Working paper

Public Safety under Imperfect Taxation

Nicolas Treich, and Yuting Yang


Standard benefit-cost analysis often ignores distortions caused by taxation and the heterogeneity of taxpayers. In this paper, we theoretically and numerically explore the effect of imperfect taxation on the public provision of mortality risk reductions (or public safety). We show that this effect critically depends on the source of imperfection as well as on the individual utility and survival probability functions. Our simulations based on the calibration of distributional weights and applied to the COVID-19 example suggest that the value per statistical life, and in turn the optimal level of public safety, should be adjusted downwards because of imperfect taxation. However, we also identify circumstances under which this result is reversed, so that imperfect taxation cannot generically justify less public safety.


Public safety; Environmental health; Imperfect taxation; Value per statistical life; Distortionary taxation; Wealth inequality; Risk aversion;

JEL codes

  • D61: Allocative Efficiency • Cost–Benefit Analysis
  • H21: Efficiency • Optimal Taxation
  • H41: Public Goods
  • I18: Government Policy • Regulation • Public Health
  • Q51: Valuation of Environmental Effects

Replaced by

Nicolas Treich, and Yuting Yang, Public safety under imperfect taxation, Journal of Environmental Economics and Management, vol. 106, n. 102421, March 2021.


Nicolas Treich, and Yuting Yang, Public Safety under Imperfect Taxation, TSE Working Paper, n. 21-1188, February 2021.

See also

Published in

TSE Working Paper, n. 21-1188, February 2021