Does the Level of Work Effort Influence Tax Evasion? Experimental Evidence
Christoph Bühren, University of Kassel & Thorben C. Kundt, Helmut-Schmidt-University Hamburg, 2014-09-12
Using a real effort experiment, we analyze the dependence of tax evasion on the
amount of effort invested to generate income. In three treatments, subjects were either
endowed with income or had to work moderately or arduously 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 that in the moderate-effort treatment.
| year: | 2014 |
| volume: | 65, Issue 2 |
| pages: | 137-158 |
| JEL: | C91, D03, H26 |
| keywords: | house_money_effect prospect_theory real_effort_experiment sunk_cost_effect tax_evasion |
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