Aint that a Shame: False Tax Declarations and Fraudulent Benefit Claims

Lory Barile, John Cullis and Philip Jones
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Lory Barile: Department of Economics, University of Warwick
John Cullis: Department of Economics, University of Bath
Philip Jones: Department of Economics, University of Bath

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper begins by listing three uncomfortable implications of the standard expected utility model of individual decision-making concerning participation in fiscal crimes : that tax evasion and benefit fraud can be treated identically; fiscal crimes should be endemic; and that all individuals, depending on parameter values, should be either honest or dishonest. Levitt and List’s (2007) utility function relating to decisions with a moral dimension is adapted to offer insight into these implications involving an individuals optimal honesty and moral hinterland. Predictions are developed that include moral costs as a determinant of dishonest intentions and are tested with reference to some 2,942 questionnaire responses to a 2016 national (UK) survey. This paper offers insight into the way moral costs inform perceptions of the intrinsic value of doing the right thing thereby providing a richer analysis of fiscal crimes. The account has particular relevance for policy prescriptions that involve aspects of shame.

Keywords: benefit fraud; tax evasion; optimal honesty; moral costs JEL Codes: D01; H2; K42 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-iue, nep-law, nep-pub and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:1435

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