We study the effects of the tax burden on tax evasion both theoretically and experimentally. We develop a theoretical framework of tax evasion decisions that is based on two behavioral assumptions: (1) taxpayers are endowed with reference dependent preferences that are subject to hedonic adaptation and (2) in making their choices, taxpayers are affected by ethical concerns. The model generates new predictions on how a change in the tax rate affects the decision to evade taxes. Contrary to the classical expected utility theory, but in line with previous applications of reference dependent preferences to taxpayers' decisions, an increase in the tax rate increases tax evasion. Moreover, as taxpayers adapt to the new legal tax rate, the decision to evade taxes becomes independent of the tax rate. We present results from a laboratory experiment that support the main predictions of the model.

Bernasconi, M., Corazzini, L., Seri, R. (2014). Reference dependent preferences, hedonic adaptation and tax evasion: Does the tax burden matter?. JOURNAL OF ECONOMIC PSYCHOLOGY, 40, 103-118 [10.1016/j.joep.2013.01.005].

Reference dependent preferences, hedonic adaptation and tax evasion: Does the tax burden matter?

Luca Corazzini;
2014

Abstract

We study the effects of the tax burden on tax evasion both theoretically and experimentally. We develop a theoretical framework of tax evasion decisions that is based on two behavioral assumptions: (1) taxpayers are endowed with reference dependent preferences that are subject to hedonic adaptation and (2) in making their choices, taxpayers are affected by ethical concerns. The model generates new predictions on how a change in the tax rate affects the decision to evade taxes. Contrary to the classical expected utility theory, but in line with previous applications of reference dependent preferences to taxpayers' decisions, an increase in the tax rate increases tax evasion. Moreover, as taxpayers adapt to the new legal tax rate, the decision to evade taxes becomes independent of the tax rate. We present results from a laboratory experiment that support the main predictions of the model.
Articolo in rivista - Articolo scientifico
Adaptation; Prospect theory; Tax evasion;
English
31-gen-2013
2014
40
103
118
reserved
Bernasconi, M., Corazzini, L., Seri, R. (2014). Reference dependent preferences, hedonic adaptation and tax evasion: Does the tax burden matter?. JOURNAL OF ECONOMIC PSYCHOLOGY, 40, 103-118 [10.1016/j.joep.2013.01.005].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/437478
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