Bequests and Inheritance Taxation: A Comment
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The traditional economic approach to policy evaluation is dominated by consequentialism. The consequentialist reasoning goes as follows. First, describe or predict the effects of the policy measure. Secondly, evaluate these effects with a well-specified social objective function. To simplify matters one usually introduces additional assumptions in both steps. In the first step, effects are analysed within an equilibrium model with self-interested agents. The broad institutional structure is kept constant when the value of a policy instrument is changed. In the second step the social objective function is usually specified in a welfarist way, i.e. it is assumed that social welfare is dependent on the welfare levels of the individual households and on these welfare levels only.
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