Tax Evasion and Social Interactions

By B. Fortin, Guy Lacroix, Marie-Claire Villeval. Social Science Research Network, 2007

387 citations recorded by the source corpus.

The paper extends the standard tax evasion model by allowing for social interactions. In Manski's (1993) nomenclature, our model takes into account social conformity effects (i.e., endogenous interactions), fairness effects (i.e., exogenous interactions) and sorting effects (i.e., correlated effects). Our model is tested using experimental data. Participants must decide how much income to report given their tax rate and audit probability, and given those faced by the other members of their group as well as their mean reported income. The estimation is based on a two-limit simultaneous tobit with fixed group effects. A unique social equilibrium exists when the model satisfies coherency conditions. In line with Brock and Durlauf (2001b), the intrinsic nonlinearity between individual and group responses is sufficient to identify the model without imposing any exclusion restrictions. Our results are consistent with fairness effects but reject social conformity and correlated effects.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/a065b1629ff85e2a0db928bd8ce115b2f5e2a80f

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Citations in the corpus

APPLICATIONS OF BEHAVIOURAL ECONOMICS TO TAX EVASION (2012, background): “This approach has been Journal of Economic Surveys (2013) Vol. 27, No. 5, pp. 941–977 C© 2012 John Wiley & Sons Ltd developed by Fortin et al. (2007), Kim (2003) and Myles and Naylor (1996) to show that reputation effects can lead to multiple equilibria and epidemics of evasion.”
Social norms and conditional cooperative taxpayers (2010, background): “The study in Fortin et al. (2007) sketches a more general structure, with”
Measuring, explaining, and controlling tax evasion: lessons from theory, experiments, and field studies (2012, background): “See Cowell and Gordon (1988), Gordon (1989), Myles and Naylor (1996), Kim (2003), Fortin et al. (2007) , and Traxler (2010) for examples of social interactions theory as applied to tax evasion.”
Tax Compliance and Enforcement in the Pampas: Evidence from a Field Experiment (2013, background): “…function by assuming that the decision-making process of the individual taxpayer is also affected by social interactions (Cowell and Gordon, 1988; Gordon, 1989; Myles and Naylor, 1996; Kim, 2003; Bayer, 2006; Fortin, Lacroix, and Villeval, 2007; Eisenhauer, 2008; Dell’Anno, 2009; Traxler, 2010).”
Effort and Comparison Income: Experimental and Survey Evidence (2010, background): “2 Recent contributions in this vein have analyzed saving (Duflo and Saez 2002), tax evasion (Fortin, Lacroix, and Villeval 2007), labor supply (Aronsson, Blomquist, and Sacklén 1999), and students’ success at school (Arcidiacono and Nicholson 2005; Sacerdote 2001).”
Perceived tax evasion and the importance of trust (2009, background): “8 See e.g. Scholz and Lubell (1998), Torgler (2003a,b), Davis et al. (2003), and Fortin et al. (2007).”
Cheating, emotions, and rationality: an experiment on tax evasion (2010, methodology): “This research was supported by a grant from the Rhône-Alpes Region (CIBLE program).”
Identification of Peer Effects through Social Networks (2009, background): “... are Brock and Durlauf (2001a, 2003) that exploit non-linearities emerging from discrete choice models to identify endogenous from exogenous effects under the assumption of no correlated effects, Krauth (2006) and Brock and Durlauf (2007) that extents Brock and Durlauf (2001a) to account for corr”