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Is the revealed price of democracy biased?

Author

Listed:
  • José María Durán-Cabré

    (Universitat de Barcelona & IEB)

  • Alejandro Esteller-Moré

    (Universitat de Barcelona & IEB)

  • Riccardo Secomandi

    (University of Ferrara & IEB)

Abstract

We examine how information influences the marginal willingness to pay taxes (MWTPT) through a four-wave randomized survey experiment conducted during the COVID-19 pandemic. Specifically, we assess the impact of quantitative (data on the actual tax-to-GDP ratio) and qualitative (basic pros and cons of taxation) information on revealed MWTPT. The results show that qualitative information increases MWTPT, particularly among high-income individuals. In contrast, quantitative information only reduces MWTPT among high-income individuals who initially underestimated the aggregate tax burden. Hence, those who are potentially more affected by taxes are also more sensitive to the provision of information. These findings suggest that information can shape perceptions of the tax system and, consequently, influence individuals' willingness to contribute to public good provision. This has important implications for tax policy design and efforts to reduce political polarization. If these efforts are not properly implemented, the revealed price of democracy will remain biased.

Suggested Citation

  • José María Durán-Cabré & Alejandro Esteller-Moré & Riccardo Secomandi, 2025. "Is the revealed price of democracy biased?," Working Papers 2025/04, Institut d'Economia de Barcelona (IEB).
    • Handle: RePEc:ieb:wpaper:doc2025-04
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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