Details
| Original language | English |
|---|---|
| Pages (from-to) | 5011-5031 |
| Number of pages | 21 |
| Journal | Management science |
| Volume | 67 |
| Issue number | 8 |
| Early online date | 1 Dec 2020 |
| Publication status | Published - Aug 2021 |
Abstract
Despite subjects being informed about tax rules before making saving decisions, we find-using laboratory experiments-that deferred taxation results in after-tax pensions that are approximately 25% lower compared with an economically equivalent immediate pension-tax system. This indicates substantial tax misperceptions. For subjects with low tax knowledge, tax misperceptions remain stable, even if they have gained experience. Tax misperceptions nearly disappear for all subjects only if we provide recurrent numerical informational pension-tax nudges and if subjects have gained experience. We demonstrate that replacing the tax-deductibility of retirement savings with government matching contributions increases after-tax pensions above the level under immediate taxation without the need to provide informational tax nudges.
Keywords
- Informational tax nudges, Learning behavior, Matching contribution, Pension taxation, Tax misperception
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- Strategy and Management
- Decision Sciences(all)
- Management Science and Operations Research
Cite this
- Standard
- Harvard
- Apa
- Vancouver
- BibTeX
- RIS
In: Management science, Vol. 67, No. 8, 08.2021, p. 5011-5031.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Tax Misperceptions and the Effect of Informational Tax Nudges on Retirement Savings
AU - Blaufus, Kay
AU - Milde, Michael
N1 - Funding Information: History: Accepted by Yuval Rottenstreich, decision analysis. Funding: K. Blaufus gratefully acknowledges financial support from Ernst & Young Stiftung e. V. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/ mnsc.2020.3761.
PY - 2021/8
Y1 - 2021/8
N2 - Despite subjects being informed about tax rules before making saving decisions, we find-using laboratory experiments-that deferred taxation results in after-tax pensions that are approximately 25% lower compared with an economically equivalent immediate pension-tax system. This indicates substantial tax misperceptions. For subjects with low tax knowledge, tax misperceptions remain stable, even if they have gained experience. Tax misperceptions nearly disappear for all subjects only if we provide recurrent numerical informational pension-tax nudges and if subjects have gained experience. We demonstrate that replacing the tax-deductibility of retirement savings with government matching contributions increases after-tax pensions above the level under immediate taxation without the need to provide informational tax nudges.
AB - Despite subjects being informed about tax rules before making saving decisions, we find-using laboratory experiments-that deferred taxation results in after-tax pensions that are approximately 25% lower compared with an economically equivalent immediate pension-tax system. This indicates substantial tax misperceptions. For subjects with low tax knowledge, tax misperceptions remain stable, even if they have gained experience. Tax misperceptions nearly disappear for all subjects only if we provide recurrent numerical informational pension-tax nudges and if subjects have gained experience. We demonstrate that replacing the tax-deductibility of retirement savings with government matching contributions increases after-tax pensions above the level under immediate taxation without the need to provide informational tax nudges.
KW - Informational tax nudges
KW - Learning behavior
KW - Matching contribution
KW - Pension taxation
KW - Tax misperception
UR - http://www.scopus.com/inward/record.url?scp=85112130767&partnerID=8YFLogxK
U2 - 10.1287/mnsc.2020.3761
DO - 10.1287/mnsc.2020.3761
M3 - Article
VL - 67
SP - 5011
EP - 5031
JO - Management science
JF - Management science
SN - 0025-1909
IS - 8
ER -