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Rebuttal of Hashimzade, Myles and Tran-Nam (2009) “New Approaches to the Economics of Tax Evasion”

Author

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  • Ali al-Nowaihi
  • Sanjit Dhami

Abstract

In a recent, 58 page, paper, Hashimzade, Myles and Tran-Nam (2009) .New Approaches to the Economics of Tax Evasion.survey alternative approaches to tax evasion. Their central conclusion is, in their own words (p. 56): .What they [the non-expected utility models] do not do is change the relationship between the tax rate and the level of evasion..We show that their central conclusion is incorrect. We also show that their representation of our work [(2007) "Why Do People Pay Taxes? Prospect Theory Versus Expected Utility Theory", Journal of Economic Behavior and Organization, 64: 171.192 ] is highly misleading, and incorrect.

Suggested Citation

  • Ali al-Nowaihi & Sanjit Dhami, 2010. "Rebuttal of Hashimzade, Myles and Tran-Nam (2009) “New Approaches to the Economics of Tax Evasion”," Discussion Papers in Economics 10/01, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:10/01
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    File URL: https://www.le.ac.uk/economics/research/RePEc/lec/leecon/dp10-01.pdf
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    References listed on IDEAS

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    1. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    2. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    3. Dhami, Sanjit & al-Nowaihi, Ali, 2007. "Why do people pay taxes? Prospect theory versus expected utility theory," Journal of Economic Behavior & Organization, Elsevier, vol. 64(1), pages 171-192, September.
    4. Erling Eide, 2001. "Rank dependent expected utility models of tax evasion," ICER Working Papers 27-2001, ICER - International Centre for Economic Research.
    5. Yaniv, Gideon, 1999. "Tax Compliance and Advance Tax Payments: A Prospect Theory Analysis," National Tax Journal, National Tax Association, vol. 52(n. 4), pages 753-64, December.
    6. Drazen Prelec, 1998. "The Probability Weighting Function," Econometrica, Econometric Society, vol. 66(3), pages 497-528, May.
    7. Gurevich, Gregory & Kliger, Doron & Levy, Ori, 2009. "Decision-making under uncertainty - A field study of cumulative prospect theory," Journal of Banking & Finance, Elsevier, vol. 33(7), pages 1221-1229, July.
    8. Yaniv, Gideon, 1999. "Tax Compliance and Advance Tax Payments: A Prospect Theory Analysis," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(4), pages 753-764, December.
    9. Dhami, Sanjit & Al-Nowaihi, Ali, 2010. "Optimal taxation in the presence of tax evasion: Expected utility versus prospect theory," Journal of Economic Behavior & Organization, Elsevier, vol. 75(2), pages 313-337, August.
    10. Yitzhaki, Shlomo, 1974. "Income tax evasion: A theoretical analysis," Journal of Public Economics, Elsevier, vol. 3(2), pages 201-202, May.
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