9783790812404

Framing Effects in Taxation

by
  • ISBN13:

    9783790812404

  • ISBN10:

    3790812404

  • Format: Paperback
  • Copyright: 1999-11-01
  • Publisher: Physica Verlag
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List Price: $159.00

Summary

The subject of this work is framing effects in the perception of taxation. Its purpose is to demonstrate that the framing of the tax system, i.e. describing the tax system either in terms of gains or losses, can significantly alter peoples preferences for taxation.In order to investigate such framing effects empirically , a large survey among the personnel of several North-German firms was conducted.The first part of the book gives a comprehensive survey of the literature concerned with framing effects a task that has not yet been done - and also provides new insights into the theory of framing. The second part reports on the results gained from our empirical investigation. It is shown that people indeed are susceptible to framing effects in the way hypothesized. The results strongly support Richard Thaler's endowment-effect hypothesis.

Table of Contents

Introduction
1(6)
Part I. Framing Effects: Theory and Evidence
The Organization of Experience
7(22)
Outline of Part I
7(2)
On Billiard Players, Cognitive Limitations, and Intuitive Scientists
9(7)
The Rational Choice Model
9(4)
Bounded Rationality
13(1)
Heuristics and Biases
14(2)
Description Invariance
16(3)
Contingent Decision-Making
19(4)
Working Definitions of the Framing Effects
23(6)
Prospect Theory
29(24)
Outline of the Chapter
29(1)
Theory
30(9)
Editing
30(2)
Evaluation
32(1)
The Value Function
32(3)
A Reference--Dependent Model
35(2)
Mental Accounting
37(1)
Cumulative Prospect Theory
37(2)
Empirical and Experimental Performance
39(6)
Reference Dependence
39(2)
The Reflection Effect
41(1)
Loss Aversion
42(2)
An Experimental Test of Mental Accounting
44(1)
A Selection of Framing Experiments
45(4)
Reference Dependence and Framing Effects
45(1)
Example 1: Judgments of Fairness
46(1)
Example 2: `Asian Disease' Experiments
47(1)
Example 3: The Framing of Medical Decisions
47(1)
Example 4: Tax Evasion
48(1)
A Problem with Reference Points
49(4)
The Endowment Effect
53(24)
Outline of the Chapter
53(1)
Theoretical Aspects
54(7)
The Underweighting of Opportunity Costs
54(2)
Endowment Effect, Coase Theorem, and Indifference Curves
56(1)
The Disparity between WTP and WTA
57(4)
An Excursion: Contingent Valuation
61(2)
Empirical Evidence
63(10)
Contingent Valuation Studies
63(3)
Market Experiments
66(4)
Endowment Effect or Substitution Effect?
70(3)
Nonreversibility of Indifference Curves
73(1)
Some Implications for Economic Analysis
73(4)
The Status Quo Bias
77(16)
Outline of the Chapter
77(1)
Stability versus Change
78(1)
Empirical and Experimental Evidence
79(3)
Some Possible Explanations
82(6)
Sunk Costs
82(4)
Regret Avoidance
86(1)
Cognitive Dissonance Reduction
87(1)
The Omission Bias
88(5)
Omission versus Commission
88(1)
Experimental Evidence
89(1)
Norm Theory
90(3)
Upshot
93(6)
Part II. Framing Effect in the Perception of Taxation: An Empirical Study
The Survey
99(28)
Motivation and Outline
99(3)
Test Method
102(5)
The German Tax and Transfer System in a Nutshell
107(4)
The Questionnaire
111(6)
Procedure
117(3)
Data Sources
120(3)
Breakdown of the Sample
123(4)
Gender, Marital Status, and Children
123(1)
Income Brackets and Occupational Groups
123(2)
Attitudes towards Taxation
125(2)
Results
127(34)
Notation and Data Preparation
127(4)
Hypotheses
131(2)
Testing for the Endowment Effect
133(12)
Judged Fair Tax Burdens
133(3)
Tax Rebates and Tax Surcharges
136(4)
The Framing Effect
140(5)
Testing for the Influence of Personal Characteristics and Attitudes
145(8)
The Regression Model
145(2)
WLS Estimates
147(2)
The Stimulus--level Effect
149(2)
Self--serving Bias?
151(2)
Testing for the Schelling Effect
153(8)
Empirical Tax Scales
153(2)
Tax--free Allowance Functions
155(6)
Summary and Conclusion
161(6)
Appendix 167(10)
List of Symbols 177(4)
List of Figures and Tables 181(2)
References 183

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