Social norms or enforcement? A natural field experiment to improve traffic and parking fine compliance
Authors: Mathias Sinning, Yinjunjie Zhang
Published in: Journal of Economic Behavior and Organization 210, 43-60, 2023
Abstract. Very little is known about the efficient collection of fines despite their indispensable contribution to local government budgets. This paper fills an important gap in the literature by studying the effectiveness of deterrence (enforcement) and non-deterrence (social norms) letters that aim to improve the collection of traffic and parking fines. We present results from a natural field experiment implemented in collaboration with the Australian Capital Territory (ACT) Government. We find that both letters increase fine payments significantly. The effect of the enforcement letter is stronger than that of the social norms letter. Our analysis of heterogenous treatment effects indicates that addressing social norms does not change the behavior of young offenders, those who committed a speeding offence, those with a long outstanding debt and those with a debt above the median. In contrast, the enforcement letter is generally effective across subgroups.
Improving tax compliance without increasing revenue: Evidence from population-wide Randomized Controlled Trials in Papua New Guinea
Authors: Christopher Hoy, Luke McKenzie, Mathias Sinning
Published in: Economic Development and Cultural Change 72, 691-723, 2023
Abstract. This paper studies the impact of “nudges” on taxpayers with varying tax compliance histories in Papua New Guinea. It presents the results from two population-wide randomized controlled trials in a setting that is characterized by low compliance rates and a lack of effective enforcement. The study tests the impact of text messages, flyers, and emails that remind taxpayers of declaration due dates and provide information about the public benefits of paying tax. The findings show that the treatments increased the number of tax declarations filed without increasing the amount of tax paid because the taxpayers who responded to the nudges were largely exempt from paying tax. This result is consistent across tax types, communication channels, and time periods. The findings also show that the treatments had no impact on previously non-filing taxpayers. Collectively, the results illustrate that taxpayers who face the lowest cost from complying are the most likely to respond to a nudge.
Trying to make a good first impression: A natural field experiment to engage new entrants to the tax system
Authors: Sarah Xue Dong and Mathias Sinning
Published in: Journal of Behavioral and Experimental Economics 100, 101900, 2022
Abstract. Very little is known about the compliance behavior of first-time taxpayers although their tax paying habits may affect the long-run functioning of a tax system. This paper studies the compliance behavior of new entrants to the tax system using data from a large-scale natural field experiment that was implemented in collaboration with the Australian Taxation Office (ATO). We examine the effectiveness of a welcome letter from the tax authority that aims to nudge first-time taxpayers to lodge their first income tax return. We compare this letter to a standard letter that emphasizes the possibility of penalties and interest charges. We find that both letters have surprisingly similar effects on tax compliance, suggesting that the main channel through which the letters affect individual behavior is by providing information. By contrast, the type of messaging and the way in which information is presented to first-time taxpayers appear to be relatively unimportant. Our analysis of heterogeneous treatment effects indicates that both letters are most effective for young entrants to the tax system and, within this group, more effective for Australian citizens than for visa holders.
COVID-19 survey participation and wellbeing: A survey experiment
Authors: Kate Sollis, Nicholas Biddle, Ben Edwards
Published in: Journal of Empirical Research on Human Research Ethics 16, 179-187, 2021
Abstract. Individuals throughout the world are being recruited into studies to examine the social impacts of coronavirus disease 2019 (COVID-19). While previous literature has illustrated how research participation can impact distress and wellbeing, to the authors’ best knowledge no study has examined this in the COVID-19 context. Using an innovative approach, this study analyses the impacts of participation in a COVID-19 survey in Australia on subjective wellbeing through a survey experiment. At a population level, we find no evidence that participation impacts subjective wellbeing. However, this may not hold for those with mental health concerns and those living in financial insecurity. These findings provide the research community with a deeper understanding of the potential wellbeing impacts from COVID-19-related research participation.
Nudging businesses to pay their taxes: Does timing matter?
Authors: Christian Gillitzer and Mathias Sinning
Published in: Journal of Economic Behavior and Organization 169, 284-300, 2020
Abstract. This paper provides empirical evidence on the implications of the timing of reminders by studying the effect of varying the timing of reminder letters to taxpayers on their payment behavior. The collection of unpaid tax debts constitutes a considerable challenge for tax au- thorities. We discuss potential mechanisms through which reminders may affect taxpayers’ behavior and study the payment behavior of business taxpayers in a field experiment in Australia. We find that a simple reminder letter increases the probability of payment by about 25 percentage points relative to a control group that does not receive a letter from the tax authority. However, variation over a three-week period in the timing of the re- minder letter has no effect on the probability of payment within seven weeks of the due date. Our findings indicate that sending reminders early results in faster payment of debts with no effect on the ultimate probability of payment.
Behavioral insights on business taxation: Evidence from two natural field experiments
Authors: Nicholas Biddle, Katja Fels, Mathias Sinning
Published in: Journal of Behavioral and Experimental Finance 18, 30-49, 2018
Abstract. This paper presents the findings of two natural field experiments that were conducted in collaboration with the Australian Taxation Office (ATO). The first experiment tests the effect of changes to letters on businesses paying the correct amount of tax. The second experiment consists of two parts. The first part aims to raise awareness of the relevance of tax debt payment by changing internal guidelines used by field auditors. The second part focuses on studying the effect of changing the phone script used by desk auditors to facilitate payment arrangements and simplifying a follow-up letter. While the first experiment had no effects on any of the outcome measures considered, the results of the second experiment indicate that changing the phone script of desk auditors and simplifying the letter reduced the proportion of default assessments raised by the ATO by 69 percent, suggesting that businesses are responsive to certain types of nudges.
