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Improving Tax Compliance without Increasing Revenue: Evidence from Population-Wide Randomized Controlled Trials in Papua New Guinea

Author

Listed:
  • Christopher Hoy
  • Luke McKenzie
  • Mathias Sinning

Abstract

We study the effect of “nudges” on taxpayers who have varying tax-compliance histories in Papua New Guinea. We present the results from two population-wide randomized controlled trials conducted in a setting that is characterized by low compliance rates and a lack of effective enforcement. We test the effect of text messages, flyers, and emails that remind taxpayers of declaration due dates and provide information about the public benefits of paying taxes. We find that the treatments increased the number of tax declarations filed without increasing the amount of tax paid because the taxpayers who responded to the nudges reported a tax liability of zero. This result is consistent across tax types, communication channels, and time periods. We also find that the treatments had no effect on previously nonfiling taxpayers. Collectively, our results illustrate that taxpayers who face the lowest cost of compliance are the most likely to respond to a nudge.

Suggested Citation

  • Christopher Hoy & Luke McKenzie & Mathias Sinning, 2024. "Improving Tax Compliance without Increasing Revenue: Evidence from Population-Wide Randomized Controlled Trials in Papua New Guinea," Economic Development and Cultural Change, University of Chicago Press, vol. 72(2), pages 691-723.
    • Handle: RePEc:ucp:ecdecc:doi:10.1086/721650
    DOI: 10.1086/721650
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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. Yogama, Eko Arief & Gray, Daniel J. & Rablen, Matthew D., 2024. "Nudging for prompt tax penalty payment: Evidence from a field experiment in Indonesia," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 548-579.
    3. Antinyan, Armenak & Corazzini, Luca, 2023. "Breaking the Bag Habit: Testing Interventions to Reduce Plastic Bag Demand in a Developing Country," Cardiff Economics Working Papers E2023/7, Cardiff University, Cardiff Business School, Economics Section.
    4. Hoy, Christopher, 2025. "How does progressivity impact tax morale? Experimental evidence across developing countries," Journal of Development Economics, Elsevier, vol. 172(C).
    5. Cohen, Isabelle, 2024. "Technology and the state: Building capacity to tax via text," Journal of Public Economics, Elsevier, vol. 236(C).
    6. Hoy,Christopher Alexander, 2022. "How Does the Progressivity of Taxes and Government Transfers Impact People’s Willingnessto Pay Tax ? Experimental Evidence across Developing Countries," Policy Research Working Paper Series 10167, The World Bank.
    7. Holz, Justin E. & List, John A. & Zentner, Alejandro & Cardoza, Marvin & Zentner, Joaquin E., 2023. "The $100 million nudge: Increasing tax compliance of firms using a natural field experiment," Journal of Public Economics, Elsevier, vol. 218(C).
    8. Antinyan, Armenak & Corazzini, Luca, 2025. "Breaking the bag habit: Testing interventions to reduce plastic bag demand," Ecological Economics, Elsevier, vol. 228(C).
    9. Antinyan, Armenak & Corazzini, Luca, 2021. "Money does it better! Economic incentives, nudging interventions and reusable shopping bags: Evidence from a natural field experiment," Cardiff Economics Working Papers E2021/29, Cardiff University, Cardiff Business School, Economics Section.

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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