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Income tax evasion dynamics: Evidence from an agent-based econophysics model

Michael Pickhardt and Goetz Seibold

No 53, MEP Discussion Papers from University of Münster, Münster Center for Economic Policy (MEP)

Abstract: We analyze income tax evasion dynamics in a standard model of statistical mechanics, the Ising model of ferromagnetism. However, in contrast to previous research, 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 allows for analyzing large societies of four different and interacting agent types. 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 existing 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 O17 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-acc, nep-cmp, nep-iue and nep-pub
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Related works:
Journal Article: Income tax evasion dynamics: Evidence from an agent-based econophysics model (2014) Downloads
Working Paper: Income Tax Evasion Dynamics: Evidence from an Agent-based Econophysics Model (2011) Downloads
Working Paper: Income Tax Evasion Dynamics: Evidence from an Agent-based Econophysics Model Downloads
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