‘Spite effects’ in tax evasion experiments

This paper sets out to consider individuals’ motivations to evade taxation. Experimental results indicate that individuals do not simply maximize pecuniary welfare. Their behaviour is consistent with the presence of a ‘spite effect’ when their perceptions are that enforcement variables are ‘excessive’.

► This paper reports two tax evasion experiments conducted with 96 geography students at Cairo University. ► It sheds new insight into individuals’ willingness to comply with taxation when enforcement variables are deemed Draconian. ► More specifically, a ‘spite effect’ is identified when individuals fail to maximise their pecuniary return. ► The results have important implications for the design of tax policy.