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The income effect results when taxes rise.
The electricity effect is large and independent of the income effect.
There may also be change in the income effect for those on low wages.
If this income effect were to become powerful enough, it would be a nice irony.
Several studies show this income effect can outweigh the initial price effect.
So, it could be bad if a child got sick but it didn't have an income effect.
But there is also an "income effect" as the overall price reduction allows more consumption of both.
Labor is not as mobile as financial capital, and the income effect helps offset the substitution effect.
The two main behavioral responses to higher tax rates are the income effect and the substitution effect.
If this "income" effect outweighs the substitution effect, people will work less hard and pay less tax.
The results suggest a regressive bias when some variables that capture the income effect positively affect participation in the program and acceptance of the payment offered.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com