Social esteem versus social stigma: The role of anonymity in an income reporting game

Abstract

When the phenomenon of tax evasion is discussed, both scholars and authorities agree on the fact that, although essential, classical enforcements are not enough to ensure tax compliance: some other forms of incentives must be adopted.The paper's aim is to experimentally test the role of di↵erent nonmonetary incentives for tax compliance: participants have been treated with di↵erent experimental conditions, which di↵er in the role played by anonymity. Indeed, subjects have been informed on the possibility of revealing their identity and their choices through the publication of their pictures, as a consequence of the result of the auditing process.As expected, anonymity plays an important role in the decision to pay taxes; in addition, we find that negative non-monetary incentive increases tax compliance more e↵ectively than positive non-monetary incentive. We find also that the e↵ect of these non-monetary incentives is mitigated, when too many information are made available.Finally, results show that, when evasion is made public, tax-dodgers are willing to pay in order to keep secret their cheating behavior and avoid public shame.

What Motivates Tax Compliance?

“…Of some note, there is now much evidence that non‐financial penalties (e.g. public disclosure) may also act as a deterrent (Bosco and Mittone, ; Fortin et al ., ; Coricelli et al ., ; Hasegawa et al ., ; Bø et al ., ; Casagrande et al ., ; Lefebvre et al ., ; Perez‐Truglia and Troiano, ; Battiston and Gamba, ; Casal and Mittone, ; Alm et al ., ). Positive inducements, whether to individuals or to groups, improve compliance . Laboratory experiments consistently find that rewards to individuals increase compliance, including programmes in which an individual who reports more income receives more government benefits (e.g.…”

Culture, compliance, and confidentiality: Taxpayer behavior in the United States and Italy

“…They found that the use of photos increased compliance (and also "emotional arousal", as measured by skin conductance responses); they also found higher compliance (and higher emotional arousal) after an audit. Casal and Mittone (2016) studied the effect of shaming in various setting in which taxes were also redistributed to subjects as in public good games. They found some complex types of behavior in which the effect of shaming tax evaders tends to increase compliance.…”

Of Governance and Revenue: Participatory Institutions and Tax Compliance in Brazil

“…This finding suggests that citizens look to their fellow citizens for cues regarding the extent to which they should comply with the existing tax regime. Casal et al (2016) also found that the "availability of voice reduces the frequency of the implementation of the exit option" in a similar lab experiment. Feld and Tyran argue that "(d)irect voter participation in the political decision making process in the form of referenda might be a beneficial condition increasing tax compliance by citizens" (Feld and Tyran 2002: 218).…”