Do Household Tax Credits Increase the Demand for Legally Provided Services?

The Tax Treatment of Commuting Expenses and Job-Related Mobility

“…Hence, the relationship between the commuter tax break and average commute length seems to be nonlinear at the lower end. This finding supports previous research suggesting that people with bounded rationality may be more influenced by the presence of an incentive than by its actual size (Karlan and List, 2007;Burgstaller et al, 2023).…”

“…Compared to subjects assigned a positive deduction rate, those to whom we give a setting that abolishes the commuter tax break are willing to commute 1.8 km less. This result is consistent with previous research showing that for boundedly rational subjects, the mere presence of an incentive is sometimes of greater importance than the size of the incentive (Karlan and List, 2007;Burgstaller et al, 2023).…”