An experimental study on institutions and social norms of tax payment

Abstract The production of public goods, which are fundamental to well-functioning societies, requires the payment of taxes, but taxpayers have clear incentives to free-ride because of the low probability of sanctions. Despite these incentives, many do pay, and research suggests that non-monetary mechanisms are important drivers. Here, we focus on social norms and propose that they drive tax paying and mediate the relationship between institutional quality and tax payments, potentially leading to either virtuous or vicious feedback cycles. Using two studies conducted in Italy, a nationally representative survey and vignette experiment (NStudy I = 1,218) and an online behavioural experiment (NStudy II = 448), we show that: (i) social norms and perceptions of institutional quality predict tax payments; (ii) social norms affect tax payment intentions and behaviour; and (iii) institutional context influences these dynamics either positively or negatively through social norms. Our results highlight the essential role of social norms in shaping tax payments and their link to context-specific institutional factors.