Carrots, Sticks, or Simplicity? Field Evidence on What Makes People Pay TV Fees

53 Pages Posted: 26 Jul 2021

See all articles by Jana Cahlikova

Jana Cahlikova

Max Planck Institute for Tax Law and Public Finance; Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Lubomir Cingl

University of Economics, Prague

Katerina Chadimova

Charles University in Prague, Faculty of Social Sciences, Institute of Economic Studies, Students

Miroslav Zajicek

University of Economics, Prague

Date Written: July 22, 2021

Abstract

We provide evidence on both innovative as well as known behavioral strategies aimed at improving tax compliance, using a unified environment of two large correspondence experiments (N=82,599 and N=51,142) with potential TV-fees evaders in the Czech Republic. We (i) simplify the original letter and add a QR code for easier registration; use two innovative text strategies aimed at (ii) the elicitation of preference for fee designation, and (iii) the explanation of fee purpose. We also employ strategies known in the literature but providing mixed results: highlighting (iv) legal consequences of non-compliance, (v) value of services for the fee, and (vi) social norms. Apart from the text treatments, we modify the envelopes by placing there (vii) a picture of a cartoon character (supported by a sticker inside), or (viii) a red inscription “Important”, with the aim to stimulate recipients' reciprocity and attention. Our results show that the text simplification and highlighting legal consequences substantially improve effectiveness of the letter, which we self-replicate on a new sample two years later, while the remaining treatments do not improve over the baseline. The QR code brings only a modest improvement.

Keywords: tax compliance; natural experiment; deterrence; simplicity; QR code

JEL Classification: C91, C93, D02, H24, H26

Suggested Citation

Cahlikova, Jana and Cingl, Lubomir and Chadimova, Katerina and Zajicek, Miroslav, Carrots, Sticks, or Simplicity? Field Evidence on What Makes People Pay TV Fees (July 22, 2021). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2021-12, Available at SSRN: https://ssrn.com/abstract=3891641 or http://dx.doi.org/10.2139/ssrn.3891641

Jana Cahlikova (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.janacahlikova.net

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic

Lubomir Cingl

University of Economics, Prague ( email )

nam. W.Churchilla 4
Prague 3, 130 67
Czech Republic

Katerina Chadimova

Charles University in Prague, Faculty of Social Sciences, Institute of Economic Studies, Students ( email )

Opletalova 26
Praha 1
Czech Republic

Miroslav Zajicek

University of Economics, Prague ( email )

nam. W.Churchilla 4
Prague 3, 130 67
Czech Republic

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