The effects of communication style

Trust, perceived discovery, fairness and norms

Nina Serdarevic, PhD Behavioral economist, The Norwegian Tax Administration

with Ivana Haakens, Stian Skaalbones, Andreas Olden and Mina Gjefle
Point of departure…
o Enhancing tax compliance requires coercive, deterrence-based power and
soft, trust-based power (Kirchler, Hoelzl and Wahl 2008).

o Lack of coherence regarding how to efficiently communicate about the

objectives of tax administration:

“Soft facts” or “Hard facts” ?

What we do
o Two large online experiments with samples of the Norwegian population
o Study the domain of illegal work

Study 1: Guide vs. more audits Study 2: Qualitative vs. quantitative

What we do
o Two large online experiments with samples of the Norwegian population
o Study the domain of illegal work

Study 1: Guide vs. more audits Study 2: Qualitative vs. quantitative

What we ask in Study 1
Does communication style about sanctions have a causal effect on

o Trust
o Perceived detection rate
o Fairness
o Evasion perceptions
What we ask in Study 1
Does communication style about sanctions have a causal effect on

o Trust
o Perceived detection rate
o Fairness
o Evasion perceptions
What we ask in Study 1
Does communication style about sanctions have a causal effect on

o Trust
o Perceived detection rate
o Fairness
o Evasion perceptions
What we ask in Study 1
Does communication style about sanctions have a causal effect on

o Trust
o Perceived detection rate
o Fairness
o Evasion perceptions
Design Hard Hard

N=1453

Fairness

Trust

Evasion perception
Soft Soft
Detection perception

En uke
Design Hard Hard

N=1453

Fairness

Trust

Evasion perception
Soft Soft
Detection perception

En uke
Effect on fairness

5
p=0.055
Strongly disagree - Strongly agree

4
3.7
3.6

1
Soft Hard

Statement: «To what extent do you agree that the Tax Administration treats people fairly.»
Effect on trust
10
p=0.441
9

8 7.6 7.5

7
No trust - full trust

0
Soft Hard
Effect on evasion perceptions
5

4
Strongly disagree - Strongly agree

p=0.338

3.0 3.0
3

1
Soft Hard

Statement: «It is common for companies to evade taxes in the construction industry.»
Effect on perceived detection rate
4

p=0.008

3
Very low - very high

2.7
2.6

1
Soft Hard

Statement: «If someone fails to report all taxes to the tax authorities, how high or low is the probability that the Tax Administration will discover this?»
Implications

No adverse effects of communication style on key indicators

Suggestive evidence on fairness perception and perceived detection rate

What we do
o Two large online experiments with samples of the Norwegian population
o Study the domain of illegal work

Study 1: Guide vs. more audits Study 2: Qualitative vs. quantitative

What we ask in Study 2
Does communication style about audits have a causal effect on

o Trust
o Perceived detection rate
o Fairness
o Descriptive norms
Design Quantitative Quantitative

N=1450

Trust

Perceived detection rate

Fairness
Qualitative Qualitative
Descriptive norms

En uke
Design Quantitative Quantitative

N=1450

Trust

Perceived detection rate

Fairness
Qualitative Qualitative
Descriptive norms

En uke
Effect on fairness
5

p=0.982 p=0.800

Strongly disagree - Strongly agree

4
3.72 3.72 3.70

1
Tall Referanse Person

Statement: «To what extent do you agree or disagree that the Tax Administration treats people fairly»
Effect on trust
10

p=0.743 p=0.393
9

8
7.44 7.48 7.36

No trust - full trust 7

0
Number Baseline Person
Effect on descriptive norms
5

p=0.091 p=0.000

Strongly disagree - Strongly agree

4

3.46
3.29
3.19

1
Number Baseline Person

Statement: «It is common that companies evade taxes.»

Effect on perceived detection rate
4

p=0.306 p=0.272

Very low - very high 3

2.68 2.73
2.68

1
Tall Referanse Person

Statement: «If someone fails to report all taxes to the tax authorities, how high or low probability is there that the Tax Administration will discover this»
Implications

No adverse effects of communication style on key indicators

Harmful behavior perceived to be more prevailing with qualitative information

Thank you!

For comments, please get in touch: nina.serdarevic@skatteetaten.no