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An Experimental Economics Investigation of the Land Value Tax: Efficiency, Acceptability, and Positional Goods

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  • Joshua M. Duke
  • TianHang Gao

Abstract

This research offers the first economic experiment investigating the land tax, where landowners invest under different property tax regimes. A voting treatment assesses the relative acceptability of land value taxation. Results show a land tax produced greater overall welfare in only 37.5% of the experiment sessions. Systematic overinvestment arises from the positional-good characteristic of residential land investment, but this effect vanishes when the positional-good indicator is removed. The experiments show that the participants unexpectedly voted in favor of the land tax, suggesting that the efficiency and acceptability of the land tax may be more complex than in nonbehavioral economics modeling.

Suggested Citation

  • Joshua M. Duke & TianHang Gao, 2018. "An Experimental Economics Investigation of the Land Value Tax: Efficiency, Acceptability, and Positional Goods," Land Economics, University of Wisconsin Press, vol. 94(4), pages 475-495.
    • Handle: RePEc:uwp:landec:v:94:y:2018:i:4:p:475-495
    Note: DOI: 10.3368/le.94.4.475
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    File URL: http://le.uwpress.org/cgi/reprint/94/4/475
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    Cited by:

    1. Buchholz, Matthias & Danne, Michael & Musshoff, Oliver, 2022. "An experimental analysis of German farmers’ decisions to buy or rent farmland," Land Use Policy, Elsevier, vol. 120(C).
    2. Jauernig, Johanna & Brosig, Stephan & Hüttel, Silke, 2023. "Profession and residency matter: Farmers' preferences for farmland price regulation in Germany," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 74(3), pages 816-834.
    3. Joshua M. Duke & TianHang Gao, 2023. "Land Value Taxation: A Spatially Explicit Economic Experiment with Endogenous Institutions," The Journal of Real Estate Finance and Economics, Springer, vol. 67(4), pages 673-694, November.

    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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