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When happy people make society unhappy: Emotions affect tax compliance behavior

Author

Listed:
  • Fochmann, Martin
  • Hechtner, Frank
  • Kirchler, Erich
  • Mohr, Peter N.C.

Abstract

Emotions affect judgments and decision making. Our paper presents a study to show that incidental background emotions (i.e., emotions not related to the actual decision) influence individuals’ tax compliance attitudes and behavior. A large-scale survey of 22,220 German taxpayers and a controlled laboratory experiment provide evidence that positive background emotions reduce willingness to comply compared to aversive (negative) background emotions. The participants in our survey show less favorable tax compliance attitudes on weekends, which are usually associated with more positive background emotions. These findings are supported by the results of a controlled laboratory experiment in which background emotions were induced by standardized pictures. Individuals choose to evade taxes more often after being exposed to positive emotions than after being exposed to aversive emotions.

Suggested Citation

  • Fochmann, Martin & Hechtner, Frank & Kirchler, Erich & Mohr, Peter N.C., 2025. "When happy people make society unhappy: Emotions affect tax compliance behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 229(C).
    • Handle: RePEc:eee:jeborg:v:229:y:2025:i:c:s0167268124004682
    DOI: 10.1016/j.jebo.2024.106854
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    More about this item

    Keywords

    Compliance attitudes; Compliance behavior; Emotions; Tax evasion; Experimental economics;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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