Can Behavioral “Nudges” Improve Compliance? The Case of Colombia Social Protection Contributions

James Alm (), Laura Rosales Cifuentes, Carlos Mauricio Ortiz Niño and Diana Rocha
Additional contact information
Laura Rosales Cifuentes: Gandour Consultores, Bogotá 110221, Colombia
Carlos Mauricio Ortiz Niño: Gandour Consultores, Bogotá 110221, Colombia
Diana Rocha: Gandour Consultores, Bogotá 110221, Colombia

Games, 2019, vol. 10, issue 4, 1-23

Abstract: The Government of Colombia imposes a variety of taxes that must be paid by individual wage earners, called in their entirety “social protection contributions”. Since 2007 individual payments have been collected using an on-line mechanism. In order to improve compliance, the Government used a controlled field experiment in which various “pop-up messages” were sent to individuals when making their on-line payments, as behavioral “nudges”. We examine the impact of these nudges on individual reporting behavior. We find mixed evidence that these messages increased compliance rates relative to a control group that received a so-called “neutral” message. However, we also demonstrate that the use as the control group of individuals receiving a so-called “neutral” message creates considerable bias; that is, the receipt of any message of any type clearly influences behavior. Instead, we show that the appropriate control group should be individuals who receive no message at all. When this control group is used, we find that self-employed individuals generally increase their contributions; individuals who are making declarations on behalf of all employees in their company are less likely to respond to messages in a systematic way.

Keywords: tax compliance; behavioral economics; “nudges”; controlled field experiments (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Can Behavioral "Nudges" Improve Compliance? The Case of Colombia Social Protection Contributions (2019)
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