| dc.description.abstract | A central assumption in public economics is that individuals optimize fully to tax policies,
meaning they respond to tax changes similarly to price changes. However, a growing body
of evidence in the field of tax salience suggests that individuals optimize imperfectly to
the available information due to inattention. Our thesis contributes to the field of tax
salience by empirically investigating whether individuals optimize fully to taxes.
We analyze the effect of salience on behavioral responses to taxes and fees on mobile
money transactions in Tanzania. In February 2023, we collected primary data through
a laboratory-in-the-field experiment in Dar es Salaam where we exploited the attention
to the heavily disputed Electronic Money Transaction Levy. Using a willingness to pay
elicitation method, we provide evidence that increasing the salience of taxes and fees of
mobile money transactions reduces the willingness to pay for using mobile money services.
The results provide support for the salience theory and suggest that the salience of a tax
has policy implications. To our knowledge, we are the first to estimate a causal effect of
salience on taxes levied on mobile transactions. | en_US |
