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Happiness and tax morale: An empirical analysis

Diego Lubian () and Luca Zarri

Journal of Economic Behavior & Organization, 2011, vol. 80, issue 1, 223-243

Abstract: This paper presents empirical evidence that “tax morale” – taxpayers’ intrinsic motivation to pay taxes – constitutes a new determinant of happiness, even after controlling for several demographic and socioeconomic factors. Using data on Italian households for 2004, we assess the strength of tax morale by relying on single items as well as composite multi-item indices. Our main result that fiscal honesty generates a higher hedonic payoff than cheating is in line with Harbaugh et al. (2007)’s neuroeconomic finding. Further, it sheds light on the well-known “puzzle of compliance”, that is the fact that many individuals pay taxes even when expected penalty and audit probability are extremely low: tax compliance is less puzzling once we show that not only it is materially costly, but also provides sizeable non-pecuniary benefits that make it rewarding in itself.

Keywords: Happiness; Tax morale; Tax compliance (search for similar items in EconPapers)
JEL-codes: C21 H20 I31 (search for similar items in EconPapers)
Date: 2011
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Working Paper: Happiness and Tax Morale: an Empirical Analysis (2011) Downloads
Working Paper: Happiness and Tax Morale: an Empirical Analysis (2011) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:80:y:2011:i:1:p:223-243

DOI: 10.1016/j.jebo.2011.03.009

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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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