The Economic Theory Assumption and Utility Maximization Model: The Perspective of Zakat Compliance Behavior

Abstract

The dearth of studies on the economic theory and model from the perspective of zakat compliance behavior is hardly found in the literature and empirical evidence as well. Numerous studies have been explained through utility maximization and compliance behavior especially in the context of taxation based on the economic theory assumption. Discussion on compliance behavior has two basic theories that are associated with compliance; firstly, the psychological and sociological theory, and secondly, the economic theory that is always used to discuss compliance behavior in taxation. Due to that, this study aims to discuss the relevant economic theory and model from the perspective of zakat compliance behavior. In reviewing the relevant literature, this article provides a discussion on economic theory and model as a basis for explaining zakat compliance which includes a number of aspects like the economic aspect, psychological and sociological aspects as well as the Islamic aspect as previously suggested by some studies. Additionally, it demonstrates that economic theory and model also can be used to discuss Zakat compliance behavior and not purposely in the taxation system. Based on the discussion, this study will hopefully shed some light that even though the theory and model mainly discuss conventional perspectives such as the taxation system but it’s also can be adapted to discuss on Islamic perspective with some modification.