Biased effects of taxes and subsidies on portfolio choices

Hagen Ackermann, Martin Fochmann and Benedikt Mihm

No 138, arqus Discussion Papers in Quantitative Tax Research from arqus - Arbeitskreis Quantitative Steuerlehre

Abstract: We study how taxes and subsidies affect portfolio choices in a laboratory experiment. We find highly significant differences after intervention, even though the net income is identical in all our treatments and thus the decision pattern of investors should be constant. In particular, we observe that the willingness to invest in the risky asset decreases markedly when an income tax has to be paid or when a subsidy is paid. If we combine both a tax and a subsidy, this effect intensifies.

Keywords: tax perception; risk-taking behavior; portfolio choice; distorting taxation; tax; subsidy; behavioral economics (search for similar items in EconPapers)
JEL-codes: C91 D14 H24 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-acc, nep-exp and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:arqudp:138

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