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Economic crisis and morale

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  • Friedrich Heinemann

Abstract

The functioning of welfare states and tax systems is fostered by social norms to obey the rules of the system. Morale can change and react to new incentives. In particular, a deep economic crisis with increasing unemployment and reduced prospects for market income may have a norm eroding effect. This study explores the link between economic crisis and morale. Our theoretical reasoning is based on an economic approach to the evolution of norms, according to which norms are influenced by self-interest. A distinction is made between two dimensions of citizens’ morale: benefit and tax morale. Our econometric evidence based on data from the World Value Survey suggests that a sharp hike in unemployment reduces the morale standards along both dimensions. The crisis impact on benefit morale is conditional on the existence of generous benefit schemes.
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Suggested Citation

  • Friedrich Heinemann, 2011. "Economic crisis and morale," European Journal of Law and Economics, Springer, vol. 32(1), pages 35-49, August.
    • Handle: RePEc:kap:ejlwec:v:32:y:2011:i:1:p:35-49
    DOI: 10.1007/s10657-010-9165-z
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    Cited by:

    1. European Commission, 2011. "Tax Reforms in EU Member States 2011: tax policy challenges for economic growth and fiscal sustainability," Taxation Papers 28, Directorate General Taxation and Customs Union, European Commission.
    2. Hartmann, Andre J. & Gangl, Katharina & Kasper, Matthias & Kirchler, Erich & Kocher, Martin G. & Mueller, Martin & Sonntag, Axel, 2022. "The economic crisis during the COVID-19 pandemic has a negative effect on tax compliance: Results from a scenario study in Austria," Journal of Economic Psychology, Elsevier, vol. 93(C).
    3. Tomasz Mickiewicz & Anna Rebmann & Arnis Sauka, 2019. "To Pay or Not to Pay? Business Owners’ Tax Morale: Testing a Neo-Institutional Framework in a Transition Environment," Journal of Business Ethics, Springer, vol. 157(1), pages 75-93, June.
    4. Virgil Henry Storr & Stefanie Haeffele & Jordan K. Lofthouse & Anne Hobson, 2022. "Entrepreneurship during a pandemic," European Journal of Law and Economics, Springer, vol. 54(1), pages 83-105, August.
    5. Cafferata, Alessia & Cerruti, Gianluca & Mazzone, Giulio, 2022. "Taxation, health system endowment and quality of institutions: a "social" perception across Europe," MPRA Paper 112118, University Library of Munich, Germany.
    6. Axel Möhlmann, 2014. "Persistence or Convergence? The East-West Tax-Morale Gap in Germany," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 70(1), pages 3-30, March.
    7. Alexander, Phyllis & Balavac-Orlic, Merima, 2022. "Tax morale: Framing and fairness," Economic Systems, Elsevier, vol. 46(1).
    8. W. Robert Knechel & Natalia Mintchik, 2022. "Do Personal Beliefs and Values Affect an Individual’s “Fraud Tolerance”? Evidence from the World Values Survey," Journal of Business Ethics, Springer, vol. 177(2), pages 463-489, May.

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    More about this item

    Keywords

    Social norms; Tax morale; Benefit morale; I 38; Z 13; E 32;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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