ESI/IFREE Lecture-Charles Sprenger,PhD-Procrastination in the Field: Evidence from Tax Filing
2017-04-21 15:00 2017-04-21 16:30 America/Los_Angeles ESI/IFREE Lecture-Charles Sprenger,PhD-Procrastination in the Field: Evidence from Tax Filing WH 116 ESI Classroom Cyndi Dumas firstname.lastname@example.org
Friday, April 21, 2017 3:00pm - 4:30pm
Abstract: 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.