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Framing and Taxation: Evaluation of Tax Policies Involving Household Composition


Edward J. McCaffery


USC Gould School of Law

Jonathan Baron


University of Pennsylvania - Department of Psychology

June 10, 2003

USC Law School, Olin Research Paper No. 00-18

Abstract:     
Three studies of attitudes toward tax policies were conducted on the World Wide Web. The results show several effects. In penalty aversion, subjects preferred bonuses over penalties, when policies differ only in how they are formally described. In the Schelling effect, subjects prefer both higher bonuses (for children) for the poor than for the rich and higher penalties (for being childless) for the rich than for the poor. In the neutrality bias, subjects preferred separate filing for married couples more when it was presented in a format that emphasized the effect of marriage (where it is neutral) than in one that emphasized the effect of the number of earners in a couple (where one-earner couples pay more). In the status-quo effect, subjects preferred the specified starting point to any change. Finally, in the metric effect, subjects favored more progressiveness in tax burdens when taxes were expressed in percent than when they were expressed in dollars.

The research suggests a general framework. Subjects approach a given decision problem with strong independent norms or ideals, such as, here, "do no harm," "avoid penalties," "treat likes alike," "help children," and "expect the rich to pay more." They then evaluate the problem on the basis of the most salient norms. In a complex area such as tax, independently attractive ideals are often in conflict, and the result is shifting, inconsistent preferences.

Note: This replaces an earlier version of the paper titled "Framing the Family: Normative Evaluation of Tax Policies Involving Household Composition," which circulated in SSRN journals in 2000.

Number of Pages in PDF File: 51

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Date posted: June 17, 2003  

Suggested Citation

McCaffery, Edward J. and Baron, Jonathan, Framing and Taxation: Evaluation of Tax Policies Involving Household Composition (June 10, 2003). USC Law School, Olin Research Paper No. 00-18. Available at SSRN: http://ssrn.com/abstract=246408 or http://dx.doi.org/10.2139/ssrn.246408

Contact Information

Edward J. McCaffery (Contact Author)
USC Gould School of Law ( email )
699 Exposition Boulevard
Los Angeles, CA 90089
United States
213-740-2567 (Phone)
213-740-5502 (Fax)

Jonathan Baron
University of Pennsylvania - Department of Psychology ( email )
3815 Walnut Street
Philadelphia, PA 19104-6196
United States
215-898-6918 (Phone)
HOME PAGE: http://www.sas.upenn.edu/~baron
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