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Happiness and tax morale: An empirical analysis

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  • Lubian, Diego
  • Zarri, Luca

Abstract

This paper presents empirical evidence that “tax morale” – taxpayers’ intrinsic motivation to pay taxes – constitutes a new determinant of happiness, even after controlling for several demographic and socioeconomic factors. Using data on Italian households for 2004, we assess the strength of tax morale by relying on single items as well as composite multi-item indices. Our main result that fiscal honesty generates a higher hedonic payoff than cheating is in line with Harbaugh et al. (2007)’s neuroeconomic finding. Further, it sheds light on the well-known “puzzle of compliance”, that is the fact that many individuals pay taxes even when expected penalty and audit probability are extremely low: tax compliance is less puzzling once we show that not only it is materially costly, but also provides sizeable non-pecuniary benefits that make it rewarding in itself.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 80 (2011)
Issue (Month): 1 ()
Pages: 223-243

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Handle: RePEc:eee:jeborg:v:80:y:2011:i:1:p:223-243

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Web page: http://www.elsevier.com/locate/jebo

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Keywords: Happiness; Tax morale; Tax compliance;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Paying tax makes you happy
    by Nicholas Gruen in Club Troppo on 2011-04-12 13:17:51
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Pickhardt, Michael & Prinz, Aloys, 2014. "Behavioral dynamics of tax evasion – A survey," Journal of Economic Psychology, Elsevier, Elsevier, vol. 40(C), pages 1-19.
  2. Philipp Doerrenberg & Denvil Duncan & Clemens Fuest & Andreas Peichl, 2012. "Nice guys finish last: are people with higher tax morale taxed more heavily?," Cologne Graduate School Working Paper Series, Cologne Graduate School in Management, Economics and Social Sciences 03-02, Cologne Graduate School in Management, Economics and Social Sciences.
  3. Filippin, Antonio & Fiorio, Carlo V. & Viviano, Eliana, 2013. "The effect of tax enforcement on tax morale," European Journal of Political Economy, Elsevier, vol. 32(C), pages 320-331.
  4. Cãtãlina Cozmei, 2012. "Playing The Fiscal Lottery Game," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 6(1), pages 511-521, November.
  5. Alpaslan Akay & Olivier Bargain & Mathias Dolls & Dirk Neumann & Andreas Peichl & Sebastian Siegloch, 2012. "Happy Taxpayers? Income Taxation and Well-Being," SOEPpapers on Multidisciplinary Panel Data Research 526, DIW Berlin, The German Socio-Economic Panel (SOEP).

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