40 years of tax evasion games: a meta-analysis

Abstract

We collect individual participant data from 70 papers that use laboratory experiments to examine individual tax evasion behavior (or "Tax Evasion Games"), in order to use meta-analysis to estimate the impacts of different public policy, experimental design and individual level variables on tax evasion choices. Our results show that standard enforcement variables like audits (including audit rules) and fines perform differently on the extensive and intensive margins. We find that other fiscal variables like a flat tax system, tax rates, and tax amnesties have unambiguous negative impacts on tax compliance, and that specific features of the experimental setting, such as how subjects are directed to report income, or whether taxes are redistributed to the participants or to a real life public good, have significant impacts on tax compliance. Our results also indicate that the demographic characteristics of the subjects (e.g., gender, experimental income, occupation, risk attitude) affect compliance.

Nudging for Tax Compliance: A Meta-Analysis

“…This is an important task since as Luttmer and Singhal (2014) put it "similar interventions have produced varying results in different contexts" and "it would be useful to examine why". We are aware of two meta-studies of tax experiments (Alm et al 2018, Blackwell 2007 which study laboratory experiments while we focus on field work. 7 As opposed to qualitative reviews, our meta-analysis can give more systematic answers to questions like: i) Are nudges effective in curbing tax evasion?…”

“…7 Blackwell (2007) concludes that increasing the penalty rate, the marginal per capita return to the public good and the probability of audit lead to higher tax compliance, meanwhile tax rate has no significant impact on tax compliance. Focusing on a larger set of papers, Alm et al (2018) illustrate that audit probability increases tax compliance on the extensive margin, while audit probability and the tax rate influence tax compliance negatively on the intensive margin.…”

Taxpayer deductions and the endogenous probability of tax penalisation

“…We assume that the hazard of penalisation λ is a monotone increasing function of m, since tax authorities are stricter against larger tax deductions [2]. Therefore, conventional Laplace transform allows a parametric representation; i.e.…”

“…if the penalisation probability is a function of the total income, then it is not differentiable on the full support. On the other hand, an exogenous probability function limits the analysis of the taxpayer's behaviour [2], as her perception of risk will not change if the amount of under-reported income changes.…”

Media negativity bias and tax compliance: experimental evidence

“…A third control group received a neutral (T NEU ) treatment characterized by the absence of any salient bias. Experimental manipulations consisted of news tickers reporting top stories about public finance and policy issues that ran on subjects' screens during a repeated taxation game (Alm et al, 2015;Alm & Malézieux, 2020).…”