Work in Progress

"Do Rewards Work? Evidence from the Randomization of Public Works" (w/P. Carrillo, and E. Castro) submitted  Download draft

Abstract: Although there is little and conflicting evidence about the benefits of positive inducements and rewards, they are popular tools to generate good behavior. We evaluate the effect of rewards on property-tax com- pliance by exploiting a natural experiment where a Municipality of Ar- gentina randomly selected 400 among more than 72,000 property own- ers. Winners were publicly recognized and awarded the construction of a sidewalk. We present novel evidence that rewards can have persistent direct and spillover effects by crowding in individuals intrinsic motiva- tion (reciprocity and peer effects). Lessons from this intervention are relevant for the design of successful reward mechanisms.

"Do Particularistic Institutions Lead to Inefficient Policies? Evidence from Taxation in Latin America" (w/M. Hallerberg) submitted

Abstract: This paper investigates the determinants of reforms that increase or decrease tax neutrality in Latin America during the period 1990-2004. It takes advantage of a new dataset that focuses on actual changes to the tax code. We consider several possible causes of such reforms, including partisanship, legislative and presidential elections, inflation, per capita income, and financial crises. Our main focus, however, is on the extent of the “personal vote” in the lower house of the legislature.  We anticipate that the greater the personal vote, the more likely there will be tax reforms that reduce the overall neutrality of a country’s tax system. Our results suggest that tax incentives for specific constituencies were more common under more particularistic electoral systems. Reforms that broadened the tax base and made the system more neutral were more common during financial crises, though when a legislative election was close this result no longer held.

"Don’t Blame the Messenger. A Field Experiment on Delivery Methods for Increasing Tax Compliance" (w/D. Ortega).

Abstract: Does the method a government use to communicate with its citizens affect the effectiveness of public policies? For example, does the delivery mechanism of messages to tax delinquents affect tax compliance? This study reports the results of a field experiment in Colombia that varies the way the National Tax Agency contacts taxpayers on payments due for income, value added, and wealth taxes. More than 20,000 were randomly assigned to a control or one of three delivery mechanisms. Results indicate large and highly significant effects, as well as sizable dif- ferences across delivery methods. A personal visit by an inspector is more effective than a letter or an email, conditional on delivery. The findings allow showing that agencies are leaving plenty of money on the table, and arguing about the optimal deterrence strategy. They highlight also that the mechanism through which policies are informed and publicized should not be neglected from the policy debate.

"Who’s calling? The effect of phone calls as a deterrence mechanism" (w/D. Ortega)

Abstract: There is an ample literature that focuses on the determinants of tax compliance. Several field experiments have evaluated the effect and comparative relevance of sending deterrence and moral suasion messages to taxpayers. Absent from the discussion so far has been evaluating the effect of different delivery mechanisms of those messages. We conduct a field experiment in Colombia in which we vary the way the National Tax Agency contacts taxpayers with due payments for income, value added, and wealth taxes. More than 34,000 taxpayers were randomly assigned to a control, or they were contacted by phone by the agency. Results indicate large and highly significant effects for increasing the payment of due taxes. These effects are higher than those usually obtained through the use of letters. The results in this paper have ample implications for the literature and for policy design. The experiment allows having the first estimates of the efficiency and effectiveness of using phone calls instead of letters, to argue about optimal enforcement strategies, and it sets the stage for further theoretical and empirical work. Moreover, it also provides evidence on the effectiveness of phone calls that could be compared to those in the get out the vote literature. 

"Property taxation and noncompliance: Evidence from high-frequency panel data" (w/C. Traxler)

Abstract: This project studies property tax noncompliance in a large city in Argentina. We exploit a complex tax reform. The reform implied a series of quarterly or bi- annually nominal tax increases (or decreases) over a period of more than three years. We measure the behavioral responses to within-variation in property taxes using high-frequency panel data on the timing of the payment (and non- payment) of the monthly tax bills for all households and property owners in the city. Preliminary results from two-way fixed effects estimates indicate that higher (real) taxes lead to more delayed tax-payments and an increase in the rate of non-payment. Quantitatively, however, these effects are small on average. Studying heterogeneity of responses according to property values, we find much stronger responses for smaller and less valuable properties. In a second step, we analyze social-interaction effects. Using within-variation in a district’s minimum-tax level, we find that “unaffected” property owners respond to (minimum-tax induced) increases in non-compliance rates in their block. Using an updated wave of data we will substantiate this observation and translate our estimates into a social multiplier of non-compliance.

"Making People Pay their Debts: The role of salience, information, and computational costs in a tax amnesty (Pre-analysis plan)" (w/E. Castro) Download

AbstractThis document describes the pre-analysis plan of a set of interventions that will take place in the city of Santa Fe, Argentina. In these interventions we will evaluate the role that messages play on the probability that taxpayers will cancel their debt with the Tax Administration by subscribing to a payment plan in the context of a tax amnesty. The interventions are the following. First, a group of recent debtors -debt less than five years old- will be divided into 3 groups. The control group will receive the old notification. Treatment one will receive a new notification that is more colorful and presents easy to follow descriptions of the payment plans. Treatment 2 will receive the new notification but including the computation of interests saved under each one of the payment plans also. The second intervention has been designed for those who have older debt that is close to prescribing. These taxpayers will be divided into two groups, one receiving the old notification and one receiving the new notification, including the analysis of savings. With these interventions we plan to evaluate the role of messages, salience, and information on debt payment, on the selection of a payment plan, and on compliance with current tax obligations (spillover). While there are several recent field experiments looking at the role of messages on tax payment, there is no evidence for this in the context of a tax amnesty. Moreover, even though it has long been considered that reducing transaction and informational costs should be a relevant policy instrument, there is little to no evidence about the role that reducing the costs of understanding the specifics of a payment plan could have on tax payment and compliance behavior.

"Public Goods, Information, Trust and Tax Compliance (Pre-analysis plan)" (w/B. Cardinale Lagomarsino) Pre-analysis plan

Abstract: Tax morale has been shown to affect individuals' willingness to pay taxes. Among others, people pay taxes because doing so is part of a voluntary exchange with the government (reciprocity). There is evidence that people comply more when they see the government in action and public monies being used for the good of the community. There is also partial evidence that information about what the government does with the money matters too. This result has been more elusive as some papers have shown evidence but others have not. One possibility for the high variance in results could be that interventions have differed in the intensity of the treatments (i.e., some researchers have worked in communities where they could show higher efficiency/efficacy of the government than others and that has driven the results). Other possibility is that average results mask high heterogeneity across individuals based on their priors about the efficiency and efficacy of the government. These priors may be affected by their previous experience with the government. In this project we aim to disentangle among these hypotheses by evaluating the role of messages in the context of a large infrastructure campaign (i.e., high intensity treatment). We aim to evaluate the marginal effect of informing taxpayers about the use of public monies and check for heterogeneity according to the services each taxpayer receives (e.g., pave roads or dirt roads), and according to changes to their stock of public services change (e.g., those who have changed from dirt to pavement recently). In terms of policy relevance, we can evaluate the marginal effect of information on top of the effect that public works should have had by themselves (people see the works and change their payment behavior). In this project, we also evaluate the effect of promises about future public works in the context of a local government with relatively low levels of trust but recently engaged in the expansion of public works. This is important in terms of policy implications: if people believe in promises, then governments could use them to finance future works in advance.

"Government Behavioral-Contingent Responses and Tax Compliance. Evidence from a Field Experiment"

Abstract: Tax evasion is a common feature in developing countries, due in part to low enforcement capacity and to a lower effect from moral determinate such as reciprocity with the State. Previous research has concentrated on one-shot interactions between the tax authority and taxpayers. In that setting, deterrence and moral messages affected tax compliance, and results tended to fade over time. One reason why these effects fade over time is that no changes occur in the long-term relationship between those who pay and those who collect taxes because of this sporadic interaction. In this project, a large scale field experiment in a Municipality in Argentina, we introduced a design in which the government's response changes over time according to the taxpayers behavior. As such, the taxpayer has a continuous feedback from the results of her actions. Those who pay are acknowledged and those who don't are reminded of their obligation. Consequently, our project tests the impact of an innovative experimental design that alternates the provision of positive and deterrence messages contingent on taxpayers’ compliance behavior. 


Field Experiment in the City of Managua (Nicaragua): Enhancing tax compliance at the local level: information, collective action and the political costs of tax enforcement (w/M. Ardanaz and P. Keefer)

Field Experiment in the City of Buenos Aires (Argentina): Tax Declarations and Third Party Reporting

Field Experiment with Aguas de Quito (water service provider) in Quito, Ecuador: Transparency, Payments, and Water Consumption (w/P. Carrillo)

Field Experiment in Mexico City: Pollution, Information, and the Demand of Public Policies (w/B. Hoffman)

Survey Experiment on the Politics of Crime (w/D. Gingerich)

Age Eligibility, Elections, and Information Gathering (w/R. Vlaicu)