Loss evasion and tax aversion
The objective of this paper is to study if taxpayers behave in a loss averse manner when filing their tax returns. This is important for tax design but also for understanding human behavior in general. The predictions of prospect theory can be contrasted to those of expected utility theory. We use data for 3.6 million Swedish taxpayers for the income year 2006. Our research method is quasi-experimental using a regression kink and discontinuity approach. We also use an alternative instrumental-variables approach. There is strong evidence of loss aversion. We estimate the coefficient of loss aversion using actual behavior and the instrument-variables approach. Our estimate is very close to the estimates reported in the experimental literature.
Year of publication: |
2011-11-29
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Authors: | Engström, Per ; Nordblom, Katarina ; Ohlsson, Henry ; Persson, Annika |
Institutions: | Nationalekonomiska Institutionen, Uppsala Universitet |
Subject: | loss aversion | prospect theory | tax compliance | quasi-experiment | regression kink | regression discontinuity |
Saved in:
freely available
Extent: | application/pdf |
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Series: | |
Type of publication: | Book / Working Paper |
Notes: | The text is part of a series Working Paper Series, Uppsala Center for Fiscal Studies Number 2011:11 43 pages |
Classification: | C21 - Cross-Sectional Models; Spatial Models ; c26 ; D03 - Behavioral Economics; Underlying Principles ; H24 - Personal Income and Other Nonbusiness Taxes and Subsidies ; H26 - Tax Evasion |
Source: |
Persistent link: https://www.econbiz.de/10010611626