Stefanie Stantcheva, Clark Medalist 2025
Stefanie Stantcheva has made fundamental contributions to the field of public economics, using a wide range of tools to understand the interaction of government taxation and private behavior. She has applied mechanism design to the analysis of optimal tax policy in dynamic settings, studied empirically the effects of taxes and subsidies on the decisions of innovators, and employed surveys and experiments to study how people think about redistribution, tax policy and other issues. Her portfolio of work provides important insights that inform policy debates on the practical design of tax systems.
One of Stantcheva’s most important contributions addresses the effects of tax policy on innovation. Until recently, little was known about the extent to which tax policy affects the behavior of individual innovators. Stantcheva brings a rare mix of rigorous theory, superb data, and empirical methods to the problem. For example, with Ufuk Akcigit and co-authors, she has employed quasi-natural experiments and analysis of detailed patent data to shed light on the link between taxation and innovation. In “Taxation and Innovation in the 20th Century,” (joint with Ufuk Akcigit, John Grigsby and Tom Nicholas, QJE, 2022), Stantcheva and her co-authors use new datasets to examine the interactions between corporate and personal taxes and innovation in the US in the 20th century. The key finding in the paper is that the quantity of innovation responds to changes in tax policy with an elasticity that is surprisingly high; for example, elasticities for innovation with respect to the net-of-tax rate (1-τ) are consistently larger than 0.25, even including inventor and state-by-time fixed effects. The data includes micro panel data tracking the universe of inventors who have a patent since 1920, a state-level corporate tax database since 1900, and data on personal income taxes. The study uses various identification strategies with consistent results: higher taxes negatively affect the quantity but not the average quality of inventive activity. Higher taxes also cause the location of inventive activity to shift at both the state and firm level. Importantly, the paper makes considerable efforts to control for the shifting of innovation to isolate the true effect on the quantity of innovation.
A second major contribution to public economics is Stantcheva’s rigorous theoretical analysis of optimal tax policy. She draws important new insights into optimal tax policy in “Optimal Taxation and Human Capital Policies over the Life Cycle” (JPE, 2017). Suppose a worker’s innate ability level increases the returns to human capital investment, but innate ability is not known to policymakers. Stantcheva shows that the optimal policy in such circumstances includes income-contingent education loans provided throughout workers’ lifetimes. Repayment depends on income and, hence, affects incentives for human capital accumulation, while providing insurance against income risk. The generosity of the loan program depends crucially on whether education benefits the most talented and already-advantaged agents or is a leveling policy. In the former case, subsidies are not required. But if education provides benefits across different abilities and endowments, then it should be subsidized.
Finally, in pioneering work over the past decade, Stantcheva has used innovative surveys and experiments to measure what people know, what their policy preferences are, and how they reason about questions such as tax policy, redistribution, international trade, climate change, and immigration. In “How Elastic are Preferences for Redistribution: Evidence from Randomized Survey Experiments," joint with Ilyana Kuziemko, Michael Norton, and Emmanuel Saez (AER, 2015), she studies support for redistribution in the US. In “Understanding Tax Policy: How do People Reason?” (QJE, 2021), she studies how people form views about income tax and inheritance policies. Using a carefully crafted survey and embedded RCTs, she studies what people believe about key factors that determine optimal tax policy, such as the current distribution of income, current tax rates, individual responses to tax incentives, and the efficacy of government spending. She shows that support for more progressive income and inheritance taxes is driven primarily by views concerning the trustworthiness and scope of government, beliefs about the benefits of redistribution, and beliefs about whether inequality and taxation are fair. Efficiency considerations are secondary.
Through her masterful application of innovative tools, both theoretical and empirical, Stantcheva has revisited classic questions in public finance and produced new insights into optimal tax policy and the general effects of taxes on economic behavior. She has also advanced our understanding about how people form views on key policy issues. She is a worthy recipient of the Clark Medal.