Extrinsic and intrinsic motivations for tax compliance: Evidence from a field experiment in Germany

Nadja Dwenger, Henrik Kleven, Imran Rasul, Johannes Rincke

Research output: Contribution to journalArticlepeer-review

162 Scopus citations

Abstract

We study extrinsic and intrinsic motivations for tax compliance in the context of a local church tax in Germany. This tax system has historically relied on zero deterrence so that any compliance at baseline is intrinsically motivated. Starting from this zero deterrence baseline, we implement a field experiment that incentivized compliance through deterrence or rewards. Using administrative records of taxes paid and true tax liabilities, we use these treatments to document that intrinsically motivated compliance is substantial, that a significant fraction of it may be driven by duty-to-comply preferences, and that there is no crowd-out between extrinsic and intrinsic motivations.

Original languageEnglish (US)
Pages (from-to)203-232
Number of pages30
JournalAmerican Economic Journal: Economic Policy
Volume8
Issue number3
DOIs
StatePublished - Aug 1 2016
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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