Testing Enforcement Strategies in the Field: Threat, Moral Appeal and Social Information

Abstract

We run a large-scale natural field experiment to evaluate alternative strategies to enforce compliance with the law. The experiment varies the text of mailings sent to potential evaders of TV license fees. We find a strong effect of mailings, leading to a substantial increase in compliance. Among different mailings, a threat treatment which makes a high detection risk salient has a significant deterrent effect. Neither appealing to morals nor imparting information about others' behavior enhances compliance on aggregate. However, the information condition has a weak positive effect in municipalities where evasion is believed to be common. (JEL: C93, H26, K42)

Tax compliance and enforcement in the pampas evidence from a field experiment

“…3 We do not find any average treatment effects for the other two messages. This result, which is in line with Torgler (2004) andFellner, Sausgruber, andTraxler (2013), contradicts the evidence in the survey-based literature. 4 Consequently, while people tend to answer that they would be willing to pay more taxes, this behavior is not necessarily corroborated in practice.…”

“…For example, while most studies to date find a positive result for reducing tax evasion by increasing the rates or salience of penalties and audits (e.g., Slemrod, Blumenthal, and Christian, 2001), there is still controversy about the effect of messages that appeal to moral considerations, and those reflecting the use of public monies by the government. For example, while Torgler (2003), and several laboratory and survey-based studies find confirmatory evidence (Dell'Anno 2009), Blumenthal, Christian, and Slemrod (2001), Torgler (2004), and Fellner, Sausgruber, and Traxler (2013) do not find significant effects across all types of taxpayers.…”

“…Finally, Fellner, Sausgruber and Traxler (2013) carried out a large field experiment with potential evaders of TV license fees in Austria, sending different messages to taxpayers. They find a strong effect on compliance, particularly for a treatment aimed at raising the salience of detection risks.…”

“…Third, the experiment was carried out on a property-based tax, whereas the previous literature focused on income taxes (e.g., Slemrod, Blumenthal, and Christian, 2001;Blumenthal, Christian, and Slemrod, 2001;Kleven et al, 2011), VAT (Pomeranz, 2013), or very specific fees (Fellner, Sausgruber, and Traxler, 2013). Because the revenue of this tax is directly related to the provision of highly visible, locally provided public services, it should work better for measuring the impact of messages that target the fairness of the tax system on actual payments (Torgler, 2004(Torgler, , 2005.…”

“…Because the revenue of this tax is directly related to the provision of highly visible, locally provided public services, it should work better for measuring the impact of messages that target the fairness of the tax system on actual payments (Torgler, 2004(Torgler, , 2005. It has the added policy value of working on a tax that is the main source of revenue at the subnational level at a time when local jurisdictions are facing pressure to raise their own 5 Some of the most salient papers in this literature are Slemrod, Blumenthal, and Christian (2001);Blumenthal, Christian, and Slemrod (2001);Pomeranz (2013); Kleven et al (2011);and Fellner, Sausgruber and Traxler (2013). levels of revenues following several waves of decentralization and fiscal tightening at the federal level.…”