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Behavioral insights on business taxation: Evidence from two natural field experiments

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  • Biddle, Nicholas
  • Fels, Katja M.
  • Sinning, Mathias

Abstract

This paper presents the findings of two natural field experiments that were conducted in collaboration with the Australian Taxation Office (ATO). The first experiment tests the effect of changes to letters on businesses paying the correct amount of tax. The second experiment consists of two parts. The first part aims to raise awareness of the relevance of tax debt payment by changing internal guidelines used by field auditors. The second part focuses on studying the effect of changing the phone script used by desk auditors to facilitate payment arrangements and simplifying a follow-up letter. While the first experiment had no effects on any of the outcome measures considered, the results of the second experiment indicate that changing the phone script of desk auditors and simplifying the letter reduced the proportion of default assessments raised by the ATO by 69 percent, suggesting that businesses are responsive to certain types of nudges.

Suggested Citation

  • Biddle, Nicholas & Fels, Katja M. & Sinning, Mathias, 2018. "Behavioral insights on business taxation: Evidence from two natural field experiments," Journal of Behavioral and Experimental Finance, Elsevier, vol. 18(C), pages 30-49.
    • Handle: RePEc:eee:beexfi:v:18:y:2018:i:c:p:30-49
    DOI: 10.1016/j.jbef.2018.01.004
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    Citations

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    Cited by:

    1. Antinyan, Armenak & Asatryan, Zareh, 2019. "Nudging for tax compliance: A meta-analysis," ZEW Discussion Papers 19-055, ZEW - Leibniz Centre for European Economic Research.
    2. Dina Pomeranz & José Vila-Belda, 2019. "Taking State-Capacity Research to the Field: Insights from Collaborations with Tax Authorities," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 755-781, August.
    3. James Alm & Lilith Burgstaller & Arrita Domi & Amanda März & Matthias Kasper, 2023. "Nudges, Boosts, and Sludge: Using New Behavioral Approaches to Improve Tax Compliance," Economies, MDPI, vol. 11(9), pages 1-22, September.
    4. Kumar, Satish & Rao, Sandeep & Goyal, Kirti & Goyal, Nisha, 2022. "Journal of Behavioral and Experimental Finance: A bibliometric overview," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    5. Eko Arief Yogama & Daniel J. Gray & Matthew D. Rablen, 2023. "Nudging for Prompt Tax Penalty Payment: Evidence from a Field Experiment in Indonesia," CESifo Working Paper Series 10836, CESifo.
    6. Cynthia Weiyi Cai, 2020. "Nudging the financial market? A review of the nudge theory," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 3341-3365, December.

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    More about this item

    Keywords

    Tax compliance; Business taxation; Natural field experiment; Behavioral insights; Social norms;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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