Tax evasion and social information: an experiment in Belgium, France, and the Netherlands

M. Lefebvre; P. Pestieau; A.M. Riedl; M.C. Villeval

doi:10.1007/s10797-014-9318-z

Tax evasion and social information: an experiment in Belgium, France, and the Netherlands

M. Lefebvre^*, P. Pestieau, A.M. Riedl, M.C. Villeval

^*Corresponding author for this work

Microeconomics & Public Economics

Research output: Contribution to journal › Article › Academic › peer-review

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Abstract

We experimentally study how receiving information about tax compliance of others affects individuals' occupational choices and subsequent evading decisions. In one treatment individuals receive information about the highest tax evasion rates of others in past experimental sessions with no such social information; in another treatment they receive information about the lowest tax evasion rates observed in the past sessions with no such social information. We observe an asymmetric effect of social information on tax compliance. Whereas examples of high compliance do not have any disciplining effect, we find evidence that examples of low compliance significantly increase tax evasion for certain audit probabilities. No major differences are found across countries.

data source: lab experiment data, available from authors upon request

Original language	English
Pages (from-to)	401-425
Number of pages	25
Journal	International Tax and Public Finance
Volume	22
Issue number	3
DOIs	https://doi.org/10.1007/s10797-014-9318-z
Publication status	Published - Jun 2015

Keywords

Tax evasion
Social interactions
Peer effects
Cross-country comparisons
Experiments
INDIVIDUAL BEHAVIOR
INCOME-TAX
DECEPTION
IDENTIFICATION
REFLECTION
ECONOMICS
MORALE
AUDIT
RISK

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10.1007/s10797-014-9318-z

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Cite this

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title = "Tax evasion and social information: an experiment in Belgium, France, and the Netherlands",

abstract = "We experimentally study how receiving information about tax compliance of others affects individuals' occupational choices and subsequent evading decisions. In one treatment individuals receive information about the highest tax evasion rates of others in past experimental sessions with no such social information; in another treatment they receive information about the lowest tax evasion rates observed in the past sessions with no such social information. We observe an asymmetric effect of social information on tax compliance. Whereas examples of high compliance do not have any disciplining effect, we find evidence that examples of low compliance significantly increase tax evasion for certain audit probabilities. No major differences are found across countries.data source: lab experiment data, available from authors upon request",

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