Working Paper: NBER ID: w15328
Authors: William Congdon; Jeffrey R. Kling; Sendhil Mullainathan
Abstract: Behavioral economics is changing our understanding of how economic policy operates, including tax policy. In this paper, we consider some implications of behavioral economics for tax policy, such as how it changes our understanding of the welfare consequences of taxation, the relative desirability of using the tax system as a platform for policy implementation, and the role of taxes as an element of policy design. We do so by reviewing the logic of specific features of tax policy in light of recent findings in areas such as tax salience, program take-up, and fiscal stimulus.
Keywords: Behavioral Economics; Tax Policy
JEL Codes: D03; H2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| tax complexity (H26) | behavioral responses (D91) |
| lower tax salience (H29) | muted responses to taxes (H29) |
| behavioral nudges (D91) | participation rates (J22) |
| framing of tax cuts (H20) | spending behavior (D12) |