Tax Policy and Public Macroeconomic Expectations: Experimental Evidence from the UK

Last registered on February 20, 2025

View Trial History

Pre-Trial

Trial Information

General Information

Title

Tax Policy for the Few, Expectations for All: Income-Based Divergences in Macroeconomic Projections

RCT ID

AEARCTR-0015395

Initial registration date

February 16, 2025

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

February 20, 2025, 5:59 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country

United Kingdom of Great Britain and Northern Ireland

Region

Primary Investigator

Name

Yuying Wu

Affiliation

UNIVERSITY OF BIRMINGHAM

Contact Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Status

In development

Start date

2025-03-01

End date

2025-04-01

Keywords

Behavior

Additional Keywords

JEL code(s)

Secondary IDs

Prior work

This trial does not extend or rely on any prior RCTs.

Abstract

This study aims to explore public perceptions of key macroeconomic indicators in the UK.

External Link(s)

Registration Citation

Citation

Wu, Yuying. 2025. "Tax Policy for the Few, Expectations for All: Income-Based Divergences in Macroeconomic Projections." AEA RCT Registry. February 20. https://doi.org/10.1257/rct.15395-1.0

Sponsors & Partners

Experimental Details

Interventions

Intervention(s)

Intervention (Hidden)

This study examines how changes in income tax policy influence individuals' macroeconomic expectations. Respondents are randomly assigned to one of four groups: a control group and three treatment groups. Each treatment group receives a different policy scenario regarding an announced change in the income tax rate for higher-rate taxpayers.

Control Group: Respondents do not receive any information about tax policy changes. They are simply asked to provide their forecasts for various macroeconomic indicators, such as inflation, GDP growth, and interest rates.

Treatment Group 1: Respondents are informed that the government has announced a long-term policy change to increase the income tax rate for higher-rate taxpayers by a specific percentage. The policy is set to take effect in one year.

Treatment Group 2: This group receives the same information as Treatment Group 1, but with additional background information specifying that the additional tax revenue will be allocated to military spending. This allows for an analysis of whether the intended use of tax revenue affects individuals' macroeconomic expectations.

Treatment Group 3: This group is similar to Treatment Group 1, but the extent of the tax rate increase is different. By comparing this group with Treatment Group 1, we can examine whether the magnitude of the tax increase affects individuals' expectations.

After providing their macroeconomic forecasts, respondents are also asked to explain the reasoning behind their predictions. This helps analyze the mechanisms through which tax policy changes influence public expectations.

Intervention Start Date

2025-03-01

Intervention End Date

2025-03-14

Primary Outcomes

Primary Outcomes (end points)

Inflation rate, GDP growth, and interest rates, etc

Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

This study investigates how policy changes influence public expectations of macroeconomic indicators using a structured survey and a randomized experimental design.

Experimental Design Details

This experiment employs a randomized controlled design to examine how policy changes influence public expectations of key macroeconomic indicators.

First, participants answer a series of questions to elicit their prior subjective expectations about macroeconomic conditions, establishing a baseline for their beliefs before any policy intervention is introduced.

Next, participants are randomly assigned to one of four groups:

Control Group: No policy information is provided.
Treatment 1: Receives a statement about a 1 percentage point increase in the income tax rate for higher-rate taxpayers, with no additional context.
Treatment 2: Receives the same information as Treatment 1, but with the added detail that the additional tax revenue will be allocated to military spending.
Treatment 3: Receives a statement about a 5 percentage point increase in the income tax rate for higher-rate taxpayers, allowing us to assess whether the magnitude of the tax increase influences expectations.
As described in the Intervention section, the treatment is presented as a hypothetical government policy announcement, after which participants provide updated forecasts for macroeconomic indicators.

Following this, participants answer additional questions about their trust in government, which may be influenced by the policy intervention, as well as questions related to taxation, capturing their perspectives on tax policy.

Finally, participants complete demographic questions to provide background information.

In addition, respondents are asked to explain the reasoning behind their forecasts. These responses help analyze the mechanisms through which tax policy changes shape public expectations.

Randomization Method

Randomization will be conducted by a computer algorithm.

Randomization Unit

individual

Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters

individual

Sample size: planned number of observations

Approximately 3,200–4,000 respondents in total.

Sample size (or number of clusters) by treatment arms

Control group: 800-1,000 respondents
Treatment group 1: 800-1,000 respondents
Treatment group 2: 800-1,000 respondents
Treatment group 3: 800-1,000 respondents

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Supporting Documents and Materials

IRB