Working Paper: NBER ID: w20007
Authors: Michael Hallsworth; John A. List; Robert D. Metcalfe; Ivo Vlaev
Abstract: Tax collection problems date back to the earliest recorded history of mankind. This paper begins with a simple theoretical construct of paying (rather than declaring) taxes, which we argue has been an overlooked aspect of tax compliance. This construct is then tested in two large natural field experiments. Using administrative data from more than 200,000 individuals in the UK, we show that including social norms and public goods messages in standard tax payment reminder letters considerably enhances tax compliance. The field experiments increased taxes collected by the Government in the sample period and were cost-free to implement, demonstrating the potential importance of such interventions in increasing tax compliance.
Keywords: tax compliance; field experiments; social norms; public goods; behavioral insights
JEL Codes: C93; H26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| social norm messages (Z13) | likelihood of tax payment (H26) |
| country norm message (F55) | likelihood of tax payment (H26) |
| minority norm message (J15) | likelihood of tax payment (H26) |
| public goods messages (H40) | likelihood of tax payment (H26) |
| descriptive norms (C92) | likelihood of tax payment (H26) |
| local descriptive norms (Z13) | likelihood of tax payment (H26) |
| minority norm effect (C92) | likelihood of tax payment (H26) |