Social Norms and Tax Compliance: A Study of the Mechanisms
Last registered on December 18, 2018

Pre-Trial

Trial Information
General Information
Title
Social Norms and Tax Compliance: A Study of the Mechanisms
RCT ID
AEARCTR-0003596
Initial registration date
December 11, 2018
Last updated
December 18, 2018 6:58 PM EST
Location(s)

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Primary Investigator
Affiliation
Universidad del Pacífico
Other Primary Investigator(s)
PI Affiliation
Universidad del Pacifico
PI Affiliation
Universidad del Pacifico
PI Affiliation
Universidad del Pacifico
Additional Trial Information
Status
On going
Start date
2018-10-01
End date
2019-07-27
Secondary IDs
Abstract
We are sending letters to potential rental income debtors living in six of the most affluent districts in Peru. These letters contain messages
referring to social norms (informing that most of their neighbors pay their taxes), civic duty (informing why is it important to pay taxes), enforcement actions taken by the tax authority, and a reminder (i.e. control group). A sample of 9,024 individuals was randomly assigned to receive one of these types of messages four times, during a period of four months. The objective is to estimate and compare the effects of the first three types of messages on tax compliance. In contrast to most of the literature, we are carrying out an endline survey to evaluate the mechanisms that underpin the observed behavioral responses.
External Link(s)
Registration Citation
Citation
Beltran, Arlette et al. 2018. "Social Norms and Tax Compliance: A Study of the Mechanisms." AEA RCT Registry. December 18. https://www.socialscienceregistry.org/trials/3596/history/39146
Experimental Details
Interventions
Intervention(s)
Our intervention consists in sending letters to potential rental income debtors living on six of the most affluent districts in Peru. We are sending four types of messages: (i) a reminder (to serve as a control group); (ii) a message referring to social norms which informs tax payers that most of their neighbors pay their taxes; (iii) a message referring to civic duty which highlights the importance of paying taxes to fund social policies; and (iv) a message that informs tax payers about the enforcement actions taken by the tax authority. Individuals in the evaluation sample were randomly assigned to one of these four groups. Each individual from each group will receive four times the same message (one per month). Letters will be complemented with emails and SMS.

The contents of these messages are (in English, but recall that original messages are in Spanish):

Reminder
"If you receive rental income , remember to pay your tax.
Find out how to declare and pay this type of tax at http://personas.sunat.gob.pe/alquilo-mi-casa-o-auto.
If you receive rental income and have already paid your taxes, congratulations!
Sincerely".

Social norms
"If you receive rental income, remember to pay your tax.
Note that most of the residents of Barranco, La Molina, Miraflores, San Isidro, San Borja and Surco comply with their rental income taxes.
Find out how to declare and pay this type of tax at http://personas.sunat.gob.pe/alquilo-mi-casa-o-auto.
If you receive rental income and have already paid your taxes, congratulations!
Sincerely".

Civic duty
"If you receive rental income, remember to pay your tax.
"Note that if all residents of Barranco, La Molina, Miraflores, San Isidro, San Borja and Surco pay their rental income taxes, it will be possible to build more than 90 Health Centers in the poorest regions of Peru."
Find out how to declare and pay this type of tax at http://personas.sunat.gob.pe/alquilo-mi-casa-o-auto.
If you receive rental income and have already paid your taxes, congratulations!
Sincerely"

Enforcement
"If you receive rental income, remember to pay your tax.
Note that SUNAT is striving to detect rental income tax debtors. We have already identified 78,000 debtors in Barranco, La Molina, Miraflores, San Isidro, San Borja and Surco.
Find out how to declare and pay this type of tax at http://personas.sunat.gob.pe/alquilo-mi-casa-o-auto.
If you receive rental income and have already paid your taxes, congratulations!
Sincerely"
Intervention Start Date
2018-10-01
Intervention End Date
2019-01-25
Primary Outcomes
Primary Outcomes (end points)
Tax compliance, and the money value of rental income tax paid.
Primary Outcomes (explanation)
These outcomes will be computed from the administrative data set provided by the tax authority.
Secondary Outcomes
Secondary Outcomes (end points)
Perceived social norms, relevance of social norms for individual behavior.
Secondary Outcomes (explanation)
We will collect survey data asking individuals about their perceived tax compliance ratio (percentage of individuals who pay their rental income taxes).
We will ask individuals several questions to gauge the importance of other people's opinions and actions when deciding their own behavior.
Experimental Design
Experimental Design
We randomly assign each of the four types of messages to our sample of potential rental income debtors. To identify our sample of potential rental income debtors, the tax authority compiled a database of individuals that: (i) lived in the districts of Barranco, La Molina, Miraflores, San Borja, San Isidro or Surco; (ii) owned at least two or more properties on different places; and (iii) did not declare nor pay rental income taxes in 2018.
Experimental Design Details
Not available
Randomization Method
Randomization done in office by a computer.
Randomization Unit
Individual level.
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
No clusters. Randomization was done at the individual level.
Sample size: planned number of observations
9,024 individuals.
Sample size (or number of clusters) by treatment arms
2,256 individuals per treatment arm (2,256 in the control group).
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Assuming power = 80%, size of the test = 5% and no clustering, we can detect a minimum effect of 0.085 standard deviations for continuous variables (such as tax payments). For outcomes such as the probability of tax compliance, assuming an average tax compliance of 50% for the control group, we can identify an effect of 4.2 percentage points. Assuming an average tax compliance of 1% for the control group, we can identify an effect of about 2.0 percentage points. Hence, the minimum effect we can detect is around [2.0, 4.2] percentage points.
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
IRB Approval Date
IRB Approval Number