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Tax Evasion: Cheating Rationally or Deciding Emotionally?

Author

Listed:
  • Giorgio Coricelli

    (ISC - Institut des Sciences Cognitives - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

  • Mateus Joffily

    (ISC - Institut des Sciences Cognitives - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

  • Claude Montmarquette

    (Université de Montréal - Département de Sciences Economique - UdeM - Université de Montréal)

  • Marie Claire Villeval

    (GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique)

Abstract

The economic models of tax compliance predict that individuals should evade taxes when the expected benefit of cheating is greater than its expected cost. When this condition is fulfilled, the high compliance however observed remains a puzzle. In this paper, we investigate the role of emotions as a possible explanation of tax compliance. Our laboratory experiment shows that emotional arousal, measured by Skin Conductance Responses, increases in the proportion of evaded taxes. The perspective of punishment after an audit, especially when the pictures of the evaders are publicly displayed, also raises emotions. We show that an audit policy that induces shame on the evaders favors compliance.

Suggested Citation

  • Giorgio Coricelli & Mateus Joffily & Claude Montmarquette & Marie Claire Villeval, 2007. "Tax Evasion: Cheating Rationally or Deciding Emotionally?," Post-Print hal-00196332, HAL.
    • Handle: RePEc:hal:journl:hal-00196332
    Note: View the original document on HAL open archive server: https://hal.science/hal-00196332
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    References listed on IDEAS

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    Cited by:

    1. Batrancea Larissa-Margareta & Nichita Ramona-Anca, 2012. "A Neuroeconomic Approach Of Tax Behavior," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 649-654, July.
    2. Kai A. Konrad & Salmai Qari, 2012. "The Last Refuge of a Scoundrel? Patriotism and Tax Compliance," Economica, London School of Economics and Political Science, vol. 79(315), pages 516-533, July.
    3. Konrad, Kai A. & Qari, Salmai, 2012. "The Last Refuge of a Scoundrel?," Munich Reprints in Economics 13960, University of Munich, Department of Economics.
    4. Cervellati, Matteo & Vanin, Paolo, 2013. "“Thou shalt not covet”: Prohibitions, temptation and moral values," Journal of Public Economics, Elsevier, vol. 103(C), pages 15-28.
    5. van Winden Frans A.A.M. & Ash Elliott, 2012. "On the Behavioral Economics of Crime," Review of Law & Economics, De Gruyter, vol. 8(1), pages 181-213, June.
    6. Sokolovskyi, Dmytro & Sokolovska, Olena, 2016. "Tax burden optimization on economic agents by modeling interaction in the taxation system," MPRA Paper 71110, University Library of Munich, Germany, revised 05 May 2016.

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    More about this item

    Keywords

    emotions; experiment; neuro-economics; physiological measures; shame; tax evasion; honte; mesures physiologiques; neuro-économie; expérience; fraude fiscale;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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