New article in the journal Public ChoiceThe politics of digits: evidence of odd taxation

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.

Olsen, Asmus L. (2013): The politics of digits: evidence of odd taxation. Public Choice, 154 (1-2): 59–73

Press coverage (all in Danish): Videnskab.dk, Tv2 Finans, Altinget.dk.

A comment on the positive and negative effects of performance measures (Berlingske, Danish).

Hvilke problemer og fordele medfører resultatmålinger sammenlignet med alternative løsninger? I det omfang resultatmålinger giver problemer, må vi finde ud af, om problemerne er større end dem, der ellers ville opstå, hvis vi levede i en verden uden resultatmålinger. Det ville utvivlsomt have negative konsekvenser, hvis borgerne ikke fik nogen form for information om resultaterne af de mange servicetilbud i den offentlig sektor. Ikke mindst i verdens største offentlige sektor.