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Carrots, Sticks, or Simplicity? Field Evidence on What Makes People Pay TV Fees

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Listed:
  • Jana Cahlikova
  • Lubomir Cingl
  • Katerina Chadimova
  • Miroslav Zajicek

Abstract

We provide evidence on both innovative as well as known behavioral strategies aimed at improving tax compliance, using a unified environment of two large correspondence experiments (N=82,599 and N=51,142) with potential TV-fees evaders in the Czech Republic. We (i) simplify the original letter and add a QR code for easier registration; use two innovative text strategies aimed at (ii) the elicitation of preference for fee designation, and (iii) the explanation of fee purpose. We also employ strategies known in the literature but providing mixed results: highlighting (iv) legal consequences of non-compliance, (v) value of services for the fee, and (vi) social norms. Apart from the text treatments, we modify the envelopes by placing there (vii) a picture of a cartoon character (supported by a sticker inside), or (viii) a red inscription "Important", with the aim to stimulate recipients' reciprocity and attention. Our results show that the text simplification and highlighting legal consequences substantially improve effectiveness of the letter, which we self-replicate on a new sample two years later, while the remaining treatments do not improve over the baseline. The QR code brings only a modest improvement.

Suggested Citation

  • Jana Cahlikova & Lubomir Cingl & Katerina Chadimova & Miroslav Zajicek, 2021. "Carrots, Sticks, or Simplicity? Field Evidence on What Makes People Pay TV Fees," Working Papers tax-mpg-rps-2021-12, Max Planck Institute for Tax Law and Public Finance.
    • Handle: RePEc:mpi:wpaper:tax-mpg-rps-2021-12
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    More about this item

    Keywords

    tax compliance; natural experiment; deterrence; simplicity; QR code;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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