Olsen, A. L. & Henriksen, M. V. (2015). Taxes are Money: A Metric Salience Effect on Citizens' Tax Preferences. Presented at the Danish Political Science Association Meeting, 2014.
ABSTRACT: We argue that tax salience can be affected by the metric by which the tax burden is expressed. Specifically, the metric effect denotes that if respondents report their tax preferences in percentages they are in favor of higher and more progressive tax rates than if they report them in real money terms. We argue that this effect can be explained by the vivid imagery of departing with money which a monetary response induces. We test the metric effect and underlying explanation with a set of experiments on tax preferences in a representative sample of Danish citizens (N=1006). The analysis shows a strong metric effect which is highly economically significant. The analysis supports that differences in metric vividness may be the underlying mechanism.
Olsen, Asmus Leth (2013). The politics of digits: evidence of odd taxation. Public Choice, 154 (1-2), 59-73.
ABSTRACT: From the concept of odd pricing, i.e., setting rightmost price digits below a whole number, this paper advances the political counterpart of odd taxation using a panel of Danish municipal taxes. First, the distribution of tax decimals is non-uniform and resembles the distribution of price-endings data. Second, nine-ending and other higher-end decimals are found to be over-represented which echoes odd pricing research. It suggests that incumbents take voters’ biases into account and apply odd taxes to minimize the political costs of taxation while maximizing revenue. Attention should be given to how policy digits are arranged to exploit voters’ cognitive biases.