Tax compliance and psychic costs: Behavioral experimental evidence using a physiological marker

Uwe Dulleck, Jonas Fooken, Cameron Newton, Andrea Ristl, Markus Schaffner, Benno Torgler

Research output: Contribution to journalArticlepeer-review

67 Citations (Scopus)


Although paying taxes is a key element of a well-functioning society, there is still limited understanding as to why people actually pay their taxes. Models emphasizing that taxpayers make strategic, financially motivated compliance decisions seemingly assume an overly restrictive view of human nature. Law abidance may be more accurately explained by social norms, a concept that has gained growing importance as research attempts to understand the tax compliance puzzle. This study analyzes the influence of psychic stress generated by the possibility of breaking social norms in the tax compliance context. We measure psychic stress using heart rate variability (HRV), which captures the psychobiological or neural equivalents of psychic stress that may arise from the contemplation of real or imagined actions, producing immediate physiologic discomfort. The results of our laboratory experiments provide empirical evidence of a positive correlation between psychic stress and tax compliance, thus underscoring the importance of moral sentiments for tax compliance. We also identify three distinct types of individuals who differ in their levels of psychic stress, tax morale, and tax compliance.

Original languageEnglish
Pages (from-to)9-18
Number of pages10
JournalJournal of Public Economics
Publication statusPublished - 1 Feb 2016
Externally publishedYes


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