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Information nudges and tax compliance: Evidence from a field experiment in China

Author

Listed:
  • Yang, Wenhui
  • Zhao, Jing
  • Zhou, Hao

Abstract

Tax administrations worldwide employ various policy tools to enhance tax compliance, but the effectiveness of nudges remains uncertain. To address this gap, we conducted a field experiment in China to evaluate the causal effects of deterrence and non-deterrence nudges on individual income tax compliance. Our findings indicate that all reminder messages significantly increase tax compliance compared to a no-message control group. Furthermore, when compared to a basic information control group, deterrence nudges – such as those highlighting credit penalties and overdue fines – significantly boost tax compliance, while non-deterrence nudges, such as appeals to tax morality or public services, have an insignificant impact. Deterrence nudges also show heterogeneous effects on tax compliance, being primarily short-term with diminishing influence over time. They are particularly effective in motivating males and individuals in market sectors to comply, but fail to improve compliance among firm owners and the super-rich.

Suggested Citation

  • Yang, Wenhui & Zhao, Jing & Zhou, Hao, 2024. "Information nudges and tax compliance: Evidence from a field experiment in China," Journal of Economic Behavior & Organization, Elsevier, vol. 228(C).
    • Handle: RePEc:eee:jeborg:v:228:y:2024:i:c:s0167268124003937
    DOI: 10.1016/j.jebo.2024.106779
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