Tax Evasion: Cheating Rationally or Deciding Emotionally?

Giorgio Coricelli (giorgio.coricelli@usc.edu), Mateus Joffily, Claude Montmarquette and Marie Claire Villeval

CIRANO Working Papers from CIRANO

Abstract: The economic models of tax compliance predict that individuals should evade taxes when the expected benefit of cheating is greater than its expected cost. When this condition is fulfilled, the high compliance however observed remains a puzzle. In this paper, we investigate the role of emotions as a possible explanation of tax compliance. Our laboratory experiment shows that emotional arousal, measured by Skin Conductance Responses, increases in the proportion of evaded taxes. The perspective of punishment after an audit, especially when the pictures of the evaders are publicly displayed, also raises emotions. We show that an audit policy that induces shame on the evaders favors compliance. Les modèles économiques d'évasion fiscale prédisent que les individus devraient frauder dès que le bénéfice attendu de l'évasion dépasse son coût espéré. Sous cette condition, le fort taux de revenu déclaré pourtant observé constitue une énigme. Dans cet article, nous nous intéressons au rôle des émotions comme explication possible de ce phénomène. Notre expérience de laboratoire montre que l'intensité des émotions, mesurée par la conductance de la peau, augmente avec la proportion du revenu qui n'est pas déclarée. La perspective d'une sanction à l'issue d'un contrôle, en particulier lorsque la photo des contrevenants est diffusée, soulève également des émotions. Nous montrons qu'une politique de contrôle qui suscite la honte chez les fraudeurs favorise l'honnêteté fiscale.

Keywords: tax evasion; emotions; neuro-economics; physiological measures; shame; experiments.; fraude fiscale; émotions; neuro-économie; mesures physiologiques; honte; expériences. (search for similar items in EconPapers)
JEL-codes: C91 C92 D81 H26 (search for similar items in EconPapers)
Date: 2007-10-01
New Economics Papers: this item is included in nep-acc, nep-cbe, nep-exp, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Tax Evasion: Cheating Rationally or Deciding Emotionally? (2007)
Working Paper: Tax Evasion: Cheating Rationally or Deciding Emotionally? (2007)
Working Paper: Tax Evasion: Cheating Rationally or Deciding Emotionally? (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cir:cirwor:2007s-22

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