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 Citations (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.

Original language	English
Journal	Public Choice
Volume	154
Issue number	1-2
Pages (from-to)	59-73
ISSN	0048-5829
DOIs	https://doi.org/10.1007/s11127-011-9807-x
Publication status	Published - Jan 2013

Keywords

Faculty of Social Sciences

Access to Document

10.1007/s11127-011-9807-x

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

Cite this

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title = "The politics of digits: Evidence of odd taxation",

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{\textquoteright} 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{\textquoteright} cognitive biases.",

keywords = "Faculty of Social Sciences, tax policy, incumbent behavior, odd pricing, local govnments, public choice, gaming, political behavior, political economy, Policy and Organisational Management",

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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

KW - political behavior

KW - political economy

KW - Policy and Organisational Management

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