An Experimental Examination of the Effects of Self-Interest, Morality and Economic Context on Preference for Tax Policy

Abstract:     
The study experimentally examines the effect of three factors potentially affecting individuals' determination of preferred gasoline tax policies. The three factors: 1) self-interest, 2) moral sense of fairness, and 3) economic context, serve as the foundation of three major theories and/or perspectives of human behavior largely associated with von Neuman and Morgenstern, James Q. Wilson, and Kahnemann and Tversky, respectively. The study found that while self-interest, not surprisingly, was an important factor affecting subjects' support for an equity-based policy, it also found that a moral sense of fairness tempered their desire to achieve its maximization. Additionally, the study found, under a condition of potential economic advantage, that support for a particular tax policy would vary, consistent with Kahnemann and Tversky's prospect theory, depending upon economic context and resulting benefit form (e.g., cash refund or reduction in tax liability). Support, in this case, also varied by gender.

Keywords: Tax, Morality, Expected Utility Theory, Prospect Theory, Gender

JEL Classification: H22, H60

working papers series