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Dynamics of tax evasion with back auditing, social norm updating, and public goods provision – An agent-based simulation

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  • Hokamp, Sascha

Abstract

Income tax evasion dynamics and social interactions are analyzed with an agent-based model in heterogeneous populations. One novelty is the combined analysis of back auditing and ageing, which allows for incorporating psychological findings with respect to social norm updating over a taxpayer’s life cycle. Another novelty concerns individual’s social behavior regarding a Pareto-optimal provision of public goods. Simulation results support the counterintuitive conclusion drawn elsewhere in the literature that income tax compliance may decrease with raising marginal per capita returns (MPCRs). Yet, back auditing seems to have by far the strongest impact on the dynamics of fiscal fraud and also can help to curb the extent of tax evasion (ETE).

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  • Hokamp, Sascha, 2014. "Dynamics of tax evasion with back auditing, social norm updating, and public goods provision – An agent-based simulation," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 187-199.
    • Handle: RePEc:eee:joepsy:v:40:y:2014:i:c:p:187-199
    DOI: 10.1016/j.joep.2013.01.006
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    Cited by:

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    2. Sascha Hokamp & Götz Seibold, 2014. "Tax Compliance and Public Goods Provision. An Agent-based Econophysics Approach," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 6(4), pages 217-236, December.
    3. Semjén, András, 2017. "Az adózói magatartás különféle magyarázatai [Various explanations for tax compliance]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 140-184.
    4. Gamannossi degl’Innocenti, Duccio & Rablen, Matthew D., 2020. "Tax evasion on a social network," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 79-91.
    5. Korndörfer, Martin & Krumpal, Ivar & Schmukle, Stefan C., 2014. "Measuring and explaining tax evasion: Improving self-reports using the crosswise model," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 18-32.
    6. Vincent, Rose Camille, 2023. "Vertical taxing rights and tax compliance norms," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 443-467.
    7. Saibal Kar & Srijan Banerjee, 2018. "Tax Evasion and Provision of Public Goods: Implications for Wage and Employment," Studies in Microeconomics, , vol. 6(1-2), pages 84-99, June.
    8. Mannan, Kazi Abdul & Farhana, Khandaker Mursheda & Chowdhury, G. M. Omar Faruque, 2021. "Social Network and Tax Evasion: Theoretical Model and Empirical Evidence in Bangladesh," MPRA Paper 108279, University Library of Munich, Germany, revised 2021.
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    More about this item

    Keywords

    Income tax evasion; Back auditing; Public goods provision; Pareto-optimality; Heterogeneous population; Social norms; Agent-based modeling;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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