Will a wealth tax change the behavior of the very rich?

Allison Schrager
Will a wealth tax change the behavior of the very rich?

When I studied economics as a graduate student, we took it for granted you could change behavior through tax policy. In the last few decades economists have relaxed their assumptions that people behave rationally, or in a consistent, logical manner when faced with various financial incentives. The newest economics Nobel Prize winners Esther Duflo and Abhijit Banerjee argue, based on their experiments and various studies, that we don’t respond to financial incentives as much as economists think—sometimes not at all.