Work in Progress
"Fiscal consolidations and electoral outcomes in emerging economies: does the policy mix matter? Macro and micro level evidence from Latin America" (w/M.Ardanaz and M. Hallerberg) (R&R)
Abstract: Do voters punish governments that introduce fiscal “austerity” measures? If so, does voter response vary according to the design (composition) of fiscal adjustments? What determines the timing of fiscal consolidations? The empirical literature on the political economy of fiscal adjustments, mostly OECD-based, argues that fiscal adjustments do not have significant electoral consequences. We re-examine these questions in Latin America and the Caribbean (LAC) by drawing on a widely available fiscal action dataset that uses contemporaneous policy documents to identify changes in fiscal policy. We find that voters punish fiscal consolidations at the polls. in LAC. To explain this result, we look at the composition and timing of fiscal adjustments. Such episodes rely fundamentally on increasing tax rates and bases of indirect taxes (such as the VAT) that hit broad segments of the population. Moreover, these policies are often implemented when politicians have no choice but to consolidate, that is, under severe economic circumstances, which amplify the multiplier effects of fiscal contractions. We corroborate these macro results with micro evidence by relying on an original survey experiment that measures voter policy preferences on taxes and public spending over the business cycle in seven countries across Latin America. The experimental evidence shows that respondents prefer expenditure cuts to tax increases during recessions. This begs the question—if tax increases are more electorally costly, why do governments rely on them? We argue the policy choice set available to pursue fiscal consolidation is relatively narrow in LAC. Policy options widely used to implement fiscal adjustment in other contexts (e.g. personal income taxation) are simply not available, suggesting that investments in fiscal capacity are needed to expand the policy toolset of governments in the face of negative shocks.
"Do Rewards Work? Evidence from the Randomization of Public Works" (w/P. Carrillo, and E. Castro) (R&R)
Abstract: Positive inducements and rewards have become popular tools to generate good behavior, including tax compliance. We evaluate the effect of a reward using a visible and durable good on property-tax compliance by exploiting a natural experiment where a Municipality of Argentina publicly recognized and awarded the construction of a sidewalk to 400 good taxpayers randomly selected through a lottery. We present novel evidence showing that this type of reward can have positive and persistent direct (higher compliance by winners) and spillover (higher compliance by the non-compliant neighbors of the winners) effects. Lessons from this intervention are relevant for the design of the mechanisms to reduce tax evasion, they highlight the importance of evaluating the spillover effects of any intervention, and they provide evidence on the components of rewards that are conducive to positive and persistent effects.
"A Heavy Hand or a Helping Hand? Information Provision and Citizen Preferences for Anti-Crime Policies" (w/D. Gingerich) (under submission)
Abstract: Anti-crime policy is often unresponsive to reductions in crime. To address why, we provide a model and empirical test of how citizens' anti-crime policy preferences respond to information. Our model shows that preferences for anti-crime policy hinge on expectations about the crime rate: punitive policies are preferred in high crime contexts, whereas social policies are preferred in low crime contexts. We evaluate these expectations through an information experiment embedded in the 2017 LAPOP survey conducted in Panama. As expected by our theory, a high crime message induced stronger preferences in favor of punitive policies. Unanticipated by our theory, but in line with cursory evidence and survey results, we find that a low crime message did not induce stronger preferences in favor of social policies. These findings are consistent with policy ratcheting: punitive policies increase during periods of high crime and remain in place during periods of low crime.
"Transparency and Trust in Government. Evidence from a Survey Experiment" (w/M. Alessandro, B. Cardinale L, J. Streb, and J. Torrealday). (under submission)
Abstract: Does providing information improve citizens’ perception about government transparency? Does all information matter the same for shaping perceptions about the government? This article addresses these questions in the context of an online randomized survey experiment conducted in Argentina. Results show that providing information to citizens matters for shaping perceptions about transparency, and the content of the information matters for affecting the evaluation people make about the government. Those who received a “positive” treatment (showing that the government was over-performing on its promises) increased their trust in the government more than those who received a “negative” treatment (showing that the government was underperforming). The evidence highlights that the channel between transparency and trust may be mediated by the performance of the government. It also highlights that the rules for disclosing information may be important for transparency to matter.
"Who Decides on Social Policy? Social Networks and the Political Economy of Social Policy in Latin America and the Caribbean" BOOK (w/A. Bonvecchi) (accepted)
Download book prospect here
"Who’s calling? The effect of phone calls and personal interaction on tax compliance" (w/M.Mogollon and D. Ortega) (submitted)
Abstract: Most tax agencies use letters as the method of communicating with taxpayers. Still, other technologies exist that could be more effective. This paper reports the results of a field experiment conducted by the National Tax Agency of Colombia (DIAN), using phone calls to reduce tax delinquencies. DIAN randomly assigned 34,000 tax debtors to a phone call operation using a fixed script to discuss existing debts and invite taxpayers to a meeting at the local tax agency office. Phone calls were very effective in increasing collection of unpaid taxes. Conditional on the phone call being made, the effect on the treatment is about 25 percentage points higher than the control group (about a five-fold increase). We also find suggestive evidence that the personal interaction seems to be an important channel for explaining taxpayers' behavior. Faced with a tax agent, taxpayers tend to commit to attending the meeting and paying the tax owed. However, many taxpayers who commit do not make payment effective. The findings complement a nascent literature that shows that there are plenty of gains from innovating in communication strategy. They also indicate that personal interactions are important, but they have to be paired with easy-to-follow and immediate actions. Paying taxes is easier said than done.
"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.
"Do Tax Amnesties Work? Results from a Field Experiment" (w/E. Castro) Download
Abstract: Limited attention affects our ability to make good choices, but governments can improve decision-making by providing simpler and more salient information. We evaluate the role of inattention in decision-making in the context of a field experiment implemented during a tax amnesty in the city of Santa Fe (Argentina). Tax amnesties are advertised to delinquent taxpayers through direct communication. In the intervention, we redesign the communication notices sent to the taxpayers to evaluate whether increasing salience and reducing cognitive costs increase the probability that taxpayers put attention to the message and understand better the benefits of tax amnesty. We randomize more than 54,000 taxpayers. A group of taxpayers receives the traditional messages. The treatment groups receive redesigned communications. Our results show that messages that reduce the cognitive costs increase the probability that taxpayers will enter the tax amnesty. The amount collected in the treatment groups is up to 8 percent higher than in the control group. We also exploit the exogenous variation in attention to evaluate the convenience of the tax amnesty program for the city given that some people may stop paying the regular bills (creates moral hazard). We find that while people are more willing to cancel their past debt, they are also more likely to reduce their compliance with the current tax bills. Moreover, there is a negative spillover effect in the compliant population (those who had no debts). When the tax amnesty becomes more noticeable, their incentive to comply falls substantially. Making public policy more salient, easier to understand, and less cognitive intensive facilitates decision-making. However, doing it during a tax amnesty may increase collection of past debt, but it could also generate negative incentives for tax compliance in the overall population.
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)
What Policies do Latin Americans Demand for Fighting Crime? (w/F. Cafferata)
Police corruption, trust and demand for public policies. An experimental approximation for Latin America (w/F. Cafferata)
Reframing Demand for Harsher Punishment: Prison Population Information and Its Impact on Policy Choices in Chile (w/F. Cafferata)
Age Eligibility, Elections, and Information Gathering (w/R. Vlaicu)
"Threat, credibility and tax collection: evidence for urban property taxes" (w/Daniel Ortega and Mónica Mogollón)
Effect of Mexico's 2017 earthquake on trust in the government (w/Paula Zamora R.)
Effect of Mexico's 2017 earthquake on demand for public policies (w/Paula Zamora R.)
Incentives for Civil Servants. The Role of Nudges and Training (w/Paula Zamora R.)