Question

Poornima: I think it’s safe to say that, in general, the savings rate of households in today’s economy is much lower than it really needs to be to sustain the improvement of living standards.

Manuel: I think a switch from the income tax to a consumption tax would bring growth in living standards.
Poornima: You really think households would change their saving behavior enough in response to this to make a difference? Because I don’t.
The disagreement between these economists is most likely due t

Answer 1

The disagreement between these economists is most likely due to differences in values and differences in scientific judgments.
Obviously, they have opposing opinions when it comes to value judgments, such as fairness or equity. And on the other hand, they also differ when it comes to scientific judgments, given that they disagree on the responsiveness of saving rates to changes in tax regimes.