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Applications of behavioural economics to tax evasion

Hashimzade, N., Myles, G. D. and Tran-Nam, B. (2013) Applications of behavioural economics to tax evasion. Journal of Economic Surveys, 27 (5). pp. 941-977. ISSN 1467-6419

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To link to this article DOI: 10.1111/j.1467-6419.2012.00733.x

Abstract/Summary

The paper reviews recent models that have applied the techniques of behavioural economics to the analysis of the tax compliance choice of an individual taxpayer. The construction of these models is motivated by the failure of the Yitzhaki version of the Allingham–Sandmo model to predict correctly the proportion of taxpayers who will evade and the effect of an increase in the tax rate upon the chosen level of evasion. Recent approaches have applied non-expected utility theory to the compliance decision and have addressed social interaction. The models we describe are able to match the observed extent of evasion and correctly predict the tax effect but do not have the parsimony or precision of the Yitzhaki model.

Item Type:Article
Refereed:Yes
Divisions:Faculty of Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
ID Code:28232
Uncontrolled Keywords:Tax evasion; Behavioural economics; Social interaction
Publisher:Wiley-Blackwell

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