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

Olsen,Jerome
; 
Kogler,Christoph
; 
Brandt,Mark
; 
Deszö,Linda
; 
Kirchler,Erich
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.
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Date
2019
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Tilburg University Research Output Collection
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Keywords
Financial choice, POLL TAX, POWER, REPLICATION, Replication, Sales tax, Tax aversion, Tax behavior, VAT, SDG 17 - Partnerships for the Goals
Citation
Olsen, J, Kogler, C, Brandt, M, Deszö, L & Kirchler, E 2019, 'Are consumption taxes really disliked more than equivalent costs? Inconclusive results in the USA and no effect in the UK', Journal of Economic Psychology, vol. 75, 102145. https://doi.org/10.1016/j.joep.2019.02.001
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https://hdl.handle.net/20.500.14602/70368
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info:eu-repo/semantics/openAccess
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