nep-neu New Economics Papers
on Neuroeconomics
Issue of 2019‒10‒14
three papers chosen by
Daniel Houser
George Mason University

  1. A Psychometric Investigation of the Personality Traits Underlying Individual Tax Morale By Nicolas Jacquemet; Stéphane Luchini; Antoine Malezieux; Jason Shogren
  2. Children and consumer temptations - Financial personality test for children By Erzsébet Németh; Alexandra Luksander
  3. Risk as Challenge: A Dual System Stochastic Model for Binary Choice Behavior By Samuel Shye; Ido Haber

  1. By: Nicolas Jacquemet (PSE - Paris School of Economics); Stéphane Luchini (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Antoine Malezieux; Jason Shogren (UW - University of Wyoming)
    Abstract: Why do people pay taxes? Rational choice theory has fallen short in answering this question. Another explanation, called "tax morale", has been promoted. Tax morale captures the behavioral idea that non-monetary preferences (like norm-submission, moral emotions and moral judgments) might be better determinants of tax compliance than monetary trade-offs. Herein we report on two lab experiments designed to assess whether norm-submission, moral emotions (e.g. affective empathy, cognitive empathy, propensity to feel guilt and shame) or moral judgments (e.g. ethics principles, integrity, and moralization of everyday life) can help explain compliance behavior. Although we find statistically significant correlations of tax compliance behavior with empathy and shame, the economic significance of these correlations are low–—more than 80% of the variability in compliance remains unexplained. These results suggest that tax authorities should focus on the institutional context, rather than individual preference characteristics, to handle tax evasion.
    Keywords: tax evasion,tax morale,morality,personality traits,psychometrics
    Date: 2019–06–26
    URL: http://d.repec.org/n?u=RePEc:hal:journl:hal-02290402&r=all
  2. By: Erzsébet Németh (Budapest Metropolitan University); Alexandra Luksander (Sociologist, Survey Statistician)
    Abstract: Goals: Our research aimed to explore the financial attitudes of teenagers (10-14 years old). Its goal is to compare the answers given by the children surveyed with the results of the Financial Personality Test addressing adults. Methods: The survey consists of 20 questions and respondents (2067 upper secondary pupils) can assess on a scale from 1 to 5 how typical of them a certain finance-related quality, behaviour or attitude is. Results: Results show that the upper secondary age-group possess higher level skills in handling money than previously presumed, they have well-established financial habits, they are willing to work for money while they know exactly how much money they have and how much things cost. They are much more exposed to temptations encouraging consumption than adults, therefore they are more likely to face financial difficulties, they do not always know what their money is spent on. At the same time, children are less likely to expect their parents to give them everything than the parents themselves. The study classifies respondent children into three clusters: 1. conscious savers, 2. spenders, 3. the passive, incompetent in their finances. Recommendations: Spenders should learn about controlling shopping impulses, planning and economizing, while the financially fragile passive group should learn about financial strategy, coping skills and motivation as well.
    Keywords: financial personality, attitude, behavioural test, children
    JEL: D18 A14 G02
    Date: 2019–10
    URL: http://d.repec.org/n?u=RePEc:sek:iefpro:9510897&r=all
  3. By: Samuel Shye; Ido Haber
    Abstract: Challenge Theory (CT), a new approach to decision under risk departs significantly from expected utility, and is based on firmly psychological, rather than economic, assumptions. The paper demonstrates that a purely cognitive-psychological paradigm for decision under risk can yield excellent predictions, comparable to those attained by more complex economic or psychological models that remain attached to conventional economic constructs and assumptions. The study presents a new model for predicting the popularity of choices made in binary risk problems. A CT-based regression model is tested on data gathered from 126 respondents who indicated their preferences with respect to 44 choice problems. Results support CT's central hypothesis, strongly associating between the Challenge Index (CI) attributable to every binary risk problem, and the observed popularity of the bold prospect in that problem (with r=-0.92 and r=-0.93 for gains and for losses, respectively). The novelty of the CT perspective as a new paradigm is illuminated by its simple, single-index (CI) representation of psychological effects proposed by Prospect Theory for describing choice behavior (certainty effect, reflection effect, overweighting small probabilities and loss aversion).
    Date: 2019–10
    URL: http://d.repec.org/n?u=RePEc:arx:papers:1910.04487&r=all

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