Prof Sally Wallace delivers a thought-provoking speech on economics
Founder president KEA Prof M A Oommen, Director CDS Prof Amit Shovon Ray and Prof Sally Wallace of Georgia State University at the seminar on Behavioural Economics in Thiruvanthapuram. (Photo: DC)
Thiruvananthapuram: What if a ‘random controlled trial’ was conducted on a group of Kerala youngsters to check their inclination for tax compliance at a time when the air is vitiated with charges of corruption? “In a context where leaders are looked upon with suspicion, the chances are there will be more tax evaders than honest people,” said Prof Sally Wallace, the director of Fiscal Research Centre, Andrew Young School of Policy Studies, Georgia State University.
She was delivering a talk on ‘Behavioural Economics in Public Finance’, which was organised jointly by Kerala Economic Association and Kerala University’s School of Distance Education at the Kerala University Senate Chamber here on Wednesday. Shaming, she said, was one way to induce compliance in deviant tax payers, as she had found during random controlled trials in US and Italy.
“My experiments in US and Italy demonstrated that the threat of disclosures increases compliance,” Prof Wallace said. She had doubts whether shaming would work in Italy where media mogul and former prime minister Silvio Berlusconi sustained his popularity though he was wrapped in corruption and sex scandals.
She said the big surprise was Egypt. “We could not get the Egyptians to cheat, however hard we tried,” she said. “The test was conducted not just after the Arab Spring but also after the excesses and the removal of its first democratically elected president Mohamed Morsi. A sort of idealistic fervour pervaded the country,” Prof Wallace said.
She said that neoclassical economic theory of maximizing utility would not hold good at times. “We are real people and as a result actual decisions may not maximize utility as we have come to understand it,” she said. By way of example, she asked: “why do corporations continue to grant dividend when the concept goes against profit maximization or why don’t people save for retirement when government gives them tax deduction.”
( Source : deccan chronicle )
Next Story
