Nudging for Tax Compliance: A Meta-Analysis
49 Pages Posted: 10 Dec 2019 Last revised: 24 Sep 2020
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Nudging for Tax Compliance: A Meta-Analysis
Nudging for Tax Compliance: A Meta-Analysis
Date Written: November 15, 2019
Abstract
Taxpayer nudges - behavioral interventions that aim to increase tax compliance without changing the underlying economic incentives of taxpayers - are used increasingly by governments because of their potential cost-effectiveness in raising tax revenue. We collect about a thousand treatment effect estimates from over 40 randomized controlled trials, and in a meta-analytical framework show that non-deterrence nudges - interventions pointing to elements of individual tax morale { are on average ineffective in curbing tax evasion, while deterrence nudges - interventions emphasizing traditional determinants of compliance such as audit probabilities and penalty rates - are potent catalysts of compliance. These effects are, however, fairly small in magnitude. Deterrence nudges increase the probability of compliance by only 1.5-2.5 percentage points more than non-deterrence nudges, while the effects are likely to be bound to the short-run, and are somewhat inflated by selective reporting of results.
Keywords: Tax compliance, Randomized control trials, Nudging, Meta-analysis
JEL Classification: C93, D91, H26
Suggested Citation: Suggested Citation