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on Nudge and Boosting |
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Issue of 2024‒01‒08
five papers chosen by |
| By: | J. Bonan; C. Cattaneo; G. d’Adda; A. Galliera; M. Tavoni |
| Abstract: | Policymakers and firms use behavioral interventions to promote sustainable development in various domains. Correctly evaluating the impacts of a nudge on behavior and satisfaction requires looking beyond the targeted domain and assessing its interactions with other similar interventions. Existing evidence on these aspects is limited, leading to potential misestimation of the cost-effectiveness of this type of intervention and poor guidance on how to design them best. Through a large-scale randomized controlled trial implemented with a multi-resource utility company, we test the impact of a social information campaign to nudge water conservation over two years. We find that the water nudge significantly decreases water and electricity usage, but not gas. The effect is driven by customers who do not receive nudges targeting the other resources. Customers receiving the water report are also significantly less likely to deactivate their gas and electricity contracts, regardless of whether they receive other reports. Our results suggest that multiple nudges strain users’ limited attention and ability to enact conservation efforts. Users’ constraints in attending to multiple stimuli pose important challenges for designing policy interventions to foster sustainable practices. |
| Keywords: | Social information, spillover effects, resource conservation |
| JEL: | Q5 Q25 D9 |
| Date: | 2023–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:491&r=nud |
| By: | Bonan, Jacopo; Cattaneo, Cristina; D'Adda, Giovanna; Galliera, Arianna; Tavoni, Massimo |
| Abstract: | Policymakers and firms use behavioral interventions to promote sustainable development in various domains. Correctly evaluating the impacts of a nudge on behavior and satisfaction requires looking beyond the targeted domain and assessing its interactions with similar interventions. Existing evidence on these aspects is limited, leading to potential misestimation of the cost-effectiveness of this type of intervention and poor guidance on how to design them best. Through a large-scale randomized controlled trial implemented with a multi-resource utility company, we test the impact of a social information campaign to nudge water conservation over two years. We find that the water nudge significantly decreases water and electricity usage but not gas. The effect is driven by customers who do not receive nudges targeting the other resources. Customers receiving the water report are also significantly less likely to deactivate their gas and electricity contracts, regardless of whether they receive other reports. Our results suggest that multiple nudges strain users’ limited attention and ability to enact conservation efforts. Users’ constraints in attending to multiple stimuli pose important challenges for designing policy interventions to foster sustainable practices. |
| Date: | 2023–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-23-46&r=nud |
| By: | James Alm (Tulane University); Lilith Burgstaller (University of Freiburg, Walter Eucken Institute); Arrita Domi (Walter Eucken Institute); Amanda März (Walter Eucken Institute); Matthias Kasper (Walter Eucken Institute) |
| Abstract: | This paper discusses current developments in tax compliance research, with a focus on three aspects. First, we summarize empirical evidence on the traditional deterrence or enforcement approach, suggesting that tax audits and fines for noncompliance are critical in taxpayersâ compliance decisions. However, recent research indicates that the effects of deterrence are more nuanced than initially thought, suggesting that other interventions are needed to improve tax compliance. Second, therefore, we discuss research on behavioral approaches to increase tax compliance, starting with research that analyzes the effects of "nudges", or interventions that use behavioral economics to alter the ways in which the choice architecture facing individuals is communicated to them by the tax administration. As applied to tax compliance, we conclude that nudges have had mixed effects on increasing tax compliance, suggesting that the specific design and implementation of these interventions determines their effectiveness. Third, we extend our discussion to other behavioral economics interventions that have not yet been studied widely in tax compliance research. These include "sludge", or institutional features that complicate compliance, and "boosts", or initiatives that target individualsâ competences and thereby help them to make better decisions. Our central argument is that all three of these behavioral interventions should be utilized in the design of tax policies. However, for these methods to effectively complement traditional deterrence approaches, tax administrations should evaluate them before implementing them in the field. Closer cooperation between administrators and academics should thus be facilitated and encouraged. |
| Keywords: | Tax compliance, deterrence theory, behavioral economics, nudges, boosts, sludge |
| JEL: | H2 H26 D91 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2308&r=nud |
| By: | Eko Arief Yogama (Department of Economics, University of Sheffield, 9 Mappin Street, Sheffield, S1 4DT, UK.); Daniel J. Gray (Department of Economics, University of Sheffield, 9 Mappin Street, Sheffield, S1 4DT, UK.); Matthew D. Rablen (Department of Economics, University of Sheffield, 9 Mappin Street, Sheffield, S1 4DT, UK.) |
| Abstract: | We conducted a randomised controlled trial in Indonesia to evaluate the effect of three intervention letters on tax penalty compliance behaviour. Over 10, 000 individual taxpayers are randomly assigned to receive either a deterrence, information, or simplification letter, or no letter. Our results indicate that simplification, which makes paying a penalty less burdensome administratively by providing billing codes to pay the penalties, yields the highest probability of timely settlement, increasing compliance by 32 per cent compared to the control group. Deterrence also positively impacts penalty compliance, increasing timely settlement rates by 27 per cent. The least effective intervention is the information letter. Although associated with a 12 per cent increase in tax compliance, this effect is only statistically significant at the 10 per cent confidence level. Our results suggest that strategic messaging by tax authorities in developing countries can be a cost-effective tool for improving tax penalty payment compliance. |
| Keywords: | Tax penalties; Tax compliance; RCT; Simplification; Deterrence; Information; Indonesia |
| JEL: | C93 D91 H26 Z18 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2023023&r=nud |
| By: | Roberto Alvarez; Alvaro Miranda; Jaime Ruiz-Tagle |
| Abstract: | We study the impact of a simplified financial counseling service provided by text messages, that includes images and videos, to low-income clients of a public bank in Chile. Using a randomized experiment and administrative data, we study the delinquency rates of individuals that received a set of messages about how to prevent and face shocks, and how to face present bias and social comparison. We also randomized the provision of an additional set of messages about concrete and practical options offered by the bank that individuals could take when they are at risk of defaulting. The estimated effect for addition of both types of financial counseling is a reduction in the loan delinquency rates of between 20% and 26%. The intervention also proved to be highly cost-effective allowing for large bank savings. We also find heterogeneous impacts, obtaining larger effects for young individuals, for men, for those with ex-ante higher probability to default, and for low-income individuals. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:udc:wpaper:wp552&r=nud |