Tax Misperceptions and the Effect of Informational Tax Nudges on Retirement Savings
Kay Blaufus () and
Michael Milde ()
Additional contact information
Kay Blaufus: Faculty of Economics and Management, Institute for Business Taxation, D 30167 Hanover, Germany
Michael Milde: Faculty of Economics and Management, Institute for Business Taxation, D 30167 Hanover, Germany
Management Science, 2021, vol. 67, issue 8, 5011-5031
Abstract:
Despite subjects being informed about tax rules before making saving decisions, we find—using laboratory experiments—that deferred taxation results in after-tax pensions that are approximately 25% lower compared with an economically equivalent immediate pension-tax system. This indicates substantial tax misperceptions. For subjects with low tax knowledge, tax misperceptions remain stable, even if they have gained experience. Tax misperceptions nearly disappear for all subjects only if we provide recurrent numerical informational pension-tax nudges and if subjects have gained experience. We demonstrate that replacing the tax-deductibility of retirement savings with government matching contributions increases after-tax pensions above the level under immediate taxation without the need to provide informational tax nudges.
Keywords: pension taxation; tax misperception; learning behavior; informational tax nudges; matching contribution (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)
Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2020.3761 (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:67:y:2021:i:8:p:5011-5031
Access Statistics for this article
More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().