Worker or Shirker - Who Evades More Taxes? A Real Effort Experiment

MAGKS Joint Discussion Paper Series in Economics No. 26-2013

31 Pages Posted: 27 Jun 2013

See all articles by Christoph Bühren

Christoph Bühren

University of Kassel - Economics

Thorben Kundt

University of the German Federal Armed Forces - Department of Economics

Date Written: 2013

Abstract

With the help of a real effort experiment, we analyze if tax evasion depends on the amount of effort invested to generate income. In three treatments, subjects were either endowed with income or had to work moderately or hard to earn it. In line with prospect theory, subjects evaded more taxes when they worked hard for their income. We find little evidence for the prediction that tax evasion in the endowed treatment is higher than in the moderate work treatment.

Keywords: tax evasion, prospect theory, house money effect, sunk cost effect, real effort experiment

JEL Classification: C91, D03, H26

Suggested Citation

Bühren, Christoph and Kundt, Thorben, Worker or Shirker - Who Evades More Taxes? A Real Effort Experiment (2013). MAGKS Joint Discussion Paper Series in Economics No. 26-2013, Available at SSRN: https://ssrn.com/abstract=2284156 or http://dx.doi.org/10.2139/ssrn.2284156

Christoph Bühren (Contact Author)

University of Kassel - Economics ( email )

Nora-Platiel Str. 4
34109 Kassel
Germany

Thorben Kundt

University of the German Federal Armed Forces - Department of Economics ( email )

Holstenhofweg 85
Hamburg, 22043
Germany

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