This book contains a substantially revised version of the Lindahl Lectures given at the University of Uppsala in April 1989, and the background material on which they were based. I am most grateful to the Uppsala Department of Economics for their invitation to deliver the lectures and for their hospitality during my visit. My principal host in Uppsala was Bengt- Christer Ysander, and I much appreciated the warmth of the welcome he extended to me. It is a matter of deep sadness that he died on 23 March 1992; he is greatly missed by those who knew him and by the economics profession at large.
The Lectures aim to survey recent developments in public economics by taking as a case-study proposals for a basic income scheme. My research on public economics over the past twenty-five years has benefited particularly from collaboration with Joe Stiglitz, Nick Stern, Mervyn King, and François Bourguignon, and their influence on my thinking will be evident. The sections on the empirical aspects of taxation and social security draw heavily on the work of the Research Programme on Taxation, Incentives, and the Distribution of Income (TIDI). The Programme was located from 1980 at the London School of Economics in the Suntory Toyota International Centre for Economics and Related Disciplines (STICERD), which provided such a stimulating and helpful environment for research. I would like to express my appreciation to the Economic and Social Research Council (ESRC) for its support over a period of twelve years, and to all those who have been associated with the Programme. In particular, it is a pleasure to acknowledge the major contribution made by Holly Sutherland to the development of the TAXMOD model (the model is now POLIMOD and is available from the Micro- simulation Unit which she directs in the Department of Applied Economics at Cambridge). TAXMOD makes use of material from the Family Expenditure Survey made available by the Central Statistical Office (CSO) through the ESRC Data Archive by permission of the Controller of HM Stationery Office. Neither