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on Nudge and Boosting |
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Issue of 2024‒01‒22
two papers chosen by |
| By: | Eko Arief Yogama; Daniel J. Gray; Matthew D. Rablen |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10836&r=nud |
| By: | Thomas Mariotti (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Nikolaus Schweizer (Tilburg University [Netherlands]); Nora Szech (KIT - Karlsruher Institut für Technologie); Jonas von Wangenheim (Universität Bonn = University of Bonn) |
| Abstract: | We study the optimal design of information nudges for present-biased consumers who make sequential consumption decisions without exact prior knowledge of their long-term consequences. For any distribution of risks, there exists a consumer-optimal information nudge that is of cutoff type, recommending abstinence if riskiness is high enough. Depending on the distribution of risks, more or less consumers may have to be sacriced in that they cannot be warned even though they would like to be. Under a stronger bias for the present, the target group receiving a credible warning to abstain must be tightened, but this need not increase the probability of harmful consumption. If some consumers are more strongly present-biased than others, traffic-light nudges turn out to be optimal and, when subgroups of consumers differ sufficiently, the optimal traffic-light nudge is also subgroup-optimal. We finally compare the consumer-optimal nudge with those a health authority or a lobbyist would favor. |
| Keywords: | Nudges, Information Design, Present-Biased Preferences, Self-Control |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04198487&r=nud |