Thad Dunning, Research Talk: Is Paying Taxes Habit Forming? Theory and Evidence from Uruguay

Thad DunningTuesday, April 4, 12:30PM-1:30PM (specialized talk)
Bryan Hall, Room 229 (English Faculty Lounge)

Citizens can develop persistent, self-reinforcing habits of interaction with tax bureaucracies and other organs of the state. Yet, policy interventions can also foster or disrupt habits, often with unanticipated consequences. We study a policy in Montevideo, Uruguay that randomly assigns tax holidays–that is, year-long interruptions of payments–to punctual taxpayers. The program is designed both to reward and induce tax compliance, a critical facet of state capacity. We find that far from fostering compliance, interrupting the habit of paying taxes results in a substantial and prolonged reduction in payments after the holiday’s conclusion. Consistent with our theory, failure to pay has self-sustaining effects. Yet, for taxpayers with a strong reserve of compliance habit, negative effects eventually decay. We use field and survey experiments to isolate the habit mechanism from alternative explanations. Our findings have implications for understanding virtuous or vicious cycles in civic participation.

Thad Dunning is Robson Professor of Political Science at the University of California, Berkeley and directs the Center on the Politics of Development. He studies comparative politics, political economy, and research methods.

His current work on ethnic and other cleavages draws on field and natural experiments and qualitative fieldwork in Latin America, India, and Africa. Dunning has written on a range of methodological topics, including causal inference, statistical analysis, and multi-method research. He is chairing the inaugural EGAP regranting initiative, which aims to achieve greater cumulation of findings from experimental research on international development and political accountability. Dunning is the author of several award-winning books, including Natural Experiments in the Social Sciences: A Design-Based Approach (2012, Cambridge University Press—winner of the Best Book Award from the American Political Science Association’s Experiments Section), and Crude Democracy: Natural Resource Wealth and Political Regimes (2008, Cambridge University Press—winner of the Best Book Award from APSA’s Comparative Democratization Section). He also co-authored Brokers, Voters, and Clientelism: The Puzzle of Distributive Politics(Cambridge University Press, 2013), which won the 2014 Luebbert Prize for best book in comparative politics and the Best Book Award of APSA’s Comparative Democratization Section. Dunning’s articles have appeared in several journals, including the American Political Science Review, Comparative Political Studies, International Organization, Journal of Conflict Resolution, and Political Analysis. He received a Ph.D. in political science and an M.A. in economics from the University of California, Berkeley (2006). Before returning to Berkeley, he was Professor of Political Science at Yale University.