The social norms approach has been used in two experiments
testing various strategies to increase tax compliance. The first of
these was conducted in the United States, the second in Australia.
Tax Compliance Experiment
In 1995, The Minnesota Department of Revenue conducted
a tax compliance experiment to test alternate strategies to improve
voluntary tax compliance (Coleman, 1996). Among the strategies tested
was a comparison of two information messages in letters sent to randomly
Informational Letter #1, which was sent to 20,000 taxpayers,
made a rational argument for tax compliance. Recipients of this letter
were informed that "your income tax dollars are spent on services
the we Minnesotans depend on. Over 30 percent of state taxes go to support
education. Another 18 percent is spent on health care and support for
the elderly and the needy. Local governments get about 12 percent of
the state tax money, supporting services in your community such as law
enforcement, parks, libraries and snow removal…So when taxpayers
do not pay what they owe, the entire community suffers."
Informational Letter #2, which was sent to a second
group of 20,000 randomly selected taxpayers, used a social norms approach.
This letter stated: "According to a recent public opinion survey,
many Minnesotans believe other people routinely cheat on their taxes.
This is not true, however. Audits by the Internal Revenue Service show
that people who file tax returns report correctly and pay voluntarily
93 percent of the income taxes they owe. Most taxpayers file their returns
accurately and on time. Although some taxpayers owe money because of
minor errors, a small number of taxpayers who deliberately cheat owe
the bulk of unpaid taxes."
Both of these informational letters shared a control
group of 20,000 randomly selected taxpayers.
The analysis of the effect was based on a comparison
of the changes in income and taxes from 1993 to 1994 between the treatment
groups and the control groups. That is, the 1993 tax or income was subtracted
from the 1994 tax or income, respectively, to calculate the change.
If the average change in the treatment group was different from the
average change in a control group, it was inferred that the treatment
had an effect, provided that the difference between groups was large
enough to be statistically significant.
The analyses indicated that Informational Letter #1
did not have any effect on compliance. By contrast, Informational Letter
#2 (which used a social norms approach) "had a moderately significant
effect on the entire sample and a stronger effect within a large subgroup
of taxpayers." The subgroup identified, representing 36 percent
of all taxpayers, was composed of those who had claimed a refund less
than $90 or had a balance due less than $1,066 the previous year.
"The most cost-effective strategy for increasing
voluntary compliance," the report concluded, "lies in applying
the results of the information message, Letter 2, experiment…[The]
low cost of sending letters or, perhaps, using advertising methods,
combined with the large number of potentially responsive taxpayers make
this a viable option to increase compliance."
Misperceptions of Social Norms about Tax Compliance: A Pre-Study
and a Field Experiment (Australian National University/Australian Taxation
In a working paper
issued in 2001, Michael Wenzel of the Australian National University
suggested that taxpayers may justify non-compliant behavior because
of the perceived high prevalence (descriptive norm) or high acceptability
(injunctive norm) of tax-noncompliance in the population (Wenzel, 2001a).
He also noted, however, that their perceptions may be distorted, i.e.,
that their taxpaying behavior may follow misperceived norms.
In an experimental
questionnaire study focusing on the injunctive norm, psychology students
were asked, in a first step, about their personal tax-related beliefs
and behavior and the perceived beliefs and behaviors of others. The
results confirmed the divergence between average personal beliefs and
perceived beliefs of the average. In a second step of the pre-study,
participants were given feedback about either this divergence or about
a norm-irrelevant finding (i.e., a control). The intervention significantly
improved the perceived tax beliefs of others (injunctive norm) and,
mediated by this effect, increased hypothetical tax compliance.
A subsequent field
study was conducted to evaluate a normative intervention to increase
tax compliance. This intervention involved two steps. In step one, taxpayers
were sent a survey about their own personal norms and behavior as well
as others' norms and behavior concerning the payment of taxes. In step
two, they were informed about the systematic self-other discrepancy
in their perceptions, suggesting that taxpayers erroneously think that
most taxpayers hold norms of honesty to a lesser degree (injunctive
norm) and actually act less honestly (descriptive norm) than they themselves
do. Normative feedback about the survey results, it was hypothesized,
would encourage taxpayers to reduce their misperceptions of the social
norm and result in increased compliance.
of four groups of taxpayers (injunctive norm feedback, descriptive norm
feedback, survey only, control) were analyzed and revealed no treatment
effects for work-related expenses, but a significant reduction of claims
for other deductions in the injunctive norm feedback condition compared
to the control conditions (Wenzel, 2001b)
Minnesota Income Tax Compliance Experiment: State Tax Results."
Minnesota Department of Revenue, April 1996.
of Social Norms about Tax Compliance: A Prestudy." Working
Paper No. 7, June 2001a. The Australian National University/Australian
Taxation Office, Centre for Tax System Integrity.
of Social Norms about Tax Compliance: A Field Experiment."
Working Paper No., June 2001b. The Australian National University/Australian
Taxation Office, Centre for Tax System Integrity.