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Review of Economics

Jahrbuch für Wirtschaftswissenschaften

Editor-in-Chief: Berlemann, Michael

Ed. by Haucap, Justus / Thum, Marcel

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Does the Level of Work Effort Influence Tax Evasion? Experimental Evidence

Christoph Bühren
  • University of Kassel, Institute of Economics, Nora-Platiel-Straße 4, 34127 Kassel, Germany
  • Email:
/ Thorben C. Kundt
  • Helmut-Schmidt-University Hamburg, Economics Department, Holstenhofweg 85, 22043 Hamburg, Germany
Published Online: 2016-02-11 | DOI: https://doi.org/10.1515/roe-2014-0203


Using a real effort experiment, we analyze the dependence of tax evasion on the amount of effort invested to generate income. In three treatments, subjects were either endowed with income or had to work moderately or arduously to earn it. In line with prospect theory, subjects evaded more taxes when they worked hard for their income. We find little evidence for the prediction that tax evasion in the endowed treatment is higher than that in the moderate-effort treatment.

Keywords : tax evasion; prospect theory; house money effect; sunk cost effect; real effort experiment

About the article

Published Online: 2016-02-11

Published in Print: 2014-08-01

Citation Information: Review of Economics, ISSN (Online) 2366-035X, ISSN (Print) 0948-5139, DOI: https://doi.org/10.1515/roe-2014-0203. Export Citation

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