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Procrastination in the Field: Evidence from Tax Filing

Martinez, Seung-Keun and Meier, Stephan and Sprenger, Charles (2017) Procrastination in the Field: Evidence from Tax Filing. . (Unpublished)

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This paper attempts to identify present-biased procrastination in tax filing behavior. Our exercise uses dynamic discrete choice techniques to develop a counterfactual benchmark for filing behavior under the assumption of exponential discounting. Deviations between this counterfactual benchmark and actual behavior provide potential ‘missing-mass' evidence of present bias. In a sample of around 22,000 low-income tax filers we demonstrate substantial deviations between exponentially-predicted and realized behavior, particularly as the tax deadline approaches. Present-biased preferences not only provide qualitatively better in-sample fit than exponential discounting, but also have improved out-of-sample predictive power for responsiveness of filing times to the 2008 Economic Stimulus Act recovery payments. Additional experimental data from around 1100 individuals demonstrates a link between experimentally measured present bias and deviations from exponential discounting in tax filing behavior.

Item Type:Report or Paper (Working Paper)
Additional Information:This Version: January 16, 2017. We are grateful for the insightful comments of many colleagues and seminar audiences at Bonn, Frankfurt, Berkeley, UC San Diego. Special thanks are due to Lorenz Goette, Supreet Kaur, Stefano DellaVigna, Dmitry Taubinsky, Ned Augenblick, James Andreoni, Joel Sobel, Ulrike Malmendier, and Leland Farmer.
Subject Keywords:Time Preferences, Procrastination, Tax Filing, Present Bias, Quasi-hyperbolic discounting
Classification Code:JEL: D81, D84, D12, D03
Record Number:CaltechAUTHORS:20200721-135422905
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:104486
Deposited By: Tony Diaz
Deposited On:21 Jul 2020 21:14
Last Modified:22 Jul 2020 14:16

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