6 Behavioral economics . Some economists argue that individuals suffer from fi scal illusionthat is, they underestimate
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6 Behavioral economics . Some economists argue that individuals suffer from fi scal illusion—that is, they underestimate the cost of government because they are less aware of the sources of revenue than their direct experience the benefi ts of government spending. (This theory was fi rst developed by Italian economist Amilcare Puviani in the 1940s.) How might fi scal illusion help to explain citizens’ willingness to let government activity grow faster than the economy as a whole? Looking at spending data, does the trend in the U.S. at the federal level over the last 50 years support the idea of fi scal illusion?
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