util_calc {bunchr}

Calculating quasi-linear iso-elastic utility

Description

u(z,n,elas,t1,t2,Tax,zstar) =

z * (1 - t1) + [z > zstar] * ((z - zstar) * (t2 - t1) - Tax) - n / (1 + (1 / elas)) * (z / n)^(1 + (1 / elas))

Usage

util_calc(z, n, elas, t1, t2, Tax, zstar)

Arguments

z

Earnings

n

Ability of person (earnings with zero tax)

elas

elasticity of earnings w.r.t. net-of-tax rate

t1

Tax rate before notch/kink

t2

Tax rate after notch/kink

Tax

height of notch (zero for pure kink)

zstar

place of notch/kink (critical earning point)

Value

The utility of earning sum z given other parameters.

Examples

util_calc(900, 950, 0.2, 0.1, 0.2, 100, 1000)