1. Willing to Pay? Testing Institutionalist Theories with Experiments G. Andrighetto, S. Ottone, F. Ponzano, N. Zhang and S. Steinmo 1

2. Traditional economic theory suggests: – Institutional rules. – Incentives and disincentives. Tax Rates Audit rates and punishment regimes. Additional Variables/Factors? – Norms? – Attitudes towards the state? – Belief in fairness (or unfairness) of system? – Sense of personal integrity or identity? – Values? 2 The aim of the project: Why do people comply - or not?

3. In real world people in different countries face different fiscal systems. In the laboratory we can use the same system to see different population groups behave differently. IF we find variation with constant institutions (we do) then we can begin to manipulate the context and/or rules (instruments’) to hopefully uncover what explains these variations. 3 Why an experimental investigation?

4. 1.Tax Compliance Experiment: 1.A real effort experiment – clerical task 2.Three stages where we elicit tax compliance under different conditions. 2.Social Value Orientation (SVO) exercise 3.Questionnaire (basic questions drawn from International Public Opinion Surveys). 4 The Basic Design: Three Separate Units

5. There are significant difference in compliance across locations. Tax rates effect behavior less than redistributive regime. Social Value Orientation matters. The influence of attitudes on behavior is not clear Some additional results: – Gender – Risk tolerance – Income 5 Some Preliminary Results:

6. 6 Most people comply and Institutions Matter

7. 7 Brits cheat more that Italians! (?)

8. 8 Round 1 Compliance by location

9. 9 Round 2 - Tax rates have small effects

10. 10 Round 3 Progressive Taxes and Charity

11. 11 Unit II: Values?

12. 12 The Social Value Index Pick a point on the scale

13. 13 SVO – example 2

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16. 16 Unit III: Political Attitudes?

17. 17 Attitudes towards redistribution and compliance

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20. 20 Some additional and unexpected findings:

21. 21 Gender

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23. 23 Men – more selfish everywhere?

24. 24 Total Evaders by gender and location

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26. 26 Are the Rich Greedy?

27. 27 High Earners Comply at Lower Rates

28. 28 Risk

29. 29 “Risk takers” are less compliant

30. 30 Further research Run the baseline experiment in more countries, in different regions in each country, and with more diverse population samples. Test for: – Norms elicitation – Effects of diversity – Efficiency – Different institutional rules (eg. Voting) – Complexity – Different redistributive regimes. Suggestions … ?

31. 31 DO NOT STEAL ! The State Does not Tolerate the Competition

32. 32 Re-ordering the treatments

33. 33 Sweden All three experiments (327)

34. 34 Some non-findings: Attitudes and behavior

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