V. Umashanker Trivedi*, York University
Mohamed Shehata, McMaster University
Stuart Mestelman, McMaster University
9 July 2004
Our study examines whether combining experimental economics and economics psychology techniques can provide a better understanding of individuals’ tax compliance decisions in the laboratory. We find that considering individuals’ attitudinal, personality and intention measures in addition to economic based variables provides a richer understanding of individuals’ actual tax compliance decisions in the laboratory in the face of monetary incentives. We also find that hypothetical and actual compliance decisions in the laboratory are significantly different from each other. Specifically, we find that actual (hypothetical) compliance decisions are significantly influenced by their moral reasoning (anti-establishment) views. Finally, we find that individuals’ actual compliance decisions in the laboratory correlate more significantly with their admission of prior evasion than either their hypothetical compliance decisions or their responses to case scenarios. The latter result, coupled with the lack of appropriate field data on tax compliance, indicates that actual compliance decisions in the laboratory in the face of monetary incentives and with the use of tax terms in the instructions may be an ideal method of obtaining data on individuals’ tax compliance.
JEL Classification: H27
Key Words: Attitudes, Intentions, Tax Compliance, Tax Evasion, Experimental Economics, Moral Development.
V. Umashanker Trivedi, Mohamed Shehata and Stuart Mestelman, "Attitudes, Incentives, and Tax Compliance ", Canadian Tax Journal, Vol. 53, No. 1, April 2005, pp. 29-61. [Abstract | pdf | Survey Instrument | Experiment Instructions]
Send Correspondence to:
V. Umashanker Trivedi*
Assistant Professor, Schulich School of Business
226 F, SSB, York University
4700 Keele Street
Toronto , Ontario
Canada M3J 1P3
Email: strivedi@schulich.yorku.ca
Tel: 416 736-5066, Ext. 30191