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Happiness and Tax Morale: an Empirical Analysis

  • Lubian, Diego

    ()

    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

  • Zarri, Luca

    ()

    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

This paper presents empirical evidence that “tax morale” - taxpayers’ intrinsic motivation to pay taxes - constitutes a new determinant of happiness, even after controlling for several demographic and socioeconomic factors. Using data on Italian households for 2004, we assess the strength of tax morale by relying on single items as well as composite multi-item indices. Our main result that fiscal honesty generates a higher hedonic payoff than cheating is in line with Harbaugh et al. (2007)’s neuroeconomic finding. Further, it sheds light on the well-known “puzzle of ompliance”, that is the fact that many individuals pay taxes even when expected penalty and audit probability are extremely low: tax compliance is less puzzling once we show that not only it is materially costly,but also provides sizeable non-pecuniary benefits that make it rewarding in itself.

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Paper provided by Associazione Italiana per la Cultura della Cooperazione e del Non Profit in its series AICCON Working Papers with number 85-2011.

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Length: 41 pages
Date of creation: 26 Apr 2011
Date of revision:
Handle: RePEc:ris:aiccon:2011_085
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  1. Benno Torgler & Markus Schaffner & Alison Macintyre, 2007. "Tax Compliance, Tax Morale And Governance Quality," School of Economics and Finance Discussion Papers and Working Papers Series 225, School of Economics and Finance, Queensland University of Technology.
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  12. Alberto Alesina & Rafael Di Tella & Robert MacCulloch, 2001. "Inequality and Happiness: Are Europeans and Americans Different?," NBER Working Papers 8198, National Bureau of Economic Research, Inc.
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  30. Andrew E. Clark & Orsolya Lelkes, 2009. "Let us pray: religious interactions in life satisfaction," PSE Working Papers halshs-00566120, HAL.
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