Social norms and tax compliance: Experiments and theory

Raúl López Pérez () and Aldo. Ramírez Zamudio ()
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Raúl López Pérez: Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.
Aldo. Ramírez Zamudio: Center for Economics, Banking and Finance Studies, Department of Economics, Universidad de Lima.
Authors registered in the RePEc Author Service: Raúl López-Pérez

No 2018/02, Working Papers in Economic Theory from Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History)

Abstract: We report data from an experiment in Peru where subjects anonymously decide how much of their endowment they donate to the Peruvian Government. The standard rational choice model and several well-known models of non-selfish preferences predict zero giving. Yet we observe that around 75% of the subjects give something (N = 164), with substantial heterogeneity. Our data is consistent with an account based on social norms: If compliance is not too costly, people comply with norms if (i) they perceive that such behavior sufficiently promotes social welfare and (ii) others are expected to respect norms as well (peer effects). Our paper contributes to a recent literature on tax morale emphasizing the importance of non-standard motivations on tax compliance and suggests that taxpayers are willing to give money to the government (e.g., paying taxes) if they believe that enough others give as well and that taxes are not wasted or ‘stolen’ by the government, but used to promote social welfare.

Keywords: corruption; evasion; peer effects; social norms; tax compliance; tax morale (search for similar items in EconPapers)
JEL-codes: C92 D91 H21 H26 H3 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2018-04
New Economics Papers: this item is included in nep-exp, nep-hpe, nep-iue, nep-pbe, nep-pub and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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