Replication data for: Salience and Taxation: Theory and Evidence
Principal Investigator(s): View help for Principal Investigator(s) Raj Chetty; Adam Looney; Kory Kroft
Version: View help for Version V1
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Project Citation:
Chetty, Raj, Looney, Adam, and Kroft, Kory. Replication data for: Salience and Taxation: Theory and Evidence. Nashville, TN: American Economic Association [publisher], 2009. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E113312V1
Project Description
Summary:
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Using two strategies, we show that consumers underreact to taxes that are not
salient. First, using a field experiment in a grocery store, we find that posting
tax-inclusive price tags reduces demand by 8 percent. Second, increases in taxes
included in posted prices reduce alcohol consumption more than increases in
taxes applied at the register. We develop a theoretical framework for applied
welfare analysis that accommodates salience effects and other optimization
failures. The simple formulas we derive imply that the economic incidence of
a tax depends on its statutory incidence, and that even policies that induce no
change in behavior can create efficiency losses. (JEL C93, D12, H25, H71)
Scope of Project
JEL Classification:
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C93 Field Experiments
D12 Consumer Economics: Empirical Analysis
H25 Business Taxes and Subsidies including sales and value-added (VAT)
H71 State and Local Taxation, Subsidies, and Revenue
C93 Field Experiments
D12 Consumer Economics: Empirical Analysis
H25 Business Taxes and Subsidies including sales and value-added (VAT)
H71 State and Local Taxation, Subsidies, and Revenue
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