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Combining the contributions of behavioral economics and other social sciences in understanding taxation and tax reform

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  • James, Simon

Abstract

This paper extends previous work presented at the SABE/IAREP conference at St Mary’s University, Halifax (James, 2009). In the earlier paper it was shown that conventional economic theory is used to make the case for tax reform but does not always adequately incorporate all the relevant factors. However, an approach based on behavioral economics can make the difference between success and failure. In this paper the contributions of other social sciences are also included. Taxation is a particularly appropriate subject to explore the integration of the social sciences since they have all devoted considerable attention to it. It can be seen that different social sciences suggest a range of variables that might be taken into account in addition to those included in mainstream economics. Other social sciences also offer different methodological approaches and consider the possibility of different outcomes of the fiscal process. The paper concludes that it is not easy to integrate the social sciences in a single approach to the study of tax and tax policy. There may also be the risk of encouraging inappropriate integration - researchers operating outside their expertise can produce results that are not helpful. However, comparing the contribution of behavioral economics with those of the social sciences more generally, it can be seen that behavioral economics can offer a framework within which these areas can be examined. Indeed, it may be a useful channel to add the contributions of other social sciences to mainstream economic research.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26289.

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Date of creation: Aug 2010
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Handle: RePEc:pra:mprapa:26289

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Keywords: behavioral economics; social sciences; taxation; tax reform;

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  1. Tomer, John F., 2007. "What is behavioral economics?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(3), pages 463-479, June.
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  3. Wagner, Richard E., 2006. "States and the crafting of souls: Mind, society, and fiscal sociology," Journal of Economic Behavior & Organization, Elsevier, vol. 59(4), pages 516-524, April.
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  6. James, Simon, 2004. "Financing multi-level government," MPRA Paper 26760, University Library of Munich, Germany.
  7. Michael McLure, 2005. "Equilibrium and Italian fiscal sociology: A reflection on the Pareto-Griziotti and Pareto-Sensini letters on fiscal theory," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 12(4), pages 609-633.
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  10. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September.
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  13. Kirchler,Erich, 2007. "The Economic Psychology of Tax Behaviour," Cambridge Books, Cambridge University Press, number 9780521876742, Fall.
  14. James, Simon & Alley, Clinton, 2008. "Successful tax reform: the experience of value added tax in the United Kingdom and goods and services tax in New Zealand," MPRA Paper 19858, University Library of Munich, Germany.
  15. J C Archer, 1983. "The geography of federal fiscal politics in the United States of America: an exploration," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 1(4), pages 377-400, August.
  16. Loewenstein, George, 2008. "Exotic Preferences: Behavioral Economics and Human Motivation," OUP Catalogue, Oxford University Press, number 9780199257089, Octomber.
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