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The Impact of Social Pressure on Tax Compliance: a Field Experiment

Document language: 
English
Publication number: 
2016-04
Publication type: 
Working Paper
Author(s): 
Pietro Battiston,
Simona Gamba
Abstract: 

We study the effect of social pressure on tax compliance, focusing on the compliance of shop sellers to the legal obligation of releasing tax receipts for each sale. We carry out a field experiment on bakeries in Italy, where a strong gap exists between the legal obligation and the actual behavior of sellers. Social pressure is manipulated by means of an explicit request for a receipt when not released. We employ an innovative approach to the identification of the treatment effect. We find that a single request for a receipt causes a 17 per cent rise in the probability of a receipt being released for a sale occurring shortly thereafter, causing on average more than two receipts to be released. We also find strong evidence of persistence in compliance decisions.

Keywords: 
Tax evasion,
field experiment,
peer pressure,
social pressure
JEL classification: 
C93, H32, K34
Date: 
February, 2016