Behavioral Tax Research

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Behavioral Tax Research

• Andy Cuccia
• ATA Doctoral Consortium
• San Diego, CA

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What is Behavioral RESEARCH?

• Scientific research is the systematic,
  controlled, empirical and critical investigation
  of phenomena guided by theory and hypotheses
  about the presumed relations among such phenomena
  (Kerlinger, F.N., Foundations of Behavioral
  Research).

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What is BEHAVIORAL Research?

• What isnt?!
• Behavioral Experimental?
• Defined more by
• unit of analysis
• Individual (e.g., taxpayer, tax professional,
  enforcer)
• Motivation for behavior / underlying theory
• Psychological/sociological

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Comparative Advantages

• Experiments allow for strong causal inference
  (i.e., internal validity) and link back to
  theory.
• Allowing for direct manipulation of those things
  hypothesized to lead to predicted results
• Impossible in uncontrolled, real-world settings
• While controlling all else
• Random assignment
• Control/manipulation
• Direct measure and stat control (i.e., covariate)
• Big Promises ? high expectations!

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Comparative Advantages

• The ability to examine things unobservable in
  natural settings, or using archival data
• The institution or environment does not exist
  (i.e., the ability to do timely, prescriptive
  research)
• E.g., penalty regimes, accountability settings
• The data does not exist
• E.g., measures of individual judgments, response
  times, search processes
• Its fun!

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Disadvantages (?)

• Inability to extrapolate results to real world
• i.e., external or predictive validity
• E.g., are effect sizes or response coefficients
  observed in an experiment meaningful?
• But are internal and external validity competing
  or complementary?

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Anyone Have a (Research) Question?

• Whats wrong with theirs?
• What constitutes a contribution?
• Document/support a belief/theory as yet
  undocumented/unsupported
• Explain something weve been unable to explain
• Lead to something unexpected
• Given a well-motivated question, shouldnt ANY
  results be informative?
• i.e., Should there be such a thing as no
  results given a good question?

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Theory-driven Questions

• Is there any value of replication in
  accounting/tax domain?
• Brunswickian/contextual view
• Does environment allow us to contribute something
  to basic discipline?
• Up to researcher to communicate value
• Cant lose sight of ecological validity
• Experimental task may capture theory (i.e.,
  construct validity) but does it capture what
  accountants really do?

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Problem-driven Questions

• Still guided by theory?
• Still allows us to contribute something to basic
  discipline?
• Regardless of what brought us to the
  problem/question, is it
• Relevant to accountants
• Informed by theory
• With something to give back to the theory or
  discipline from which the theory came

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Cuccia and McGill 2000

• Research Question
• Are tax accts s.t. a recency bias?
• H The ability to structure the judgment task to
  use familiar, motivated processing strategy will
  eliminate recency.
• Motivation
• Theory-driven or problem-driven?
• Inform acct or psych domain?
• Would it have been (just as) interesting
  regardless of results?

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Theory and Method
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Internal Validity

• Manipulated directly
• Evaluation order
• Nature of task
• Control over task (i.e., ability to use strategy)
• Task context (i.e., familiarity and motivation)
• Controlled
• Via random assignment
• Age, gender, advocacy (confirmed and reported)
• Manipulated and included in analyses
• Knowledge regarding existence of evidence

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Ecological Validity

• Closer attention hopefully leads to greater
  insight into accounting domain and underlying
  judgment model.

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Copeland and Cuccia 2002

• Research Question
• Do expectations, along with payment/refund
  status, frame tax reporting decisions?
• Motivation
• Theory-driven or problem driven?
• Inform acct of psych domain?
• Would it have been (just as!) interesting
  regardless of results?

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Theory and Method
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Internal Validity

• Manipulated directly
• Variance around status quo
• Payment/refund position
• Variance around expectations
• Variances around taxpayer/subjects actual priors
• Enhanced construct validity contributed to
  findings
• Controlled via random assignment
• Age, gender, income, educ, risk preferences
• Confirmed and reported
• Unexpectedly, results turned out to be
  conditioned on such factors!

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Publishing Prospects

• Casual observation may be misleading
• Id guess that batting average of good
  behavioral researchers is comparable to that of
  other areas.
• Demonstrating General Interest
• Theory driven v problem driven
• Write with readership in mind
• JATA, TAR, CAR, AOS best bets
• Perhaps more general than accounting!
• Benefits of publishing in management or
  psychology journal

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Summary

• Accounting is inescapably behavioral!
• Behavioral/experimental research is best way to
  make causal inferences and tie back to theory.
• Must be careful and explicit about interplay of
  theory and domain interest.
• Potential strengths create high expectations.
• Keep abreast of developments in both practice and
  JDM theory.
• If these papers were published in good journals,
  just think if what you could do!
• Have fun.