Income Tax Evasion Dynamics: Evidence from an Agent-based Econophysics Model

Michael Pickhardt and Goetz Seibold

No 201179, Working Papers from Institute of Spatial and Housing Economics, Munster Universitary

Abstract: We analyze income tax evasion dynamics in a standard model of statistical me- chanics, the Ising model of ferromagnetism. However, in contrast to previous re- search, 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 al- lows for analyzing large societies of interacting heterogeneous agents. 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 exist- ing two-dimensional Ising based tax evasion models. We then use our model for analyzing income tax evasion dynamics under different enforcement scenarios and point to some policy implications.

Keywords: Tax Evasion; Tax Compliance; Ising Model; Econophysics; Numerical Simulation (search for similar items in EconPapers)
JEL-codes: C15 H26 (search for similar items in EconPapers)
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Income tax evasion dynamics: Evidence from an agent-based econophysics model (2014)
Working Paper: Income Tax Evasion Dynamics: Evidence from an Agent-based Econophysics Model (2011)
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