Everyone may benefit from subsidising entry to risky occupations

Black, Jane; Meza, David de

doi:10.1016/s0047-2727(97)00048-0

Cited by 19 publications

(11 citation statements)

References 21 publications

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“…This observation is interesting in view of past discussion (Kanbur 1981;Black and de Meza 1997) on the e¢ ciency of risk-taking in competitive economies.…”

Section: Risk-taking and Income Distributionmentioning

confidence: 59%

The use of agent-based modelling to investigate tax compliance

et al. 2014

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Agent-based modelling can be used to investigate the behavioural and social aspects of tax compliance. We illustrate the approach with two models. The …rst model emphasises the role of occupational choice in tax compliance, and explores the e¤ect of non-compliance on risk-taking and income distribution. The modelling of the compliance decision is discussed with an emphasis on decision-making under uncertainty and social interaction. We then add to the model a social network which governs the transmission of information on attitudes and beliefs, and investigate alternative audit strategies. A strategy of auditing a …xed number of taxpayers from each occupation dominates alternative strategies (including random and focussed strategies) in the sense of …rst-order stochastic dominance.

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“…This observation is interesting in view of past discussion (Kanbur 1981;Black and de Meza 1997) on the e¢ ciency of risk-taking in competitive economies.…”

Section: Risk-taking and Income Distributionmentioning

confidence: 59%

The use of agent-based modelling to investigate tax compliance

et al. 2014

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“…Those who are least risk averse will choose to enter the riskiest occupations. Kanbur (1979) and Black and de Meza (1997) assume employment is safe but self-employment is risky, and address the social e¢ ciency of aggregate risk-taking. Self-employment attracts the least risk-averse taxpayers, who will evade the most when the opportunity arises.…”

Section: Occupational Choicementioning

confidence: 99%

Predictive analytics and the targeting of audits

Hashimzade

Myles

Rablen

2016

Journal of Economic Behavior & Organization

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The literature on audit strategies has focused on random audits or on audits conditioned only on income declaration. In contrast, tax authorities employ the tools of predictive analytics to identify taxpayers for audit, with a range of variables used for conditioning. The paper explores the compliance and revenue consequences of the use of predictive analytics in an agent-based model that draws upon a behavioral approach to tax compliance. The taxpayers in the model form subjective beliefs about the probability of audit from social interaction, and are guided by a social custom that is developed from meeting other taxpayers. The belief and social custom feed into the occupational choice between employment and two forms of self-employment. It is shown that the use of predictive analytics yields a signi…cant increase in revenue over a random audit strategy.

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“…Considering that each contract is on the bank's break-even line, under the further assumption that U P (C P ) > U P (C P OOL ) 5 with the pooling contract , C P OOL , at zero collateral c = 0, thus, no other contract (hypothetically labeled C N ) can attract any bundle of the two entrepreneurs and make a positive expected pro…t. Note that this requires a zero collateral contract just for rich borrowers.…”

Section: Perverse Cross-subsidizationmentioning

confidence: 99%

“…The issue of cross-subsidization has been one of the most intensely discussed topics in the area, both in theory and practice (e.g., Black and de Meza, 1997;de Meza andWebb, 1999, 2000;de Meza, 2002), although more rarely it has been addressed from the equity point of view. Our contribution is grounded in the literature on ine¢ ciencies in the credit market by de 1 http://www.fsb.org.uk/News.aspx?loc=pressroom&rec=5742 Meza and Webb (1987), who point out the possibility that adverse selection in credit markets may lead to excessive entry into entrepreneurship due to cross subsidization, quite in contrast with the credit rationing phenomenon emphasized by Stiglitz and Weiss (1981).…”

Section: Introductionmentioning

confidence: 99%

Unfair credit allocations

Coco

Pignataro

2012

Small Bus Econ

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We show how asymmetric information and borrowers'heterogeneity in wealth may produce equilibria in which, due to decreasing absolute risk aversion, hard working poor borrowers subsidize richer borrowers. In particular, a model of adverse selection and moral hazard in a competitive credit market is developed with private information on borrowers'wealth. Because of the ambiguous e¤ect of decreasing risk aversion on the willingness to post collateral, both separating and pooling equilibria are possible in principle. Under separation the poor borrowers bear the cost of separation in terms of excessive risk taking. In a more likely pooling equilibrium poor hard-working borrowers subsidize richer ones.

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Everyone may benefit from subsidising entry to risky occupations

Cited by 19 publications

References 21 publications

The use of agent-based modelling to investigate tax compliance

The use of agent-based modelling to investigate tax compliance

Predictive analytics and the targeting of audits

Unfair credit allocations

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