Skip to Content

Social, Behavioral & Experimental Economics (SBEE): Procrastination in the Field: Evidence from Tax Filing

Charlie Sprenger, University of California - San Diego
Monday, March 20, 2017
3:30-5:00 PM
201 Lorch Hall Map
Abstract:
This paper attempts to identify present-biased procrastination in tax filing behavior. Our exercise uses dynamic discrete choice techniques to develop a counterfactual benchmark for filing behavior under the assumption of exponential discounting. Deviations between this counterfactual benchmark and actual behavior provide potential ‘missing-mass’ evidence of present bias. In a sample of around 22,000 low-income tax filers we demonstrate substantial deviations between exponentially-predicted and realized behavior, particularly as the tax deadline approaches. Present biased preferences not only provide qualitatively better in-sample fit than exponential discounting, but also have improved out-of-sample predictive power for responsiveness of filing times to the 2008 Economic Stimulus Act recovery payments. Additional experimental data from around 1100 individuals demonstrates a link between experimentally measured present bias and deviations from exponential discounting in tax filing behavior.
Building: Lorch Hall
Website:
Event Type: Workshop / Seminar
Tags: Economics, seminar
Source: Happening @ Michigan from Social, Behavioral, and Experimental Economics (SBEE), Department of Economics, Department of Economics Seminars