Thursday, April 03, 2008

The Pigou Club: Rated R? 

A South Carolina state senator wants to tax pR0n. He says "Just as we're trying to do with cigarettes, we have tried to do and continue to try to do with alcohol, is lets the users of those products pay for some of the consequences that come from that." Presumably the consequences are crimes against women and increased divorce rates.

I suspect there will be people lining up to estimate the external cost of pornography. I mention this because there was an interesting paper a couple of years ago that looked at the link between sales of Penthouse and the use of private P.O. boxes (all the better to keep your subscriptions away from prying eyes.) If you instrument the demand for pR0n with the use of private mail boxes, the relationship between smut and crime actually turns negative, and that with divorce disappears. The negative relationship would lead one to believe smut and sexual assault might be substitutes. I don't think that's likely, but I neither would throw the idea away as preposterous. And if so, what's the right tax for your Playboy to meet the Pigou criterion? Do club members make an allowance for the possibility that they cannot accurately measure the external cost?

I suspect the tax in this South Carolina story has more to do with Colbert. How many feathers do you pluck from a goose before it's rated R?

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