Raising the stakes : experimental evidence on the endogeneity of taxpayer mistakes

Resource Information

The work Raising the stakes : experimental evidence on the endogeneity of taxpayer mistakes represents a distinct intellectual or artistic creation found in International Bureau of Fiscal Documentation. This resource is a combination of several types including: Work, Language Material, Continuing Resources.

Label

Raising the stakes : experimental evidence on the endogeneity of taxpayer mistakes

Creator

• Feldman, N
• Goldin, J
• Homonoff, T

Subject

• sales tax
• taxpayer

Language

eng

Summary

Recent evidence suggests consumers fail to account for taxes that are excluded from a good's displayed price. What is less understood is whether and how such "salience effects" depend on the magnitude of the tax. The authors conduct a laboratory shopping experiment with real stakes to study the effect of tax size on salience. They find no evidence that salience effects decline as the tax rate increases; they document a statistically significant salience effect at a tax rate that is considerably larger than the tax rates at which such effects have been previously documented. In fact, their results are more consistent with the hypothesis that higher taxes make consumers less attentive (at least for the range of taxes they consider). This result can be explained by a confirmation bias theory of salience: consumers tend to disregard information (like a tax) that does not align with their intention to purchase an item, and this lack of alignment increases in the size of the tax

Citation source

In: National tax journal. - Washington. - Vol. 71 (2018), no. 2 ; p. 201-230

Geographic coverage

International

Language note

English