Taxes and Benefits: Two Options to Cheat on the State

21 Pages Posted: 24 Apr 2014

See all articles by Martin Halla

Martin Halla

Johannes Kepler University Linz - Department of Economics; IZA Institute of Labor Economics

Friedrich Schneider

Johannes Kepler University Linz - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)

Date Written: June 2014

Abstract

In this article we study the social norms to abstain from cheating on the state via benefit fraud and tax evasion. We interpret these norms (called benefit morale and tax morale) as moral goods, and derive testable hypotheses on whether their demand is determined by prices. Employing a large survey data set from OECD‐member countries we provide robust evidence that the demand responds to price proxy variables as predicted by theory. The main general conclusion of this article is that social norms (which are widely accepted as determinants of individual economic behaviour) are themselves influenced by economic factors.

Suggested Citation

Halla, Martin and Schneider, Friedrich G., Taxes and Benefits: Two Options to Cheat on the State (June 2014). Oxford Bulletin of Economics and Statistics, Vol. 76, Issue 3, pp. 411-431, 2014, Available at SSRN: https://ssrn.com/abstract=2428513 or http://dx.doi.org/10.1111/obes.12024

Martin Halla (Contact Author)

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Friedrich G. Schneider

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria
+43 732 2468 8210 (Phone)
+43 732 2468 8208 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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