Are consumption taxes really disliked more than equivalent costs? Inconclusive results in the USA and no effect in the UK

Jerome Olsen*, Christoph Kogler, Mark Brandt, Linda Deszö, Erich Kirchler

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

2 Citations (Scopus)

Abstract

In two experiments on hypothetical purchase decisions, Sussman and Olivola (2011) found that US citizens prefer avoiding tax-related costs over avoiding tax-unrelated monetary costs of the same size. The original Experiment 1 and 2 tests of this Tax Aversion indicated that people are willing to wait longer to receive a discount when it refers to taxes (e.g., “axe-the-tax discount”) than when it is just a regular discount (e.g., “customer rewards”). We conducted high-powered close replications of both original studies, Experiment 1 (N = 590) and Experiment 2 (N = 650), which reveal either no effect (Experiment 1: r = 0.02, 95% CI [−0.06, 0.10]) or a small effect (Experimental 2: r = 0.09, 95% CI [0.01, 0.16]) in the USA. We also replicated both experimental procedures in the UK to test whether the effect generalized to a value added tax system. Neither Experiment 1 (N = 595; r = 0.01, 95% CI [−0.07, 0.09]) nor Experiment 2 (N = 673; r = 0.03, 95% CI [−0.04, 0.11]) revealed an effect in the UK. Tax Aversion in hypothetical consumption decisions seems to be a smaller phenomenon than originally proposed and does not generalize to a value added tax system.
Original languageEnglish
Article number102145
Number of pages10
JournalJournal of Economic Psychology
Volume75
DOIs
Publication statusPublished - 2019

Keywords

  • Financial choice
  • POLL TAX
  • POWER
  • REPLICATION
  • Replication
  • Sales tax
  • Tax aversion
  • Tax behavior
  • VAT

Fingerprint Dive into the research topics of 'Are consumption taxes really disliked more than equivalent costs? Inconclusive results in the USA and no effect in the UK'. Together they form a unique fingerprint.

Cite this