Field Experiments in Tax Compliance (by Dr. Nadja Dwenger)

Tax evasion, in particular with respect to income taxes, has recently become a major topic in the political discussion about how to frame a modern tax system. Unfortunately, our knowledge about what motivates individuals to comply with tax laws and regula tions is still rather limited. The main reason for the scarcity of evidence on tax morale and tax compliance is that it is extremely difficult to obtain reliable data that would allow the researcher to characterize the degree of tax compliance of individu als. If, for instance, individuals receive income from certain sources but do not report this income to the tax authorities, the researcher will not be able to uncover the true degree of compliance even if she has full access to the administrative data of the tax authority. The empirical gold standard in research on tax compliance is thus to rely on either laboratory experiments (in which participants' behaviour is studied in a laboratory) or so-called natural randomized field experiments (in which indiv iduals, who do not know that they are part of an experiment, are observed in their natural environment). In such settings, the environment shaping individual incentives for tax compliance vs. evasion is under the control of the researcher. In my researc h I aim at contributing to the very small literature on field experiments in tax compliance and tax collection. In these field studies I am particularly interested in the role of social norms, social networks, and enforcement spillovers.