The politics of digits: evidence of odd taxation
From the concept of odd pricing, i.e., setting rightmost price digits below a whole number, this paper advances the political counterpart of odd taxation using a panel of Danish municipal taxes. First, the distribution of tax decimals is non-uniform and resembles the distribution of price-endings data. Second, nine-ending and other higher-end decimals are found to be over-represented which echoes odd pricing research. It suggests that incumbents take voters’ biases into account and apply odd taxes to minimize the political costs of taxation while maximizing revenue. Attention should be given to how policy digits are arranged to exploit voters’ cognitive biases. Copyright Springer Science+Business Media, LLC 2013
Volume (Year): 154 (2013)
Issue (Month): 1 (January)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/economics/public+finance/journal/11127/PS2|
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.:
- Besley, Timothy & Case, Anne, 1995.
"Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition,"
American Economic Review,
American Economic Association, vol. 85(1), pages 25-45, March.
- Timothy Besley & Anne Case, 1992. "Incumbent Behavior: Vote Seeking, Tax Setting and Yardstick Competition," NBER Working Papers 4041, National Bureau of Economic Research, Inc.
- Jon Fiva & Jørn Rattsø, 2007. "Local choice of property taxation: evidence from Norway," Public Choice, Springer, vol. 132(3), pages 457-470, September.
- Victor Niederhoffer, 1965. "A New Look at Clustering of Stock Prices," The Journal of Business, University of Chicago Press, vol. 39, pages 309-309.
- Mill, John Stuart, 1848. "Principles of Political Economy (II): Distribution," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 2, number mill1848-2.
- Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and Taxation: Theory and Evidence," American Economic Review, American Economic Association, vol. 99(4), pages 1145-1177, September.
- Raj Chetty & Adam Looney & Kory Kroft, 2007. "Salience and Taxation: Theory and Evidence," NBER Working Papers 13330, National Bureau of Economic Research, Inc.
- Looney, Adam & Kroft, Kory & Chetty, Raj, 2009. "Salience and Taxation: Theory and Evidence," Scholarly Articles 9748525, Harvard University Department of Economics.
- Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and taxation: theory and evidence," Finance and Economics Discussion Series 2009-11, Board of Governors of the Federal Reserve System (U.S.).
- Thomas L. Brunell & Amihai Glazer, 2001. "Rational Response to Irrational Attitudes: The Level of the Gasoline Tax in the United States," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(4), pages 761-764.
- Stiving, Mark & Winer, Russell S, 1997. " An Empirical Analysis of Price Endings with Scanner Data," Journal of Consumer Research, Oxford University Press, vol. 24(1), pages 57-67, June.
- Krishna, Aradhna & Slemrod, Joel, 2003. "Behavioral Public Finance: Tax Design As Price Presentation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(2), pages 189-203, March.
- Hales, Douglas N. & Chakravorty, Satya S. & Sridharan, V., 2009. "Testing Benford's Law for improving supply chain decision-making: A field experiment," International Journal of Production Economics, Elsevier, vol. 122(2), pages 606-618, December.
- Mill, John Stuart, 1848. "Principles of Political Economy (III): Exchange," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 3, number mill1848-3.
- Linda Veiga & Francisco Veiga, 2007. "Political business cycles at the municipal level," Public Choice, Springer, vol. 131(1), pages 45-64, April.
- Linda Veiga & Francisco Veiga, 2004. "Political business cycles at the municipal level," ERSA conference papers ersa04p427, European Regional Science Association.
- Francisco José Veiga & Linda Gonçalves Veiga, 2004. "Political Business Cycles at the Municipal Level," NIPE Working Papers 4/2004, NIPE - Universidade do Minho.
- Eric Anderson & Duncan Simester, 2003. "Effects of $9 Price Endings on Retail Sales: Evidence from Field Experiments," Quantitative Marketing and Economics (QME), Springer, vol. 1(1), pages 93-110, March.
- Alberto Alesina & Nouriel Roubini & Gerald D. Cohen, 1997. "Political Cycles and the Macroeconomy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510944, September.
- Amy Finkelstein, 2009. "E-ztax: Tax Salience and Tax Rates," The Quarterly Journal of Economics, Oxford University Press, vol. 124(3), pages 969-1010.
- Brenner, Gabrielle A & Brenner, Reuven, 1982. "Memory and Markets, or Why Are You Paying $2.99 for a Widget?," The Journal of Business, University of Chicago Press, vol. 55(1), pages 147-158, January.
- Salmon, Pierre, 1987. "Decentralisation as an Incentive Scheme," Oxford Review of Economic Policy, Oxford University Press, vol. 3(2), pages 24-43, Summer.
- SALMON, Pierre, 1987. "Decentralization as an incentive scheme," Institut des Mathématiques Economiques – Document de travail de l’I.M.E. (1974-1993) 98, Institut des Mathématiques Economiques. LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS, Université de Bourgogne.
- Mill, John Stuart, 1848. "Principles of Political Economy (I): Production," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 1, number mill1848-1.
- Harris, Lawrence, 1991. "Stock Price Clustering and Discreteness," Review of Financial Studies, Society for Financial Studies, vol. 4(3), pages 389-415.
- Rupert Sausgruber & Jean-Robert Tyran, 2005. "Testing the Mill hypothesis of fiscal illusion," Public Choice, Springer, vol. 122(1), pages 39-68, January.
- Rupert Sausgruber & Jean-Robert Tyran, "undated". "Testing the Mill hypothesis of fiscal illusion," Discussion Papers 04-18, University of Copenhagen. Department of Economics, revised Sep 2004.
- Markus Tepe & Pieter Vanhuysse, 2009. "Educational business cycles," Public Choice, Springer, vol. 139(1), pages 61-82, April.
- Schindler, Robert M. & Wiman, Alan R., 1989. "Effects of odd pricing on price recall," Journal of Business Research, Elsevier, vol. 19(3), pages 165-177, November.
- Frey, Bruno S & Eichenberger, Reiner, 1991. "Anomalies in Political Economy," Public Choice, Springer, vol. 68(1-3), pages 71-89, January.
- Edmark, Karin & Ågren, Hanna, 2008. "Identifying strategic interactions in Swedish local income tax policies," Journal of Urban Economics, Elsevier, vol. 63(3), pages 849-857, May.
- Edmark, Karin & Ågren, Hanna, 2006. "Identifying Strategic Interactions in Swedish Local Income Tax Policies," Working Paper Series 2006:22, Uppsala University, Department of Economics.
- Schindler, Robert M & Kirby, Patrick N, 1997. " Patterns of Rightmost Digits Used in Advertised Prices: Implications for Nine-Ending Effects," Journal of Consumer Research, Oxford University Press, vol. 24(2), pages 192-201, September.
- William D. Nordhaus, 1975. "The Political Business Cycle," Review of Economic Studies, Oxford University Press, vol. 42(2), pages 169-190.
- Ashworth, John & Heyndels, Bruno & Smolders, Carine, 2003. "Psychological taxing in Flemish municipalities," Journal of Economic Psychology, Elsevier, vol. 24(6), pages 741-762, December. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:154:y:2013:i:1:p:59-73. 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: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.