Shaming Tax Delinquents: Evidence from a Field Experiment in the United States

66 Pages Posted: 1 Feb 2015 Last revised: 1 Jun 2016

Ricardo Perez-Truglia

University of California, Los Angeles (UCLA)

Ugo Troiano

University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: April 1, 2016

Abstract

Many federal and local governments rely on shaming penalties to achieve policy goals, but little is known about whether these penalties work as intended. Shaming penalties may be ineffective or may backfire by crowding-out intrinsic motivation. In this paper, we measure the effects of shaming penalties in the collection of tax delinquencies. We sent letters to 34,344 tax delinquents who owed half a billion dollars in three U.S. states. We randomized some of the information contained in the letter to vary the salience of financial penalties, shaming penalties and peer comparisons. We then measure the effects of this information on subsequent re-payment rates. We find that shaming penalties have a large effect on repayment of smaller debt amounts, but no effect on larger debt amounts. Also, financial reminders increase re-payment rates, but peer comparisons are ineffective.

Keywords: tax debt, enforcement, financial, shaming, penalty

JEL Classification: C93, H26, K34, K42, Z13

Suggested Citation

Perez-Truglia, Ricardo and Troiano, Ugo, Shaming Tax Delinquents: Evidence from a Field Experiment in the United States (April 1, 2016). Available at SSRN: https://ssrn.com/abstract=2558115 or http://dx.doi.org/10.2139/ssrn.2558115

Ricardo Perez-Truglia

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

HOME PAGE: http://www.anderson.ucla.edu/faculty/global-economics-and-management/perez-truglia

Ugo Troiano (Contact Author)

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

HOME PAGE: http://sites.google.com/a/umich.edu/troiano

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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