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Nudging towards tax compliance: A fieldwork informed randomised controlled trial

Published version
Peer-reviewed

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Authors

Aaben, Laura 
Paulus, Alari 
Koppel, Helleka 
Tammsaar, Helelyn 

Abstract

Changing complex behaviours such as tax evasion may require several behavioural interventions, or nudges. We developed a tailored compound intervention approach to increase employers’ payroll tax compliance in Estonia’s construction industry. First, we used anthropological methods to gain insights into the decision processes of employers and employees in the industry (Study 1, N=16). These insights were combined with behavioural decision-making principles to design an intervention e-mail with the aim to strengthen perceived risks and weaken descriptive norms of non-compliance as well as to strengthen collaborative and weaken adversarial construal of tax authority. The compound intervention was tested using a three-armed non-blinded randomised controlled trial (Study 2, N=4770) involving all employers whose declared wages were below 70% of the industry’s average. The intervention significantly increased declared payroll taxes by 5.1% to 6.1% on average across the two treated groups over a 3-month follow-up period (p< .0001) and was therefore effective. It remains unclear which constituent nudges of our compound intervention were crucial for this effect. These findings suggest that the compound intervention approach may be a feasible avenue for designing effective interventions in under-studied contexts.

Description

Keywords

4801 Commercial Law, 48 Law and Legal Studies, Behavioral and Social Science

Journal Title

Journal of Behavioral Public Administration

Conference Name

Journal ISSN

2576-6465

Volume Title

3

Publisher

American Political Science Association
Sponsorship
Estonian Tax and Customs Board, Praxis Centre for Policy Studies, Estonian Research Council grant MOBTP-17