Is the revealed price of democracy biased?

José María Durán-Cabré (), Alejandro Esteller-Moré () and Riccardo Secomandi ()
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José María Durán-Cabré: Universitat de Barcelona & IEB
Alejandro Esteller-Moré: Universitat de Barcelona & IEB
Riccardo Secomandi: University of Ferrara & IEB

No 2025/04, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: We examine how information influences the marginal willingness to pay taxes (MWTPT) through a four-wave randomized survey experiment conducted during the COVID-19 pandemic. Specifically, we assess the impact of quantitative (data on the actual tax-to-GDP ratio) and qualitative (basic pros and cons of taxation) information on revealed MWTPT. The results show that qualitative information increases MWTPT, particularly among high-income individuals. In contrast, quantitative information only reduces MWTPT among high-income individuals who initially underestimated the aggregate tax burden. Hence, those who are potentially more affected by taxes are also more sensitive to the provision of information. These findings suggest that information can shape perceptions of the tax system and, consequently, influence individuals' willingness to contribute to public good provision. This has important implications for tax policy design and efforts to reduce political polarization. If these efforts are not properly implemented, the revealed price of democracy will remain biased.

Keywords: Survey experiment; Fiscal knowledge; Marginal Willingness to Pay Taxes; Income based behaviour (search for similar items in EconPapers)
JEL-codes: D72 D91 H20 H26 H30 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2025
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