Tax Morale and Policy Intervention

Katarina Nordblom ()

No 711, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: This paper deals with tax morale and how norms may evolve over time. The special focus is on buying black-market services. I apply mechanisms from social psychology to explain how personal norms may evolve due to one's own past behavior through self-signaling and due to conformity based on social interactions. These changes over time result in multiple equilibria, so that the economy can develop stronger social norms and less evasion over time, or weaker norms and more evasion in the long run. An economy on a trajectory toward the “bad” equilibrium may be permanently pushed onto a trajectory toward the “good” equilibrium by means of a suffciently strong temporary policy. Observations from a recent tax reform in Sweden strongly support the theory and suggest that other policies than enforcement may indeed be a powerful tool in inuencing both behavior and attitudes.

Keywords: Social norms; Endogenous norms; Tax evasion; Self-signaling; Normative conformity. (search for similar items in EconPapers)
JEL-codes: D91 H26 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2017-11
New Economics Papers: this item is included in nep-iue, nep-pbe, nep-pub and nep-soc
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Citations: View citations in EconPapers (2)

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