Advanced Search
MyIDEAS: Login to save this paper or follow this series

Combining Psychology and Economics in the Analysis of Compliance: From Enforcement to Cooperation

Contents:

Author Info

  • Erich Kirchler

    ()
    (Department of Applied Psychology: Work, Education and Economy, University of Vienna)

  • Stephan Muehlbacher

    ()
    (Department of Applied Psychology: Work, Education and Economy, University of Vienna)

  • Katharina Gangl

    ()
    (Department of Applied Psychology: Work, Education and Economy, University of Vienna)

  • Eva Hofmann

    ()
    (Department of Applied Psychology: Work, Education and Economy, University of Vienna)

  • Christoph Kogler

    ()
    (Department of Applied Psychology: Work, Education and Economy, University of Vienna)

  • Maria Pollai

    ()
    (Department of Applied Psychology: Work, Education and Economy, University of Vienna)

  • James Alm

    ()
    (Department of Economics, Tulane University)

Abstract

In tax compliance research, there has been a significant shift in research emphasis from the analysis of enforcement to the incorporation of trust-building measures that encourage cooperation. In this paper, we trace this shift. We first describe the four major "actors" in the tax compliance game and their complex interactions: taxpayers, elected government officials, appointed tax authorities (or the tax administration), and tax accountants. Second, we examine various perspectives on what determines the compliance decisions of individuals. We start with "economic" factors that are based on tax compliance as an individual decision under risk (e.g., audits and fines). We then move to factors based more on "psychology", like social norms, fairness, and interactions both between taxpayers and between taxpayers and the government. Indeed, over the past few decades the view of taxpayers has shifted from one in which an authoritarian government and its tax authority force citizens to pay their taxes under the threat of punishment, to a view in which both elected and appointed authorities provide the necessary services to enable compliance, and even more recently to a view of authorities and citizens cooperating with one another. Third, we present the "slippery slope" framework as a way of integrating economic and psychological aspects into a unified framework. We conclude with recommendations based on this framework that can improve compliance.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://econ.tulane.edu/RePEc/pdf/tul1212.pdf
File Function: First Version, 2012
Download Restriction: no

Bibliographic Info

Paper provided by Tulane University, Department of Economics in its series Working Papers with number 1212.

as in new window
Length: 35 pages
Date of creation: Jul 2012
Date of revision:
Handle: RePEc:tul:wpaper:1212

Contact details of provider:
Postal: 206 Tilton Hall, New Orleans, LA 70118
Phone: (504) 865-5321
Fax: (504) 865-5869
Web page: http://econ.tulane.edu
More information through EDIRC

Related research

Keywords: tax evasion; behavioral economics; social norms; "slippery slope";

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  2. Gneezy, Uri & Rustichini, Aldo, 2000. "A Fine is a Price," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 1-17, January.
  3. Kirchler,Erich, 2007. "The Economic Psychology of Tax Behaviour," Cambridge Books, Cambridge University Press, number 9780521876742, April.
  4. Gerald J. Pruckner & Rupert Sausgruber, 2008. "Honesty on the Streets - A Natural Field Experiment on Newspaper Purchasing," Working Papers 2009-24, Faculty of Economics and Statistics, University of Innsbruck.
  5. Dekker, Henri C., 2004. "Control of inter-organizational relationships: evidence on appropriation concerns and coordination requirements," Accounting, Organizations and Society, Elsevier, vol. 29(1), pages 27-49, January.
  6. Alm, James & Sanchez, Isabel & de Juan, Ana, 1995. "Economic and Noneconomic Factors in Tax Compliance," Kyklos, Wiley Blackwell, vol. 48(1), pages 3-18.
  7. James Alm & Benno Torgler, 2012. "Do Ethics Matter? Tax Compliance and Morality," Working Papers 1207, Tulane University, Department of Economics.
  8. James Andreoni & Brian Erard & Jonathan Feinstein, 1998. "Tax Compliance," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 818-860, June.
  9. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
  10. 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.
  11. Kastlunger, Barbara & Kirchler, Erich & Mittone, Luigi & Pitters, Julia, 2009. "Sequences of audits, tax compliance, and taxpaying strategies," Journal of Economic Psychology, Elsevier, vol. 30(3), pages 405-418, June.
  12. PerOla Öberg & Torsten Svensson, 2010. "Does Power Drive Out Trust? Relations between Labour Market Actors in Sweden," Political Studies, Political Studies Association, vol. 58, pages 143-166, 02.
  13. Feld, Lars P. & Matsusaka, John G., 2003. "Budget referendums and government spending: evidence from Swiss cantons," Journal of Public Economics, Elsevier, vol. 87(12), pages 2703-2724, December.
  14. James Alm, 2012. "Measuring, explaining, and controlling tax evasion: lessons from theory, experiments, and field studies," International Tax and Public Finance, Springer, vol. 19(1), pages 54-77, February.
  15. Alm, James & Torgler, Benno, 2006. "Culture differences and tax morale in the United States and in Europe," Journal of Economic Psychology, Elsevier, vol. 27(2), pages 224-246, April.
  16. Erich Kirchler & Boris Maciejovsky & Martin Weber, 2004. "Framing Effects, Selective Information and Market Behavior ­ An Experimental Analysis ­," Papers on Strategic Interaction 2004-16, Max Planck Institute of Economics, Strategic Interaction Group.
  17. Srinivasan, T. N., 1973. "Tax evasion: A model," Journal of Public Economics, Elsevier, vol. 2(4), pages 339-346.
  18. Kirchler, Erich & Hoelzl, Erik & Wahl, Ingrid, 2008. "Enforced versus voluntary tax compliance: The "slippery slope" framework," Journal of Economic Psychology, Elsevier, vol. 29(2), pages 210-225, April.
  19. Francesco Guala & Luigi Mittone, 2005. "Experiments in economics: External validity and the robustness of phenomena," Journal of Economic Methodology, Taylor & Francis Journals, vol. 12(4), pages 495-515.
  20. Frey, Bruno S, 1997. "A Constitution for Knaves Crowds Out Civic Virtues," Economic Journal, Royal Economic Society, vol. 107(443), pages 1043-53, July.
  21. Braithwaite, John, 2005. "Markets in Vice, Markets in Virtue," OUP Catalogue, Oxford University Press, number 9780195222012.
  22. Erich Kirchler & Boris Maciejovsky & Herbert Schwarzenberger, 2003. "Specious Confidence after Tax Audits: A Contribition to the Dynamics of Compliance," Papers on Strategic Interaction 2003-14, Max Planck Institute of Economics, Strategic Interaction Group.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Pickhardt, Michael & Seibold, Goetz, 2014. "Income tax evasion dynamics: Evidence from an agent-based econophysics model," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 147-160.
  2. Pickhardt, Michael & Prinz, Aloys, 2014. "Behavioral dynamics of tax evasion – A survey," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 1-19.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:tul:wpaper:1212. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Finlay).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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