
Over dinner in 1974 at the iconic Two Continents restaurant Donald Rumsfeld, his deputy Dick Cheney and an economist Arthur Laffer were discussing the presidential plan to raise taxes by 5%. Laffer an economist by training supposedly used a napkin (he does not remember it) to make a point that if the government taxes more, the willingness of people and businesses to work, and invest goes down. Put simply lower taxes and it will act as a stimulus for people to work, and invest more.
Although the idea behind this section is to review academic graphs but this napkin graph has spurned an economic mythology of its own. Not to say it has been the hallmark of low tax experimentation the world over. It has made more academic impact than most peer reviewed papers could.
Economist are not generally known for quips but the Laffer curve makes a stand-up comedians of us all. Hal Varian, the longtime head of economics at Google had this to say about the Laffer curve:
“It has been said that the popularity of the Laffer curve is due to the fact that you can explain it to a congressman in six minutes and he can talk about it for six months”
The idea behind the Laffer curve is fairly simple, two perpendicular lines and a blimp shaped curve with a faint line in between. The tax rate is on the y-axis and tax revenue on the x-axis. The general pervasive argument till this graph was if you want more revenue you tax more which meant a higher rate of taxation on a smaller base of economic activity. The other possibility was to tax at a lower rate on a larger base of economic activity. The amount of revenue generated ought to be same at both, this was the simple ingenuity of the curve.
In 1981 Ronald Reagan signed into law one of the biggest tax breaks based on the ideas of the Laffer curve.

The logic of supply side economics made a lot of sense to the burgeoning neo-capitalists in 1980's, but did the economic logic work? The 1981 experiment where the top tax rate was brought down to 28% from 70%, slashing corporate, and capital gains taxes. The tax base that was supposed to expand never materialised and the public debt just exploded, and continued its march through stratosphere.
The cult of Laffer curve lives on. There are forums dedicated to proving it either right, or wrong. In the age of RCT's there are public policies still being made in the name of the Laffer curve, and with the tacit understanding of the man himself.
The latest and the most consequential was the “Great Kansas Tax Cut Experiment”, it was signed by the governor Sam Brownback in 2012. The experiment had to be wound up after the state under-performed the national economy, and neighbouring economies. The tax was increased in 2018 and in the subsequent election the Democrats won a largely conservative state.
However, the proponents of supply side economics and the proponents of the tax cut regime have only grown. How do you convince people away from an appealing idea? Perhaps behavioural economists can step in.

Are we biased towards Tall politicians?
Human height is a very important predictor of nutrition, health, and general development brought about due to an increase in welfare state.However, height should not determine our political leaders? Turns out it does and this is very behaviour and biology come together to shape our perception about something we thought was based on evidence,proof, and our reasoning.
For understanding this let us turn to a proverbial melting pot of the world. Presidency of the United States is open to any citizen with certain riders as in any other country. So it stands to reason that the presidents of the country would be around the median height of the nation? Every once in a while the law of probability should have a shorter individual should also be given the chance to serve in the Oval office. The last President to have been less than the median height served just before the 20th century began in 1896! So probability is not on point there.
Could it be just an American quirk? To check it out a team of researchers in Switzerland recruited 681 children as part of a larger group to see if complex decisions could be predicted using simple heuristic and rapid cognition.
They did so by playing a game which simulated a boat trip and the children were asked to pick a captain. The sting in the tale was that they were shown photographs people running for the French Parliament at the time, and the children picked their favourite candidate turns out they picked winners mostly (71% of the time). There is no height data here but the premise of the experiment is that we use facial data to make decisions all the time.The same study also tried to gauge how adults make these choices and turn out they use the same heuristic. They were also correct 72% of the time.
In these days of social media and massive video content, we rely onslightly more subtle clues to assess winning candidates and height isalways perceived to be a good indication. Our heights are considered agood proxy for our general health and well being. Taller people appear to be better at certain things which involve leadership or so we are told. This unconscious bias could perhaps explain the emphasis that candidates vying for top positions in different countries place on their general fitness, and sports?
However, height has not made inroads into American politics only inthe age of peak content (yes we realise this is content too!). In avery interesting published by psychologists at the University ofGroningen, they looked at the results of American elections going backto 1789, the taller candidates got more votes than shorter onestwo-thirds of the time. This was especially true when seekingre-election in the second term. The authors report that winners tendto be two inches taller. They also posit that height could explain asmuch as 15% of the variation in election results. They also follow on the “greatness” that height bestows professional historians, and journalists tend to perceive taller presidents to be better at leadership and communication. This is an incredible finding but it needs to be explored in detail and context.
Height and other visual cues tend not to play an important role in the success of female politicians, or have not been studied in detail. Perhaps we need to study this with special emphasis on female politicians, or those who conform to a fluid gender identity.
The other missing cue piece is the what happens in countries that are beyond the definition of WEIRD (Western, Educated, Industrialised, Rich, and Democratic).
