Experimental Economics Seminar for October 28

Events, Seminars | October 25, 2016

Join us for the next ICES Experimental Economics Seminar of the semester, featuring Carlos Scartascini.

Dr. Scartascini, of the Inter-American Development Bank, will discuss his paper (co-authored with Paul E. Carrillo and Edgar Castro) Do Rewards Work to Maintain and Increase Tax Compliance? Evidence from the Randomization of Public Goods (Abstract). The talk will take place on Friday, October 28th, from 4:00 to 5:00pm, in room 5183 of the Metropolitan Building, Arlington campus.

Visit the Seminar schedule to access the paper and to learn more about upcoming speakers.

Abstract

Do citizens react to positive inducements? Are the effects long lasting? Are prizes an appropriate incentive for rewarding good behavior? What types of rewards help to crowd in moral incentives? These questions are common in the behavioral economics literature but have been hardly looked at in the empirical tax compliance literature. In this paper, we test the effect of positive inducements and rewards for compliers, by making use of a randomized experiment in which a Municipality of Argentina awarded randomly the construction of 400 individual sidewalks among the more than 72,000 taxpayers who had complied with the payment of their property tax during the previous year. Results indicate that rewarding taxpayers for good behavior with a durable and visible public good has large positive effects. First, we find that those who were selected to receive the prize were 3 percentage points more likely to continue paying on time over the next few years compared to their peers (conditional on construction the taxpayers who received the reward were about 7 percentage points more likely to continue paying on time). Second, we find that results do not fade over time, a characteristic of most previous behavioral interventions. Finally, we find spillover effects for some of the neighbors of those who received the reward. These effects are not universal but seem to depend on the salience of the reward and on the pre-treatment tax morale of the taxpayer. Overall, these results have relevant implications for the literature and for policymakers.

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