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Field
Trial Title
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Before
Tax Policy for the Few, Expectations for All: Income-Based Divergences in Macroeconomic Projections
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After
Tax Policy and Public Macroeconomic Expectations: Experimental Evidence from the UK
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Field
Abstract
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Before
This study aims to explore public perceptions of key macroeconomic indicators in the UK.
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After
Economic theory suggests that fiscal policy shapes public expectations by influencing perceptions of future economic conditions. This study employs a randomized survey experiment to examine how individuals adjust their macroeconomic expectations in response to tax policy changes. How do variations in tax magnitude, policy justification, and announcement timing affect belief formation? Do different income groups respond differently to tax increases in forming expectations? By exploring these mechanisms, the study provides insights into how policy establishment and communication influence economic sentiment and forward-looking decision-making.
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Trial End Date
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April 01, 2025
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After
September 01, 2025
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Last Published
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February 20, 2025 05:59 AM
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After
March 18, 2025 07:24 AM
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Intervention Start Date
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March 01, 2025
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After
March 17, 2025
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Intervention End Date
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March 14, 2025
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After
April 04, 2025
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Primary Outcomes (End Points)
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Before
Inflation rate, GDP growth, and interest rates, etc
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After
The macroeconomic expectations of the UK public, including expectations of inflation, bank rates, GDP growth, the debt-to-GDP ratio, and the fiscal deficit.
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Experimental Design (Public)
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Before
This study investigates how policy changes influence public expectations of macroeconomic indicators using a structured survey and a randomized experimental design.
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This study investigates how tax policy changes influence public expectations of macroeconomic indicators using a structured survey and a randomized experimental design.
First, participants answer a series of questions to elicit their prior expectations about macroeconomic conditions.
Next, participants are randomly assigned to different groups. Except for the control group, each group is exposed to distinct policy scenarios regarding an announced tax rate increase. Some receive information about the tax policy change with varying magnitudes, while others are provided with additional contextual details, such as the purpose of the tax increase.
Following the information intervention, participants update their forecasts for macroeconomic indicators and answer additional questions related to taxation. They are also asked to explain their reasoning, helping to analyze the mechanisms through which tax policy changes shape public expectations. In addition, participants report expected changes in their savings and consumption behaviors, allowing us to examine the broader economic implications of tax policy adjustments.
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Additional Keyword(s)
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Before
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Belief formation, macroeconomic expectations, tax policy
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Intervention (Hidden)
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Before
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.
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After
Respondents are randomly assigned to a control group or one of three treatment groups.
Control group: There is no additional information provided to the respondents.
While the treatment groups are presented with different policy scenarios regarding a proposed tax increase. Respondents in the treatment groups receive information about a planned increase in the income tax rate for higher-rate taxpayers under varying conditions:
Treatment 1: The government announces a long-term policy change to increase the income tax rate for higher-rate taxpayers by 1%, set to take effect in one year.
Treatment 2: The same information as Treatment 1 is provided, with an additional statement that the revenue from the tax increase will be allocated to military spending.
Treatment 3: The same information as Treatment 1 is given, but the tax rate increase is 5% instead of 1%.
After receiving this information, respondents provide macroeconomic forecasts and explain their reasoning.
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