Deterring Property Tax Delinquency in Philadelphia: An Experimental Evaluation of Nudge Strategies

39 Pages Posted: 19 Mar 2017

See all articles by Michael Chirico

Michael Chirico

University of Pennsylvania

Robert P. Inman

University of Pennsylvania - Finance Department; National Bureau of Economic Research (NBER)

Charles Loeffler

University of Pennsylvania

John MacDonald

University of Pennsylvania

Holger Sieg

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: March 2017

Abstract

Municipal governments commonly confront the problem of tardy or delinquent property tax payments. We implement an experiment in property tax collection for tardy taxpayers in the City of Philadelphia for the calendar year, 2015. The experiment sent one of seven reminder letters to the tardy taxpayers, testing the efficacy of a simple reminder, two alternative reminders stressing economic sanctions, and four alternative reminders emphasizing either that taxpayers receive neighborhood services or city-wide services for their tax payments, that most of their neighbors pay their taxes on time, or that as a citizen in a democracy it is a civic duty to pay taxes on time. Compliance behaviors were compared to a holdout sample that received no reminder letter. The most effective letters were those that threatened an economic sanction for continued non-compliance. These letters were particularly cost-effective in raising additional city revenues. There was no evidence that those receiving a reminder for the calendar year 2015 improved their tax compliance behavior in the calendar year 2016.

Suggested Citation

Chirico, Michael and Inman, Robert P. and Loeffler, Charles and MacDonald, John and Sieg, Holger, Deterring Property Tax Delinquency in Philadelphia: An Experimental Evaluation of Nudge Strategies (March 2017). NBER Working Paper No. w23243. Available at SSRN: https://ssrn.com/abstract=2935414

Michael Chirico (Contact Author)

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

Robert P. Inman

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States
215-898-8299 (Phone)
215-898-8200 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Charles Loeffler

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

John MacDonald

University of Pennsylvania ( email )

483 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
United States
215-646-3623 (Phone)

HOME PAGE: http://www.crim.upenn.edu/faculty_macdonald.htm

Holger Sieg

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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