Predicting behavioral responses to one-time fiscal events (Public)
Project
Predicting behavioral responses to one-time fiscal events
Study ID sspp-2024-0043-v1
Study Title Predicting behavioral responses to one-time fiscal events
Authors Augustin Bergeron, Lukas Bolte, Jakob Brounstein
Completion Time 15 Minutes
Close Date (UTC) March 25, 2025
Discipline Economics
Field Applied Econometrics, Labor Economics, Public Economics, Behavioral Economics
Country Online (limited countries), The Democratic Republic of Congo
Abstract
"One-time fiscal events" (OTFEs) refer to policies and events that, ipso facto, occur only once with no de jure periodicity. We observe these kinds of events around the world with considerable frequency: for example, capital levies constitute one-time taxes on wealth; other events include corporate windfall taxes, tax amnesties, debt forgiveness, etc. Yet, little is known about the implications of such events for economic behavior and tax revenue. However, one of the central limitations of these policies lies in the critique that, in response to an OTFE, economic agents may update on the likelihood of such ``one-time'' events occurring again in the future. Behavioral distortions---e.g., to investment, labor supply decisions, etc.---may manifest through these updated beliefs. In other words, OTFEs may lead to subsequent deadweight loss. In this project, we develop a methodology for quantifying the behavioral impacts of OTFEs and apply the methodology in a controlled online experiment. This online experiment forms part of a larger project in which we implement our methodology at-scale in a tax randomized controlled trial in coordination with the provincial government of Kasai-Central in the DR Congo. In broad, the methodology incorporates belief elicitation of agents around the implementation of OTFEs (agents' subjective probabilities of repeated events and their expected fiscal environments) in order to decompose behavioral responses between changes in beliefs and underlying behavioral elasticities. We first evaluate our methodology in the context of an online experiment in which workers repeatedly decide how much labor to supply; their labor earnings, including past earnings, may be subject to one-time (non-periodic) tax shocks.
Study ID sspp-2024-0043-v1
Study Title Predicting behavioral responses to one-time fiscal events
Authors Augustin Bergeron, Lukas Bolte, Jakob Brounstein
Completion Time 15 Minutes
Close Date (UTC) March 25, 2025
Discipline Economics
Field Applied Econometrics, Labor Economics, Public Economics, Behavioral Economics
Country Online (limited countries), The Democratic Republic of Congo
Abstract
"One-time fiscal events" (OTFEs) refer to policies and events that, ipso facto, occur only once with no de jure periodicity. We observe these kinds of events around the world with considerable frequency: for example, capital levies constitute one-time taxes on wealth; other events include corporate windfall taxes, tax amnesties, debt forgiveness, etc. Yet, little is known about the implications of such events for economic behavior and tax revenue. However, one of the central limitations of these policies lies in the critique that, in response to an OTFE, economic agents may update on the likelihood of such ``one-time'' events occurring again in the future. Behavioral distortions---e.g., to investment, labor supply decisions, etc.---may manifest through these updated beliefs. In other words, OTFEs may lead to subsequent deadweight loss. In this project, we develop a methodology for quantifying the behavioral impacts of OTFEs and apply the methodology in a controlled online experiment. This online experiment forms part of a larger project in which we implement our methodology at-scale in a tax randomized controlled trial in coordination with the provincial government of Kasai-Central in the DR Congo. In broad, the methodology incorporates belief elicitation of agents around the implementation of OTFEs (agents' subjective probabilities of repeated events and their expected fiscal environments) in order to decompose behavioral responses between changes in beliefs and underlying behavioral elasticities. We first evaluate our methodology in the context of an online experiment in which workers repeatedly decide how much labor to supply; their labor earnings, including past earnings, may be subject to one-time (non-periodic) tax shocks.
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