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Do Taxes Crowd Out Intrinsic Motivation? Field-Experimental Evidence from Germany

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  • Rincke, Johannes
  • Boyer, Pierre
  • Dwenger, Nadja

Abstract

This paper studies how imposing norms on contribution behavior affects individuals' intrinsic motivation. We consider an urban area in Germany where the Catholic Church collects a local church levy as a charitable donation, despite the fact that the levy is legally a tax. In cooperation with the church, we design a natural randomized field experiment with letter treatments informing individuals that the church levy is in fact a tax. Guided by a simple theoretical model, we use baseline contribution behavior to measure individuals' intrinsic motivation and demonstrate that treatment effects differ strongly across motivational types. Among weakly intrinsically motivated individuals, communicating the existence of a legal norm results in a significant crowd-out of intrinsic motivation. In contrast, strongly intrinsically motivated individuals do not show any treatment response. We cross-validate our findings using alternative motivational measures derived from an extensive post-treatment survey.

Suggested Citation

  • Rincke, Johannes & Boyer, Pierre & Dwenger, Nadja, 2015. "Do Taxes Crowd Out Intrinsic Motivation? Field-Experimental Evidence from Germany," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112951, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc15:112951
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    Cited by:

    1. Wolfgang Frimmel & Martin Halla & Jörg Paetzold, 2019. "The Intergenerational Causal Effect of Tax Evasion: Evidence from the Commuter Tax Allowance in Austria," Journal of the European Economic Association, European Economic Association, vol. 17(6), pages 1843-1880.
    2. Cagala, Tobias & Glogowsky, Ulrich & Rincke, Johannes, 2014. "A field experiment on intertemporal enforcement spillovers," Economics Letters, Elsevier, vol. 125(2), pages 171-174.
    3. Friedrichsen, Jana & Engelmann, Dirk, 2018. "Who cares about social image?," European Economic Review, Elsevier, vol. 110(C), pages 61-77.
    4. Erzo F. P. Luttmer & Monica Singhal, 2014. "Tax Morale," Journal of Economic Perspectives, American Economic Association, vol. 28(4), pages 149-168, Fall.
    5. Dwenger, Nadja & Treber, Lukas, 2018. "Shaming for Tax Enforcement: Evidence from a New Policy," CEPR Discussion Papers 13194, C.E.P.R. Discussion Papers.
    6. Blaufus, Kay & Hundsdoerfer, Jochen & Jacob, Martin & Sünwoldt, Matthias, 2016. "Does legality matter? The case of tax avoidance and evasion," Journal of Economic Behavior & Organization, Elsevier, vol. 127(C), pages 182-206.
    7. Blaufus, Kay & Braune, Matthias & Hundsdoerfer, Jochen & Jacob, Martin, 2015. "Does legality matter? The case of tax avoidance and evasion," Discussion Papers 2015/23, Free University Berlin, School of Business & Economics.
    8. Blaufus, Kay & Braune, Matthias & Hundsdoerfer, Jochen & Jacob, Martin, 2015. "Does legality matter? The case of tax avoidance and evasion," arqus Discussion Papers in Quantitative Tax Research 193, arqus - Arbeitskreis Quantitative Steuerlehre.
    9. Friedrichsen, Jana, 2016. "Signals sell: Designing a product line when consumers have social image concerns," Discussion Papers, Research Unit: Market Behavior SP II 2016-202, WZB Berlin Social Science Center.

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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