The politics of digits:  Evidence of odd taxation

Asmus Leth Olsen

doi:10.1007/s11127-011-9807-x

The politics of digits: Evidence of odd taxation

10 Citationer (Scopus)

Abstract

From the concept of odd pricing, i.e., setting rightmost price digits below a whole number, this paper advances the political counterpart of odd taxation using a panel of Danish municipal taxes. First, the distribution of tax decimals is non-uniform and resembles the distribution of price-endings data. Second, nine-ending and other higher-end decimals are found to be over-represented which echoes odd pricing research. It suggests that incumbents take voters’ biases into account and apply odd taxes to minimize the political costs of taxation while maximizing revenue. Attention should be given to how policy digits are arranged to exploit voters’ cognitive biases.

Originalsprog	Engelsk
Tidsskrift	Public Choice
Vol/bind	154
Udgave nummer	1-2
Sider (fra-til)	59-73
ISSN	0048-5829
DOI	https://doi.org/10.1007/s11127-011-9807-x
Status	Udgivet - jan. 2013

Emneord

Det Samfundsvidenskabelige Fakultet
tax policy
incumbent behavior
odd pricing
local govnments
public choice
gaming
political behavior
political economy
Policy and Organisational Management

Adgang til dokumentet

10.1007/s11127-011-9807-x

http://www.springerlink.com/content/6013172346gmv4j5/

Citationsformater

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AB - From the concept of odd pricing, i.e., setting rightmost price digits below a whole number, this paper advances the political counterpart of odd taxation using a panel of Danish municipal taxes. First, the distribution of tax decimals is non-uniform and resembles the distribution of price-endings data. Second, nine-ending and other higher-end decimals are found to be over-represented which echoes odd pricing research. It suggests that incumbents take voters’ biases into account and apply odd taxes to minimize the political costs of taxation while maximizing revenue. Attention should be given to how policy digits are arranged to exploit voters’ cognitive biases.

KW - Faculty of Social Sciences

KW - tax policy

KW - incumbent behavior

KW - odd pricing

KW - local govnments

KW - public choice

KW - gaming

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KW - political economy

KW - Policy and Organisational Management

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