IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-21-00191.html

Gender differences in preferences for income tax refunds

Author

Listed:
  • Kimberly S. Krieg

    (University of San Diego School of Business)

  • Sarah C. Lyon

    (University of San Diego School of Business)

Abstract

The Tax Cuts and Jobs Act of 2017 (TCJA) provides a natural setting to examine taxpayer preferences for income tax refunds. An examination of the individual income tax formula reveals that an income tax refund is simply a function of the total tax owed (net of any tax credits) compared to the total tax already paid through withholdings and estimated tax payments. However, many taxpayers continue to focus on the size of their income tax refund, rather than the holistic picture of their total tax liability compared to their tax withholdings. Recent results examining the propensity for mental tax accounting and gender, and the economics literature focusing on female risk aversion, suggest that gender may play an important role in attitudes towards and preferences for certain tax behaviors. Thus, we investigate whether gender is a significant factor in preferences for income tax refunds. We survey U.S. taxpayers and find a significant gender difference related to receiving money as higher wages in a monthly paycheck or as a tax refund at the end of the year. Our results compliment prior studies in economics that document a consistent and significant relation between gender and risk-taking. Overall, we provide preliminary evidence that women may view income tax withholding as a low-risk investment and as a way to save.

Suggested Citation

  • Kimberly S. Krieg & Sarah C. Lyon, 2021. "Gender differences in preferences for income tax refunds," Economics Bulletin, AccessEcon, vol. 41(3), pages 1727-1740.
    • Handle: RePEc:ebl:ecbull:eb-21-00191
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2021/Volume41/EB-21-V41-I3-P148.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    2. Lewellen, Wilbur G & Lease, Ronald C & Schlarbaum, Gary G, 1977. "Patterns of Investment Strategy and Behavior among Individual Investors," The Journal of Business, University of Chicago Press, vol. 50(3), pages 296-333, July.
    3. Richard H. Thaler, 2008. "Mental Accounting and Consumer Choice," Marketing Science, INFORMS, vol. 27(1), pages 15-25, 01-02.
    4. Chambers, Valrie & Spencer, Marilyn, 2008. "Does changing the timing of a yearly individual tax refund change the amount spent vs. saved?," Journal of Economic Psychology, Elsevier, vol. 29(6), pages 856-862, December.
    5. Richard P. Hinz & David D. McCarthy & John A. Turner, "undated". "Are Women Conservative Investors? Gender Differences in Participant Directed Pension Investments," Pension Research Council Working Papers 96-17, Wharton School Pension Research Council, University of Pennsylvania.
    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. Sanjit Dhami & Narges Hajimoladarvish, 2020. "Mental Accounting, Loss Aversion, and Tax Evasion: Theory and Evidence," CESifo Working Paper Series 8606, CESifo.
    2. Maryam Bathaei Javareshk & Briony D. Pulford & Eva M. Krockow, 2024. "Mental accounting in tax liabilities," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 51(2), pages 153-164, June.
    3. Qiu, Shangzhi & Wu, Laurie & Yang, Yanjia & Zeng, Guojun, 2022. "Offering the right incentive at the right time: Leveraging customer mental accounting to promote prepaid service," Annals of Tourism Research, Elsevier, vol. 93(C).
    4. Vohra, Shalini & Davies, Gary, 2020. "Investor regret, share performance and the role of corporate agreeableness," Journal of Business Research, Elsevier, vol. 110(C), pages 306-315.
    5. Barber, Brad M. & Odean, Terrance, 2013. "The Behavior of Individual Investors," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 1533-1570, Elsevier.
    6. Kim, Joonkyung & Zhao, Min & Soman, Dilip, 2023. "Converging vs diverging: The effect of visual representation of goal structure on financial decisions," International Journal of Research in Marketing, Elsevier, vol. 40(2), pages 362-377.
    7. Kristien Werck & Bruno Heyndels & Benny Geys, 2008. "The impact of ‘central places’ on spatial spending patterns: evidence from Flemish local government cultural expenditures," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 32(1), pages 35-58, March.
    8. Justin S. Skillman & Michael J. Vernarelli, 2016. "Framing effects on bidding behavior in experimental first-price sealed-bid money auctions," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(4), pages 391-400, July.
    9. Karle, Heiko & Schumacher, Heiner & Vølund, Rune, 2023. "Consumer loss aversion and scale-dependent psychological switching costs," Games and Economic Behavior, Elsevier, vol. 138(C), pages 214-237.
    10. Duncan Luce, R., 1997. "Associative joint receipts," Mathematical Social Sciences, Elsevier, vol. 34(1), pages 51-74, August.
    11. Uri Gneezy & Jan Potters, 1997. "An Experiment on Risk Taking and Evaluation Periods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 631-645.
    12. Cristiano Codagnone & Giuseppe Alessandro Veltri & Francesco Bogliacino & Francisco Lupiáñez-Villanueva & George Gaskell & Andriy Ivchenko & Pietro Ortoleva & Francesco Mureddu, 2016. "Labels as nudges? An experimental study of car eco-labels," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 33(3), pages 403-432, December.
    13. Dipankar Chakravarti & Atanu Sinha & Jaewhan Kim, 2005. "Choice Research: A Wealth of Perspectives," Marketing Letters, Springer, vol. 16(3), pages 173-182, December.
    14. Martin Kukuk & Stefan Winter, 2008. "An Alternative Explanation of the Favorite-Longshot Bias," Journal of Gambling Business and Economics, University of Buckingham Press, vol. 2(2), pages 79-96, September.
    15. Han, Guiming & Preda, Alex, 2025. "Does home bias amplify the disposition effect? Evidence from retail forex trading," Finance Research Letters, Elsevier, vol. 86(PB).
    16. Oliveira-Castro, Jorge M., 2003. "Effects of base price upon search behavior of consumers in a supermarket: An operant analysis," Journal of Economic Psychology, Elsevier, vol. 24(5), pages 637-652, October.
    17. White, Tiffany Barnett & Novak, Thomas P. & Hoffman, Donna L., 2014. "No Strings Attached: When Giving It Away Versus Making Them Pay Reduces Consumer Information Disclosure," Journal of Interactive Marketing, Elsevier, vol. 28(3), pages 184-195.
    18. Jae‐Do Song, 2023. "Excessive banking preference in emissions trading," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 448-458, January.
    19. Eriksen, Kristoffer W. & Kvaløy, Ola, 2014. "Myopic risk-taking in tournaments," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 37-46.
    20. Robin Maximilian Stetzka & Stefan Winter, 2023. "How rational is gambling?," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1432-1488, September.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • D1 - Microeconomics - - Household Behavior

    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:ebl:ecbull:eb-21-00191. 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: John P. Conley (email available below). General contact details of provider: .

    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.