Psychological Warfare on Tax Evaders

The taxman is now using behavioural psychologists to draft letters to errant taxpayers: in order to “guilt-trip” them into sorting out their tax affairs.

The Coalition’s Chief Secretary to the Treasury (Danny Alexander) speaking at his party’s conference threatened: “Tax dodgers beware – we know where you live, we know how much you owe, and now we know how you think. Your behaviour is unacceptable, and we are coming for our money”.

Where people have tax arrears, HMRC frequently send out so-called “nudge” letters to encourage them to pay up: e.g. 5,000 such letters were sent to UK residents holding Swiss accounts earlier this year.

Apparently HMRC’s team of so-called “behavioural economists” to advise them on the psychology of tax compliance and to subtly refine the wording of the “nudge” letters.

HMRC have adopted a well-known psychological concept:  “social proof”.  In his book “Influence, Science and Practice”, the renowned psychologist Robert Cialdini says: “The principle of social proof states that we view a behaviour as correct in a given situation to the degree that we see others performing it”.   The social-proofed letters emphasise the behaviour of the “great majority”:  using phrases like “most people with a debt like yours have now paid it”.

Cialdini also emphasises the importance of “similarity”, saying “the principle of social proof operates most powerfully when we are observing the behaviour of people just like us”.  HMRC have picked up on this so that often local comparisons are used, such as “9 out of 10 people in [your town] pay their tax on time”.

The revised letters also seem, at first glance, to appeal to people’s moral and social obligations.  For instance, HMRC say that taxpayers who owed more than £30,000 were 20% more likely to respond when letters claimed that the taxes are used to “essential” public services.  In fact, these letters also rely on a well-known psychological trick.  Robert Cialdini points out that when we ask someone to perform an action for us “we will be more successful if we provide a reason”: the “because” effect.  Effectively HMRC are saying people should pay up because the money is used for spending!

It seems to be working as the tax authority claim that the changes in wording have already helped it collect £210 million extra tax each year.

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