of Psychology, Uppsala University, Associate Professor Erica Lindahl, IFAU and Professor Olof Johansson Stenman, Department of Economics, Göteborg University.

The first essay studies the effect of taxes on labor supply by exploiting a tax free-year on labor income in Iceland. Arnaldur shows how commonly used theoretical assumptions may lead to very different conclusions about the size of the labor supply response.

The second essay shows that individuals are more likely to claim deductions when having taxes due than when receiving a refund. This is consistent with theories that allow for psychological biases like loss aversion. On the contrary, responses to higher tax rates, which neoclassical theory predicts to affect behavior, are found to be insignificant.

The third essay studies what affects take-up of a housing allowance for low-income pensioners. Information letters sent to a randomly chosen group of pensioners more than four-folded the take-up rate and increased the income of those who were induced to apply for the benefit by roughly 10 percent.

The last two essays analyze data on individuals' choices from laboratory experiments. The fourth essay shows that surveys of the public’s views on public resources for health care may lead to choices that are inconsistent with theories of distributive justice. Finally, the last essay studies the channels for aversion to uncertainty (ambiguity aversion), showing, among other things, that there may be a link between mental ability and indifference to ambiguity.

Read more about the thesis in Diva
Learn more about Arnaldur