In 'Arguing with Zombies: Economics, Politics, and the Fight for a Better Future', Paul Krugman presents several surprising insights. One of them is the concept of 'Zombie ideas', which are ideas that refuse to die despite evidence disproving them. He also discusses the optimal tax rate, which according to experts like Peter Diamond and Emmanuel Saez, is estimated to be 73%. This rate is based on the Diminishing Marginal Utility, suggesting that a dollar is worth less to those with very high incomes compared to those with lower incomes. Therefore, a policy that makes the rich a bit poorer will impact very few people and will barely affect their life satisfaction.

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Arguing with Zombies: Economics, Politics, and the Fight for a Better Future

“Zombie ideas” simply refuse to die despite mountains of evidence to disprove them. How do you fight them? Paul Krugman, Nobel Prize winner in Economi...

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Experts like Nobel Prize in Economic Sciences Laureate Peter Diamond, in collaboration with Emmanuel Saez, have estimated the optimal tax rate to be 73%. These rates are based on Diminishing Marginal Utility, the idea that a dollar is worth less to those with very high incomes compared to those with far lower incomes. Therefore, a policy that makes the rich a bit poorer will impact very few people and will barely affect their life satisfaction. The optimal tax rate on people with very high incomes is the rate that raises the maximum possible revenue while still preserving the incentive to generate wealth.

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1. Understand the concept of "Zombie ideas" - These are ideas that refuse to die despite evidence against them. Entrepreneurs and managers should be aware of such ideas in their field and work to debunk them.

2. The principle of Diminishing Marginal Utility - This principle suggests that a dollar is worth less to those with very high incomes compared to those with lower incomes. This can be applied in pricing strategies or in understanding consumer behavior.

3. The optimal tax rate - The book suggests an optimal tax rate of 73% for people with very high incomes. While this may not directly apply to entrepreneurs or managers, it's an important concept to understand in the broader economic context.

The book 'Arguing with Zombies: Economics, Politics, and the Fight for a Better Future' does not directly discuss how the concept of 'Diminishing Marginal Utility' has influenced corporate strategies or business models. However, it does discuss the concept in the context of optimal tax rates. The idea is that a dollar is worth less to those with very high incomes compared to those with far lower incomes. This principle can indirectly influence corporate strategies or business models, particularly in terms of pricing and revenue generation. For instance, businesses may implement tiered pricing strategies, recognizing that higher-income customers may be willing to pay more for premium services or products.

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