IDEAS home Printed from https://ideas.repec.org/a/bla/ecinqu/v62y2024i2p563-583.html
   My bibliography  Save this article

Outcomes or participation? Experimentally testing competing sources of legitimacy for taxation

Author

Listed:
  • Christoph Engel
  • Luigi Mittone
  • Azzurra Morreale

Abstract

Legitimacy may result from support for projects that a government implements. However, legitimacy may also result from the opportunity to participate in the selection process of projects. We tested the strength of these competing sources of legitimacy experimentally and their relationship. We find a straightforward effect of the former: the more projects a participant supports, the higher their taxes. Participants are also willing to pay for participation; if they have had a say, they pay higher taxes. Yet, most of this effect is actually instrumental: participants want participation to ensure that their taxes are used for purposes they deem acceptable.

Suggested Citation

  • Christoph Engel & Luigi Mittone & Azzurra Morreale, 2024. "Outcomes or participation? Experimentally testing competing sources of legitimacy for taxation," Economic Inquiry, Western Economic Association International, vol. 62(2), pages 563-583, April.
    • Handle: RePEc:bla:ecinqu:v:62:y:2024:i:2:p:563-583
    DOI: 10.1111/ecin.13188
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ecin.13188
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ecin.13188?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 817-869.
    2. Daron Acemoglu & Matthew O. Jackson, 2017. "Social Norms and the Enforcement of Laws," Journal of the European Economic Association, European Economic Association, vol. 15(2), pages 245-295.
    3. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    4. Fischbacher, Urs & Gächter, Simon & Quercia, Simone, 2012. "The behavioral validity of the strategy method in public good experiments," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 897-913.
    5. Guala, Francesco & Mittone, Luigi, 2010. "How history and convention create norms: An experimental study," Journal of Economic Psychology, Elsevier, vol. 31(4), pages 749-756, August.
    6. Neblo, Michael A. & Esterling, Kevin M. & Kennedy, Ryan P. & Lazer, David M.J. & Sokhey, Anand E., 2010. "Who Wants To Deliberate—And Why?," American Political Science Review, Cambridge University Press, vol. 104(3), pages 566-583, August.
    7. Vivien A. Schmidt, 2013. "Democracy and Legitimacy in the European Union Revisited: Input, Output and ‘Throughput’," Political Studies, Political Studies Association, vol. 61(1), pages 2-22, March.
    8. Erik O. Kimbrough & Alexander Vostroknutov, 2016. "Norms Make Preferences Social," Journal of the European Economic Association, European Economic Association, vol. 14(3), pages 608-638, June.
    9. Benno Torgler, 2004. "Moral suasion: An alternative tax policy strategy? Evidence from a controlled field experiment in Switzerland," Economics of Governance, Springer, vol. 5(3), pages 235-253, November.
    10. Peter J. Lambert, 1988. "Okun's Bucket: A Leak and Two Splashes?," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 15(1), pages 71-78, January.
    11. Alm, James & Jackson, Betty R. & McKee, Michael, 1993. "Fiscal exchange, collective decision institutions, and tax compliance," Journal of Economic Behavior & Organization, Elsevier, vol. 22(3), pages 285-303, December.
    12. Martin Abraham & Kerstin Lorek & Friedemann Richter & Matthias Wrede, 2017. "Collusive tax evasion and social norms," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(2), pages 179-197, April.
    13. Casal, Sandro & Mittone, Luigi, 2016. "Social esteem versus social stigma: The role of anonymity in an income reporting game," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 55-66.
    14. Pietro Battiston & Simona Gamba, 2013. "Is Tax Compliance a Social Norm? A Field Experiment," Working Papers 249, University of Milano-Bicocca, Department of Economics, revised Jul 2013.
    15. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    16. Ellickson, Robert C, 1998. "Law and Economics Discovers Social Norms," The Journal of Legal Studies, University of Chicago Press, vol. 27(2), pages 537-552, June.
    17. Benno Torgler & Markus Schaffner & Alison Macintyre, 2007. "Tax Compliance, Tax Morale and Governance Quality," CREMA Working Paper Series 2007-17, Center for Research in Economics, Management and the Arts (CREMA).
    18. Engel, Christoph & Mittone, Luigi & Morreale, Azzurra, 2020. "Tax morale and fairness in conflict an experiment," Journal of Economic Psychology, Elsevier, vol. 81(C).
    19. Blumenthal, Marsha & Christian, Charles W. & Slemrod, Joel, 2001. "Do Normative Appeals Affect Tax Compliance? Evidence from a Controlled Experiment in Minnesota," National Tax Journal, National Tax Association, vol. 54(n. 1), pages 125-38, March.
    20. Frey, Bruno S, 1997. "A Constitution for Knaves Crowds Out Civic Virtues," Economic Journal, Royal Economic Society, vol. 107(443), pages 1043-1053, July.
    21. Steven R Beckman & John P Formby & W James Smith, 2004. "Efficiency, Equity And Democracy: Experimental Evidence On Okun’S Leaky Bucket," Research on Economic Inequality, in: Inequality, Welfare and Income Distribution: Experimental Approaches, pages 17-42, Emerald Group Publishing Limited.
    22. Bordignon, Massimo, 1993. "A fairness approach to income tax evasion," Journal of Public Economics, Elsevier, vol. 52(3), pages 345-362, October.
    23. Esaiasson, Peter & Persson, Mikael & Gilljam, Mikael & Lindholm, Torun, 2019. "Reconsidering the Role of Procedures for Decision Acceptance," British Journal of Political Science, Cambridge University Press, vol. 49(1), pages 291-314, January.
    24. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    25. Desmet, Pieter T.M. & Engel, Christoph, 2021. "People are conditional rule followers," Journal of Economic Psychology, Elsevier, vol. 85(C).
    26. Castro, Lucio & Scartascini, Carlos, 2015. "Tax compliance and enforcement in the pampas evidence from a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 65-82.
    27. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
    28. Lars P. Feld & Jean‐Robert Tyran, 2002. "Tax Evasion and Voting: An Experimental Analysis," Kyklos, Wiley Blackwell, vol. 55(2), pages 197-221, May.
    29. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    30. Donna Bobek & Amy Hageman & Charles Kelliher, 2013. "Analyzing the Role of Social Norms in Tax Compliance Behavior," Journal of Business Ethics, Springer, vol. 115(3), pages 451-468, July.
    31. Marco Kleine & Pascal Langenbach & Lilia Zhurakhovska, 2013. "How Voice Shapes Reactions to Impartial Decision- Makers: An Experiment on Participation Procedures," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2013_11, Max Planck Institute for Research on Collective Goods, revised Feb 2017.
    32. Sclen, Håkon & Kallbekken, Steffen, 2011. "A choice experiment on fuel taxation and earmarking in Norway," Ecological Economics, Elsevier, vol. 70(11), pages 2181-2190, September.
    33. Falkinger, Josef, 1995. "Tax evasion, consumption of public goods and fairness," Journal of Economic Psychology, Elsevier, vol. 16(1), pages 63-72, March.
    34. Engel, Christoph, 2014. "Social preferences can make imperfect sanctions work: Evidence from a public good experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 343-353.
    35. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    36. Torgler, Benno, 2005. "Tax morale and direct democracy," European Journal of Political Economy, Elsevier, vol. 21(2), pages 525-531, June.
    37. Wenzel, Michael & Taylor, Natalie, 2004. "An experimental evaluation of tax-reporting schedules: a case of evidence-based tax administration," Journal of Public Economics, Elsevier, vol. 88(12), pages 2785-2799, December.
    38. Lucy F. Ackert & Jorge Martinez‐Vazquez & Mark Rider, 2007. "Social Preferences And Tax Policy Design: Some Experimental Evidence," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 487-501, July.
    39. Slemrod, Joel, 1994. "Fixing the leak in Okun's bucket optimal tax progressivity when avoidance can be controlled," Journal of Public Economics, Elsevier, vol. 55(1), pages 41-51, September.
    40. Kristina M. Bott & Alexander W. Cappelen & Erik Ø. Sørensen & Bertil Tungodden, 2020. "You’ve Got Mail: A Randomized Field Experiment on Tax Evasion," Management Science, INFORMS, vol. 66(7), pages 2801-2819, July.
    41. Benno Torgler, 2004. "Moral Suasion: An alternative tax policy strategy? Evidence from a controlled field experiment in Switzerland," CREMA Working Paper Series 2004-01, Center for Research in Economics, Management and the Arts (CREMA).
    42. Blumenthal, Marsha & Christian, Charles W. & Slemrod, Joel, 2001. "Do Normative Appeals Affect Tax Compliance? Evidence From a Controlled Experiment in Minnesota," National Tax Journal, National Tax Association;National Tax Journal, vol. 54(1), pages 125-138, March.
    43. James Alm & Gary H. McClelland & William D. Schulze, 1999. "Changing the Social Norm of Tax Compliance by Voting," Kyklos, Wiley Blackwell, vol. 52(2), pages 141-171, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. James Alm, 2019. "What Motivates Tax Compliance?," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 353-388, April.
    2. James Alm & Lilith Burgstaller & Arrita Domi & Amanda März & Matthias Kasper, 2023. "Nudges, Boosts, and Sludge: Using New Behavioral Approaches to Improve Tax Compliance," Economies, MDPI, vol. 11(9), pages 1-22, September.
    3. Lars P. Feld & Bruno S. Frey, 2006. "Tax Evasion in Switzerland: The Roles of Deterrence and Tax Morale," CREMA Working Paper Series 2006-13, Center for Research in Economics, Management and the Arts (CREMA).
    4. Kamm, Aaron & Koch, Christian & Nikiforakis, Nikos, 2021. "The ghost of institutions past: History as an obstacle to fighting tax evasion?," European Economic Review, Elsevier, vol. 132(C).
    5. Kristina M. Bott & Alexander W. Cappelen & Erik Ø. Sørensen & Bertil Tungodden, 2020. "You’ve Got Mail: A Randomized Field Experiment on Tax Evasion," Management Science, INFORMS, vol. 66(7), pages 2801-2819, July.
    6. Klaser, Klaudijo & Mittone, Luigi, 2022. "Can the rawlsian veil of ignorance foster tax compliance? Evidence from a laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 99-113.
    7. Sinning, Mathias & Zhang, Yinjunjie, 2023. "Social norms or enforcement? A natural field experiment to improve traffic and parking fine compliance," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 43-60.
    8. Lars P. Feld & Bruno S. Frey, 2004. "Illegal, Immoral, Fattening or What?: How Deterrence and Responsive Regulation Shape Tax Morale," Marburg Working Papers on Economics 200426, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    9. Giulia Mascagni, 2018. "From The Lab To The Field: A Review Of Tax Experiments," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 273-301, April.
    10. Dong, Sarah Xue & Sinning, Mathias, 2022. "Trying to Make a Good First Impression: A Natural Field Experiment to Engage New Entrants to the Tax System," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 100(C).
    11. Kettle, Stewart & Hernandez, Marco & Sanders, Michael & Hauser, Oliver & Ruda, Simon, 2017. "Failure to CAPTCHA Attention: Null Results from an Honesty Priming Experiment in Guatemala," Scholarly Articles 33490945, Harvard Kennedy School of Government.
    12. Biddle, Nicholas & Fels, Katja & Sinning, Mathias, 2017. "Behavioral Insights and Business Taxation: Evidence from Two Randomized Controlled Trials," IZA Discussion Papers 10795, Institute of Labor Economics (IZA).
    13. Biddle, Nicholas & Fels, Katja M. & Sinning, Mathias, 2018. "Behavioral insights on business taxation: Evidence from two natural field experiments," Journal of Behavioral and Experimental Finance, Elsevier, vol. 18(C), pages 30-49.
    14. Vossler, Christian A. & McKee, Michael & Bruner, David M., 2021. "Behavioral effects of tax withholding on tax compliance: Implications for information initiatives," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 301-319.
    15. James Alm & William D. Schulze & Carrie von Bose & Jubo Yan, 2019. "Appeals to Social Norms and Taxpayer Compliance," Southern Economic Journal, John Wiley & Sons, vol. 86(2), pages 638-666, October.
    16. Friedrich Heinemann & Martin Kocher, 2013. "Tax compliance under tax regime changes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(2), pages 225-246, April.
    17. Dina Pomeranz & José Vila-Belda, 2019. "Taking State-Capacity Research to the Field: Insights from Collaborations with Tax Authorities," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 755-781, August.
    18. James Alm & Laura Rosales Cifuentes & Carlos Mauricio Ortiz Niño & Diana Rocha, 2019. "Can Behavioral “Nudges” Improve Compliance? The Case of Colombia Social Protection Contributions," Games, MDPI, vol. 10(4), pages 1-23, October.
    19. López-Pérez, Raúl & Ramirez-Zamudio, Aldo, 2020. "An experimental test of two policies to increase donations to public projects," International Review of Law and Economics, Elsevier, vol. 62(C).
    20. Joel Slemrod, 2007. "Cheating Ourselves: The Economics of Tax Evasion," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 25-48, Winter.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecinqu:v:62:y:2024:i:2:p:563-583. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.