Matthew C. Weinzierl

Associate Professor of Business Administration, Marvin Bower Fellow

Matt Weinzierl completed his PhD in economics at Harvard University in 2008 and is an Associate Professor in the Business, Government, and the International Economy Unit at Harvard Business School.  Prior to his doctoral studies, Professor Weinzierl worked in the New York office of McKinsey & Company, specializing in financial services.  From 2003 to 2004, he served as the Staff Economist for Macroeconomics on the President’s Council of Economic Advisers.

Professor Weinzierl’s research focuses on the optimal design of tax policy.  In particular, he has written on the potential value of age-dependent taxation, the dynamic feedback effects of tax changes, the use of fiscal policy to counteract recessions, and the impact of differences in beliefs and tastes across individuals on optimal tax design.  His research has been published in Review of Economic Studies, Journal of Public Economics, American Economic Journals: Economic Policy, Brookings Papers on Economic Activity, Journal of Economic Perspectives, and has been discussed in the Economist, the New York Times, and the Wall Street Journal.  In 2008, he was selected to participate in the Review of Economic Studies tour. He is a Faculty Research Fellow at the National Bureau of Economic Research.

Professor Weinzierl is married to Coventry Edwards-Pitt, a wealth advisor.  Their family lives in the western suburbs of Boston and spends its free time enjoying music, the outdoors, and ice cream.

Featured Work


Journal Articles

  1. The Promise of Positive Optimal Taxation

    A prominent assumption in modern optimal tax research is that the objective of taxation is Utilitarian. I present new survey evidence that most people disagree with this assumption, preferring tax policies based at least in part on a classic alternative objective: the principle of Equal Sacrifice. I generalize the standard model to accommodate this preference for a mixed objective, proposing a method by which to make disparate criteria commensurable while respecting Pareto efficiency. Then, I show that optimal policy in this generalized model, calibrated to the survey evidence and U.S. microdata, quantitatively matches several features of existing tax policy that are incompatible in the conventional model but widely endorsed in reality, including the coexistence of substantial redistribution and limited tagging. Together, these findings demonstrate the potential of a positive theory of optimal taxation.

    Keywords: Taxation; Theory;


    Weinzierl, Matthew. "The Promise of Positive Optimal Taxation." Journal of Public Economics (forthcoming). (NBER Working Paper Series, No. 18599.) View Details
  2. Preference Heterogeneity and Optimal Capital Income Taxation

    We examine a prominent justification for capital income taxation: goods preferred by those with high ability ought to be taxed. In an environment where commodity taxes are allowed to be nonlinear functions of income and consumption, we derive an analytical expression that reveals the forces determining optimal commodity taxation. We then calibrate the model to evidence on the relationship between skills and preferences and extensively examine the quantitative case for taxes on future consumption (saving). In our baseline case of a unit intertemporal elasticity, optimal capital income tax rates are 2% on average and 4.5% on high earners. We find that the intertemporal elasticity of substitution has a substantial effect on optimal capital taxation. If the intertemporal elasticity is one-third, optimal capital income tax rates rise to 15% on average and 23% on high earners; if the intertemporal elasticity is two, optimal rates fall to 0.6% on average and 1.6% on high earners. Nevertheless, in all cases that we consider, the welfare gains of using optimal capital taxes are small.

    Keywords: Taxation;


    Golosov, Mikhail, Maxim Troshkin, Aleh Tsyvinski, and Matthew Weinzierl. "Preference Heterogeneity and Optimal Capital Income Taxation." Journal of Public Economics 97 (January 2013): 160–175. (Earlier version: NBER Working Paper Series, No. 16619, December 2010.) View Details
  3. An Exploration of Optimal Stabilization Policy

    This paper examines the optimal response of monetary and fiscal policy to a decline in aggregate demand. The theoretical framework is a two-period general equilibrium model in which prices are sticky in the short-run and flexible in the long-run. Policy is evaluated by how well it raises the welfare of the representative household. While the model has Keynesian features, its policy prescriptions differ significantly from textbook Keynesian analysis. Moreover, the model suggests that the commonly used "bang for the buck" calculations are potentially misleading guides for the welfare effects of alternative fiscal policies.

    Keywords: Business Cycles; Framework; Theory; Business Model; Markets; Welfare or Wellbeing; Policy; History; Balance and Stability; Business Organization; Price;


    Mankiw, N. Gregory, and Matthew C. Weinzierl. "An Exploration of Optimal Stabilization Policy." Brookings Papers on Economic Activity (spring 2011). (Also Harvard Business School Working Paper, No. 11-113, May 2011 and NBER Working Paper Series, No. 17029, May 2011.) View Details
  4. The Surprising Power of Age-Dependent Taxes

    This article provides a new, empirically driven application of the dynamic Mirrleesian framework by studying a feasible and potentially powerful tax reform: age-dependent labor income taxation. I show analytically how age dependence improves policy on both the intratemporal and intertemporal margins. I use detailed numerical simulations, calibrated with data from the U.S. PSID, to generate robust policy implications: age dependence (1) lowers marginal taxes on average and especially on high-income young workers and (2) lowers average taxes on all young workers relative to older workers when private saving and borrowing are restricted. Finally, I calculate and characterize the welfare gains from age dependence. Despite its simplicity, age dependence generates a welfare gain equal to between 0.6% and 1.5% of aggregate annual consumption, and it captures more than 60% of the gain from reform to the dynamic optimal policy. The gains are due to substantial increases in both efficiency and equity. When age dependence is restricted to be Pareto-improving, the welfare gain is nearly as large.

    Keywords: Age; Income Characteristics; Mathematical Methods; Taxation; Policy; Welfare or Wellbeing; United States;


    Weinzierl, Matthew C. "The Surprising Power of Age-Dependent Taxes." Review of Economic Studies 78, no. 4 (October 2011): 1490–1518. (Also Harvard Business School Working Paper, No. 11-114, May 2011.) View Details
  5. The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution

    Should the income tax include a credit for short taxpayers and a surcharge for tall ones? The standard Utilitarian framework for tax analysis answers this question in the affirmative. Moreover, a plausible parameterization using data on height and wages implies a substantial height tax: a tall person earning $50,000 should pay $4,500 more in tax than a short person. One interpretation is that personal attributes correlated with wages should be considered more widely for determining taxes. Alternatively, if policies such as a height tax are rejected, then the standard Utilitarian framework must fail to capture intuitive notions of distributive justice.

    Keywords: Taxation; Wages; Personal Characteristics;


    Mankiw, N. Gregory, and Matthew C. Weinzierl. "The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution." American Economic Journal: Economic Policy 2, no. 1 (February 2010): 155–176. View Details
  6. Optimal Taxation in Theory and Practice

    We highlight and explain eight lessons from optimal tax theory and compare them to the last few decades of OECD tax policy. As recommended by theory, top marginal income tax rates have declined, marginal income tax schedules have flattened, redistribution has risen with income inequality, and commodity taxes are more uniform and are typically assessed on final goods. However, trends in capital taxation are mixed, and capital income tax rates remain well above the zero level recommended by theory. Moreover, some of theory's more subtle prescriptions, such as taxes that involve personal characteristics, asset-testing, and history-dependence, remain rare in practice. Where large gaps between theory and policy remain, the difficult question is whether policymakers need to learn more from theorists, or the other way around.

    Keywords: Taxation; Theory; Practice; Policy; Distribution; Capital; Assets; History; Equality and Inequality; Personal Characteristics;


    Mankiw, N. Gregory, Matthew C. Weinzierl, and Danny Yagan. "Optimal Taxation in Theory and Practice." Journal of Economic Perspectives 23, no. 4 (fall 2009): 147–174. View Details
  7. Dynamic Scoring: A Back-of-the-Envelope Guide

    This paper uses the neoclassical growth model to examine the extent to which a tax cut pays for itself through higher economic growth. The model yields simple expressions for the steady-state feedback effect of a tax cut. The feedback is surprisingly large: for standard parameter values, half of a capital tax cut is self-financing. The paper considers various generalizations of the basic model, including elastic labor supply, general production technologies, departures from infinite horizons, and non-neoclassical production settings. It also examines how the steady-state results are modified when one considers the transition path to the steady state.

    Keywords: Taxation; Venture Capital; Financial Services Industry;


    Weinzierl, Matthew C., and N. Gregory Mankiw. "Dynamic Scoring: A Back-of-the-Envelope Guide." Journal of Public Economics 90, no. 8 (September 2006): 1415–1433. View Details

Working Papers

  1. Positive and Normative Judgments Implicit in U.S. Tax Policy, and the Costs of Unequal Growth and Recessions

    We use official data and standard optimal tax conditions to infer the positive and normative judgments implicit in U.S. tax policy since 1979. We find that explanations within this framework for the time path of U.S. policy require central parameters of the model, namely the elasticity of taxable income or the marginal social welfare weights on top earners, to take unconventional values. We use inferred social preferences to provide novel estimates of the welfare costs of unequal growth and recessions and find that they are sensitive to the assumed distortionary costs of taxation and the year from which preferences are derived. We explore several possible explanations for our findings with available data.

    Keywords: Equality and Inequality; Taxation; Policy; Welfare or Wellbeing; Public Administration Industry; United States;


    Lockwood, Benjamin B., and Matthew Weinzierl. "Positive and Normative Judgments Implicit in U.S. Tax Policy, and the Costs of Unequal Growth and Recessions." Harvard Business School Working Paper, No. 14-119, June 2014. View Details
  2. Revisiting the Classical View of Benefit-Based Taxation

    This paper explores how the persistently popular "classical" logic of benefit-based taxation, in which an individual's benefit from public goods is tied to his or her income-earning ability, can be incorporated into modern optimal tax theory. If Lindahl's methods are applied to that view of benefits, first-best optimal policy can be characterized analytically as depending on a few potentially estimable statistics, in particular the coefficient of complementarity between public goods and innate talent. Constrained optimal policy with a Pareto-efficient objective that strikes a balance—controlled by a single parameter—between this principle and the familiar utilitarian criterion can be simulated using conventional constraints and methods. A wide range of optimal policy outcomes can result, including those consistent with existing policies. To the extent that such an objective reflects the mixed normative reasoning behind prevailing policies, this model may offer a useful approach to a positive optimal tax theory.

    Keywords: Taxation; Policy;


    Weinzierl, Matthew. "Revisiting the Classical View of Benefit-Based Taxation." Harvard Business School Working Paper, No. 14-101, April 2014. View Details
  3. De Gustibus non est Taxandum: Heterogeneity in Preferences and Optimal Redistribution

    The prominent but unproven intuition that preference heterogeneity reduces redistribution in a standard optimal tax model is shown to hold under the plausible condition that the distribution of preferences for consumption relative to leisure rises, in terms of first-order stochastic dominance, with income. Given familiar functional form assumptions on utility and the distributions of ability and preferences, a simple statistic for the effect of preference heterogeneity on marginal tax rates is derived. Numerical simulations and suggestive empirical evidence demonstrate the link between this potentially measurable statistic and the quantitative implications of preference heterogeneity for policy.

    Keywords: Spending; Policy; Taxation; Theory; United States;


    Lockwood, Benjamin B., and Matthew Weinzierl. "De Gustibus non est Taxandum: Heterogeneity in Preferences and Optimal Redistribution." Harvard Business School Working Paper, No. 12-063, January 2012. (Updated September 2014. NBER Working Paper Series, No. 17784. Revise and Resubmit, Journal of Public Economics.) View Details
  4. Equalizing Outcomes and Equalizing Opportunities: Optimal Taxation When Children's Abilities Depend on Parents' Resources

    Empirical research suggests that parents' economic resources affect their children's future earnings abilities. Optimal tax policy therefore treats future ability distributions as endogenous to current taxes. We model this endogeneity, calibrate the model to match estimates of the intergenerational transmission of earnings ability in the United States, and use the model to simulate such an optimal policy numerically. The optimal policy in this context is more redistributive toward low-income parents than existing U.S. tax policy. It also increases the probability that low-income children move up the economic ladder, generating a present-value welfare gain of one and three-quarters percent of consumption in our baseline case.

    Keywords: Equality and Inequality; Income Characteristics; Taxation; Policy; Outcome or Result; Public Administration Industry; United States;


    Gelber, Alexander, and Matthew Weinzierl. "Equalizing Outcomes and Equalizing Opportunities: Optimal Taxation When Children's Abilities Depend on Parents' Resources." Harvard Business School Working Paper, No. 13-014, August 2012. (Updated April 2014. NBER Working Paper Series, No. 18332) View Details

Cases and Teaching Materials

  1. Comparative Advantage

    The theory of comparative advantage is a factor in international trade. In this note, we introduce the basic economics of comparative advantage and study its key implications.

    Keywords: Business and Government Relations; Comparative Advantage; economics; International trade; Trade; Cooperation; Business and Government Relations;


    Weinzierl, Matthew. "Comparative Advantage." Harvard Business School Background Note 713-080, April 2013. View Details
  2. Barack Obama and the Bush Tax Cuts (A)

    As his inauguration approached, President-elect Obama faced a financial sector meltdown, a costly bailout, and massive government deficits. With the economy in recession, interest rates near zero, and joblessness on the rise, Obama needed to decide whether, and how much, to use fiscal stimulus to resuscitate the economy. To help students understand Obama's options, the case reviews both the recent tax cuts under President George W. Bush, including the supply-side and demand-management justification given for them, and the broad history of fiscal policy in the United States.

    Keywords: Decision Choices and Conditions; Financial Crisis; Borrowing and Debt; Financial Management; Policy; Government Administration; Taxation; United States;


    Weinzierl, Matthew C., and Eric D. Werker. "Barack Obama and the Bush Tax Cuts (A)." Harvard Business School Case 709-037, January 2009. (Revised October 2011.) View Details
  3. Barack Obama and the Bush Tax Cuts (B)

    President Obama signs a major fiscal stimulus package and then must debate whether to extend the Bush tax cuts.

    Keywords: Taxation; Government and Politics; United States;


    Weinzierl, Matthew, and Jacob Kuipers. "Barack Obama and the Bush Tax Cuts (B)." Harvard Business School Supplement 712-012, October 2011. (Revised October 2011.) View Details
  4. Ben Bernanke: Person of the Year?

    In response to the economic and financial crisis of 2008–2009, the Federal Reserve greatly expanded the scale and scope of its activities. Though lauded by many experts for its actions, the Fed and its chairman, Ben Bernanke, faced harsh criticism from some public commentators and members of Congress. This document summarizes that criticism and Chairman Bernanke's responses to it, highlighting the tension between congressional oversight of the Fed and the Fed's independence from political influence.

    Keywords: Financial Crisis; Central Banking; Governance Controls; Policy; Crisis Management; Power and Influence; Public Administration Industry; United States;


    Iyer, Lakshmi, and Matthew C. Weinzierl. "Ben Bernanke: Person of the Year?" Harvard Business School Case 710-051, January 2010. (Revised March 2011.) View Details
  5. California's Budget Crises, Tax Reform, and Domestic and International Tax Competition

    How do (and how should) governments design fiscal policies to compete in a globalized economy while meeting internal policy priorities including redistribution? In 2009, Governor Arnold Schwarzenegger repeatedly declared fiscal emergencies as California's state budget deficit reached all-time highs. The Governor and legislative leaders established the Commission on the Twenty-first Century Economy to recommend tax reforms that would improve the state's fiscal health and competitiveness. But when the Commission issued its recommendations, many of which were consistent with domestic and international trends in taxation, legislative leaders were highly critical and the prospects for reform dimmed. The case describes the political and economic contributors to California's persistent fiscal deficits and the reforms recommended by the Commission. It summarizes recent trends in taxation by U.S. states and OECD nations, relating the empirical trends to tax theory. Finally, it engages the issue of inter-jurisdictional tax competition from both positive and normative perspectives.

    Keywords: Budgets and Budgeting; Economy; Globalization; Governing Rules, Regulations, and Reforms; Policy; Taxation; Competition; California;


    Weinzierl, Matthew C., and Jacob Kuipers. "California's Budget Crises, Tax Reform, and Domestic and International Tax Competition." Harvard Business School Case 710-038, April 2010. (Revised January 2013.) View Details
  6. California's Budget Crises, Tax Reform, and Domestic and International Tax Competition (TN)

    Keywords: Financial Crisis; Budgets and Budgeting; Taxation; Governing Rules, Regulations, and Reforms; California;


    Weinzierl, Matthew. "California's Budget Crises, Tax Reform, and Domestic and International Tax Competition (TN)." Harvard Business School Teaching Note 712-039, January 2012. View Details
  7. GUIDES: Insight through Indicators

    GUIDES is an easily remembered framework that can help the business leader and student to confidently and quickly identify, organize, and interpret a country's key economic indicators. Alternatively, it can help them to evaluate third-party analyses and to compare such analyses across countries. In either case, this framework provides a structured way to complete and communicate analysis of a country's economic data.

    Keywords: Economy; Macroeconomics; Framework; Country; Performance Evaluation;


    Weinzierl, Matthew C., Jonathan Schlefer, and Ann Cullen. "GUIDES: Insight through Indicators." Harvard Business School Background Note 710-044, January 2010. (Revised December 2011.) View Details
  8. GUIDESlines: Benchmark Values for the GUIDES Framework

    GUIDESlines provides benchmark values of the key economic indicators identified in the GUIDES framework for both developed countries (the OECD) and fast-growing emerging markets (the BRINCS countries).

    Keywords: Economics; Business Cycles; Macroeconomics; Framework; Business and Government Relations;


    Weinzierl, Matthew C., Jacob Kuipers, and Jonathan Schlefer. "GUIDESlines: Benchmark Values for the GUIDES Framework." Harvard Business School Background Note 711-067, February 2011. View Details
  9. Introduction to Business, Government, and the International Economy (BGIE)

    Keywords: Business and Government Relations; International Relations; Trade;


    Duggan, Catherine S. M., Aldo Musacchio, and Matthew C. Weinzierl. "Introduction to Business, Government, and the International Economy (BGIE)." Harvard Business School Course Overview Note 710-045, January 2010. (Revised January 2013.) View Details

Other Publications and Materials

  1. The Roots of Our Tax Debates

    Our fiscal debates are endlessly frustrating. The outlines of a compromise seem clear, yet both sides remain incapable of agreement. But is the proper balance between spending less and taxing more really so obvious? A look at what underlies the political wars over taxes reveals that the nation is not merely arguing about budgets: Americans are trying to reconcile deeply held, and often contradictory, beliefs about why we tax.

    Keywords: Values and Beliefs; Debates; Taxation; Budgets and Budgeting; United States;


    Weinzierl, Matthew C. "The Roots of Our Tax Debates." National Affairs, no. 16 (Summer 2013). View Details
  2. Macroeconomic Policy and U.S. Competitiveness

    The United States is on a glide path to fiscal disaster, with experts projecting that the federal government will take in far less money than it spends-indefinitely. Our current fiscal policy is eroding competitiveness in several ways, and business conditions in the U.S. will deteriorate if there's no change in direction. The authors examine how fiscal policy relates to the three drivers of productivity: improving human capital, increasing physical capital (equipment or software, for example), and using these forms of capital more efficiently. Government spending for many public goods, such as education and infrastructure, contributes directly to one or more of them, whereas spending on health care and entitlements does little to enhance competitiveness directly. Taxes are needed to fund public goods, but they sometimes distort the allocation of human and physical capital. And large government deficits put upward pressure on the cost of borrowing for companies. The authors propose a plan-they call it "20/21 by 2021"-to reduce the deficit from 3.8% of GDP (the Congressional Budget Office's most likely scenario) to just over 1%.

    Keywords: Macroeconomics; Government and Politics; Financial Crisis; Policy; Competition; Public Administration Industry; United States;


    Vietor, Richard H.K., and Matthew Weinzierl. "Macroeconomic Policy and U.S. Competitiveness." Harvard Business Review 90, no. 3 (March 2012). View Details

    Research Summary

  1. Overview

    Professor Weinzierl’s work focuses on the design of economic policy, especially taxation. His current and recent work can be divided into three broad categories.

    First, he has shown how simple reforms might meaningfully improve policy. To take two examples, he has shown how making taxes depend on age, as well as income and other factors, would yield a more efficient and equitable tax system; and he has shown (along with Alex Gelber) how providing poor families with greater after-tax income, for example through expanded child tax credits, could increase the future income-earning abilities of their children and thereby generate substantial gains for all households.

    Second, he has challenged some core aspects of the standard approach to optimal policy analysis in the hopes of making it a more relevant, robust literature. He has argued (along with Greg Mankiw) that the standard approach recommends the taxation of height—a policy most people strongly reject. And he has shown that one explanation for that paradox, consistent with both survey evidence and existing policy design, is that people support a mixture of objectives for tax policy that includes J.S. Mill’s Equal Sacrifice principle in addition to the utilitarian objective usually assumed in policy analysis. In other work, he has shown how the standard approach’s assumption that all people have the same preferences can generate misleading results: with Ben B. Lockwood, he has shown how tax policy ought to be less redistributive if people have different tastes for consumption relative to leisure, and in work with Mike Golosov, Aleh Tsyvinski, and Maxim Troshkin he has shown how preference differences ought to affect the taxation of capital income.

    Third, he has worked on current issues in fiscal and tax policy. With Greg Mankiw, he has written about the effects of tax cuts in the long term, where their “dynamic scoring” impacts may be large, and about the optimal use of monetary and fiscal policy in short-term business cycle smoothing. In work with Richard Vietor, as part of the HBS initiative on U.S. competitiveness, he has provided recommendations on fiscal policy changes for the United States.

    1. Excellence in Peer Review, Journal of Public Economics, 2012. Awarded by Elsevier and the Editors of the Journal.

    2. Review of Economic Studies Tour, 2008. Presented the paper "The Surprising Power of Age-Dependent Taxes,” published in the Review in October, 2011.