Halloweenand Tiebout sorting
Fromthe column responses above, I do agree with the response provided byPrudence. In her response to the author of the letter, she condemnsher insinuations in the letter and directly tells her to stop whiningand being callous and miserly. The author is not eager to providetrick or treat children who do not belong to the local neighborhood.She however, acknowledges that she belongs to the poor of among thetop 1% of the population. By American standards, she is rich andwealthy and there are moral expectations to give more to charity.
Ideally,these issues raised in the correspondence in this case can beexplained by the Tiebout modeling ideas. Tiebout’s model arguesthat individuals have different subjective valuations of servicesprovided by local governments. This is to mean that, in equilibrium,families will sort themselves into neighborhoods informed by theirsubjective valuation of public good provided by local governments(Saez, 2013). Therefore, individuals and families will move tocommunities which they believe maximizes their personal utility fromconsuming public goods. Where redistribution is high, the poor willflock these areas to maximize their gains from welfare benefitswhereas the rich are likely to flee to avoid paying the highredistribution costs.
Inthe case of the author, he lives on the poor side of “one of theaffluent neighborhoods” in the country. This adequately revealsthat the author of the letter has chosen to live in a community wherehe can maximize utility on the services provided by the localgovernment. Other services that come along in living in suchneighborhoods are not directly provided by the local government butarise as a by-product. They include social prestige, class andassociation. However, to receive these higher level services, theseneighborhoods are subject to higher taxes. And as a result, those whofeel they cannot afford such high taxes relocate to other areas withlower taxes that they can afford.
Inthe end, people tend to congregate in communities that they feel thatthey get value for their taxes and the taxation level that they canafford as per the Tiebout model. Prudence recognizes the impact ofthe Tiebout model which is to say that paying extra taxes guaranteecertain neighborhoods to attract people of a certain income level.For the affluent in society, they should be willing to incuradditional costs such as the extra $20 that Prudence talks about thathis family was willing to pay once every year to provide candy tochildren of the less fortunate.
Additionally,the Tiebout model explains the poor parent’s choice to send theirchildren to strategic neighborhoods for candy hunting duringHalloween. These parents recognize that the utilities in form ofcandy for their kids can be best maximized in the rich neighborhoodsand streets. Such utilities cannot be maximized in their poorneighborhoods. It is for this reason that the author of the letterindicates that about 75% of the kids who visit her neighborhood totreat or trick are foreign which captures a new form ofredistribution.
Undera capitalist system, economic redistribution of wealth is necessary.Taxation, charity, and welfare are the most important forms of wealthdistribution. This redistribution in an economic system involvestaking from those who have more and sharing to those that have less.These systems must recognize the objectives and obligations of theredistribution system and safeguard it from misuse. In the case ofpoor parents as discussed by the author of the letter, she is worriedthat the system of distribution in the form of Halloween candy isbeing misused by the poor. However, taking note from Prudence thatonly about extra $20 was needed to purchase candy for children fromdifferent neighborhoods, it is unfair that the author complains oversuch an insignificant amount of money given that she is rich courtesyof her residing in an affluent neighborhood.
Froma moral perspective, I believe that the rich have a moral obligationto share with the poor. Governments have enforced this moralobligation through gradual taxation regimes: the higher the income,the higher the taxation level. Although some economists argue thateconomic redistribution works in fighting poverty, other economistssuch as Lee (2015) feel that the redistribution processes bygovernments have failed as they tend to collect resources from thelargely disorganized poor and redistribute it back to them and in theprocess leaving the wealthy untouched. As such, Lee suggests moralobligations for the wealthy in redistributing wealth by beingcompassionate and showing empathy towards the poor by sharing withthem. However, such compassion and empathy is not always forthcoming.The author lacks it while Prudence demands for a moral need for theauthor to share her wealth trough Halloween treats for kids.
Insummation, it is important to note that the Tiebout model explainswhy Families of different income levels tend to congregate in certainneighborhoods. The correspondence teen Prudence and a fan clearlyindicates that economic systems alone are not effective in effectingredistribution of wealth and thus there is need to enforce moralperspectives borrowed from religion social expectations among others.
CasestudyDear Prudence. Web.
Lee,Dwight, Redistribution. The concise encyclopedia economics. 2015.Web.
Saez,Emmanuel, State and Local Government Expenditures 131 UndergraduatePublic