Essays in public economics: behavioural responses to taxes, public good provision, and social welfare

This thesis presents empirical and theoretical contributions to three key topics in the field of public economics: (i) individual behavioural responses to taxation, (ii) optimal public good provision and taxation, and (iii) social welfare theory. The first chapter of the thesis analyses the responses of self-employed individuals to the incentives of the tax system in Italy. I exploit the discontinuity created by the eligibility threshold of the preferential turnover tax regime to estimate how self-employed individuals adjust turnover -- i.e. revenues -- in response to taxes. By combining bunching techniques and a newly developed theoretical framework describing the individual choice between a turnover tax regime and profit-based tax system, I estimate the elasticity of turnover in three sectors of the economy: professional services, retail and accommodation and business intermediaries. The second chapter presents a theory of optimal provision of a (risky) public good when individuals have heterogeneous preferences for risk. People with different attitudes to risk have different views on the extent to which society should invest in certain risky projects. I investigate how these different views should be taken into account for the choice of the optimal policy. The choice of the welfare criterion to use to evaluate the optimal policy is a related, but separate, issue that is explored in the third chapter. Governments are often required to make decisions under risk. However, it is not clear how society should evaluate such choices when individuals have different attitudes to risk. The third chapter proposes a new welfare criterion to evaluate social options in the presence of risk and heterogeneous attitudes to it, and it applies to the specific case of constant relative risk aversion utility function.