Income tax evasion dynamics: Evidence from an agent-based econophysics model

Michael Pickhardt and Goetz Seibold

Journal of Economic Psychology, 2014, vol. 40, issue C, 147-160

Abstract: We analyze income tax evasion dynamics in a standard model of statistical mechanics, the Ising model of ferromagnetism. However, in contrast to previous research, we use an inhomogeneous multi-dimensional Ising model where the local degrees of freedom (agents) are subject to a specific social temperature and coupled to external fields which govern their social behavior. This new modeling frame allows for analyzing large societies of four different and interacting agent types. As a second novelty, our model may reproduce results from agent-based models that incorporate standard Allingham and Sandmo tax evasion features as well as results from existing two-dimensional Ising based tax evasion models. In this way, such kind of models may become more relevant and useful in economics as well as social psychology. We finally use our model for analyzing income tax evasion dynamics under different enforcement scenarios and point to some policy implications that may also be of interest for psychological research on tax compliance.

Keywords: Tax evasion; Tax compliance; Ising model; Econophysics; Numerical simulation (search for similar items in EconPapers)
JEL-codes: C15 H26 H30 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (13)

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Related works:
Working Paper: Income Tax Evasion Dynamics: Evidence from an Agent-based Econophysics Model (2011)
Working Paper: Income Tax Evasion Dynamics: Evidence from an Agent-based Econophysics Model
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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:40:y:2014:i:c:p:147-160

DOI: 10.1016/j.joep.2013.01.011

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