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Do Taxes Crowd Out Intrinsic Motivation? Field-Experimental Evidence from Germany

Pierre Boyer, Nadja Dwenger and Johannes Rincke ()

No tax-mpg-rps-2014-23, Working Papers from Max Planck Institute for Tax Law and Public Finance

Abstract: This paper studies how imposing norms on contribution behavior affects individuals' intrinsic motivation. We consider an urban area in Germany where the Catholic Church collects a local church levy as a charitable donation, despite the fact that the levy is legally a tax. In cooperation with the church, we design a natural randomized field experiment with letter treatments informing individuals that the church levy is in fact a tax. Guided by a simple theoretical model, we use baseline contribution behavior to measure individuals' intrinsic motivation and demonstrate that treatment effects differ strongly across motivational types. Among weakly intrinsically motivated individuals, communicating the existence of a legal norm results in a significant crowd-out of intrinsic motivation. In contrast, strongly intrinsically motivated individuals do not show any treatment response. We cross-validate our findings using alternative motivational measures derived from an extensive post-treatment survey.

Keywords: intrinsic motivation; crowding out; charitable giving; taxes; public goods; natural randomized field experiment (search for similar items in EconPapers)
JEL-codes: C93 D03 H26 H41 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2014-12
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-pbe, nep-pub and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed

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Working Paper: Do Taxes Crowd Out Intrinsic Motivation? Field-Experimental Evidence from Germany (2015) Downloads
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