Evaluating the Impact of Occupation Choice on Tax Evasion - Behavioral Economics Approach with the Agent-Based Method in the Iranian Economy

Tax evasion is considered an important challenge, especially in developing countries. One of the models that can be used to identify the social and behavioral dimensions of tax evasion is the agent-based model. These models are based on simulation techniques that consider a system of agents and their relationships. In this study, this method has been used to study the structure of tax evasion in different occupational groups. The information on the occupational groups has been extracted from the results of the statistics from the expenditure and income plan of the country's households from 2001-to 2019. Three occupational groups of public sector jobs, low-income self-employed jobs, and high-income self-employed jobs have been evaluated. Three scenarios are embedded. In the first scenario (the honesty of all agents) and the second (assumption of tax evasion), the effect of risk aversion on job selection is evaluated. In the third scenario, the decision model for tax evasion is designed, taking into account behavioral factors and social interactions. Evaluation of behavioral parameters of the model shows that in moving from low-risk self-employed to high-risk self-employed, the coefficient of social norms decreases, and the coefficient of tax evasion increases. The results show that with changes in tax rates and fines, tax evasion changes with a very slope. In other words, policies to increase tax rates and penalties in the presence of behavioral factors do not significantly deter individuals from tax evasion