Endogenous Norm Formation Over the Life Cycle - The Case of Tax Morale

Elderly are generally observed to have stronger tax morale than young people. We explain why this may be an age rather than a cohort effect. We apply mechanisms from social psychology to explain how personal norms may evolve over the life cycle due to past behavior (e.g., cognitive dissonance) and/or by the attitudes of peers (normative conformity). We can explain the difference between young and old people's moral values as an age effect with heterogeneous norm-updating where those who identify with their network conform with it, while others are influenced by their own past behavior.