Behavioural Economics and Taxation

Below is a presentation given as part of a discussion on what tax policy can learn from behavioural economics.

The talk: briefly overviews Geary; outlines the idea of causal econometric evaluation; and gives a brief overview of behavioural economics. With respect to tax the talk: outlines the role of trust, fairness and legitimacy in tax systems including using ultimatum games and money burning experiments as examples; examines loss aversion, endowment effects, hyperbolic discounting and other non-standard preferences; outlines the potential role of group processes such as conformity including a discussion of the causal peer effects literature; discusses common biases such as the planning fallacy and overconfidence; puts particular emphasis on cognitive complexity and procrastination; outlines major papers in the savings and pensions literature that used behavioural principles to change financial behaviour.

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