The Experimental method and

Rational Economic Man:

A Perspective from Economic
Psychology
Alan Lewis
Department of Psychology
University of Bath

a.lewis@bath.ac.uk

The empirical part of this paper is

based on:
Individual, Cognitive and Cultural
Differences in Tax Compliance: UK and
Italy compared
(in preparation)
Alan Lewis, Sonia Carrera, John Cullis, Philip
Jones

Questionnaire study based on 505 Italian

psychology and economics students and 539
U.K. psychology and economics
undergraduates.

Participants take on the role of a small trader

declaring income of 30,000.

Dependent Variable: amount of income

declared

Independent Variables:
1.
2.
3.
4.
5.
6.

Detection rates Repeated measures 1%, 5%, 25%

Instruction to maximise income or not (between subjects)
Framing effects (between subjects)
Degree studied
Gender
Country (culture)

The influence of detection rates, culture, framing,

instrumentality, gender and degree choice on tax
compliance*
ANOVA resultsa
Source
Within subject factors

DF

Prob > F

detection

231.95

<.000

detection x sex

12.07

<.000

detection x degree

6.47

.002

Detection x
instrumentality
Between subject factors
Country
Degree
Framing

5.38

.005

1
1
1

10.31
31.46
10.18

.001
<.000
.001

1
1
1

1.89
15.82
4.12

.169
<.000
.043

Instrumentality
Gender
Degree x instrumentality

*Not to be reproduced without permission

External Validity and Justifications

Tax evasion is covert

Calculation of the extent of tax evasion is indirect
Tax compliance is a mystery (given REM)
Hypothetical experiments, simulations, self descriptions
of behaviour all become highly relevant in these
contexts

I would not wish to claim the tax compliance figures

derived from the study are a reflection of reality. Many
reasons for this:
1.
2.
3.
4.

Hypothetical questions
Nature of sample
Repeated measures design for detection
Perceptions of audit rate

What I would claim to be true (and I believe

has external validity )is:

Audit rates influence tax compliance

People and cultures are different
Men and people who study economics are more
instrumental
Framing effects work
Instructions to maximise wealth encouraged
psychologists to declare less, while economists behaved
instrumentally whether they were asked to or not.
Instructions to maximise wealth will be asking many
participants to behave unnaturally.

References

Lewis, A. (1982). The psychology of taxation. Oxford:

Blackwell
Cullis, J., Jones, P., & Lewis, A. (2006). Tax framing,
instrumentality and individual differences: are there two
different cultures? Journal of Economic Psychology, 27, 304320
Lewis A., Carrera S., Cullis J., Jones P. (2008). Individual,
Cognitive and Cultural Differences in Tax Compliance: UK
and Italy compared (in preparation)