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The last refuge of a scoundrel? Patriotism and tax compliance
[Die letzte Zuflucht eines Schurken? Patriotismus und Steuerehrlichkeit]

  • Konrad, Kai A.
  • Qari, Salmai

We study the effects of patriotism on tax compliance. In particular, we assume that individuals feel a (random draw of) warm glow from honestly paying their taxes. A higher expected warm glow reduces the government's optimal audit probability and yields higher tax compliance. Second, individuals with higher warm glow are less likely to evade taxes. This prediction is confirmed empirically by a multivariate analysis on the individual level while controlling for several other potentially confounding factors. The findings survive a variety of robustness checks, including an instrumental variables estimation to tackle the possible endogeneity of patriotism. On the aggregate level, we provide evidence for a negative correlation between average patriotic warm glow and the size of the shadow economy across several countries.

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Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Processes and Governance with number SP II 2009-04.

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Date of creation: 2009
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Handle: RePEc:zbw:wzbmpg:spii200904
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