Research Insights: Can Rewards Improve Tax Compliance?

As policymakers increasingly use rewards to encourage good citizenship, it is important to find a reward mechanism that does not curb intrinsic motivation, is long-lasting, and has effects that go beyond direct reward recipients. A policy innovation introduced by the Municipality of Santa Fe, Argentina allowed us to evaluate the potential of different mechanisms for encouraging tax compliance—participation in a lottery (financial motive), public recognition (social image), and provision of a visible and durable good (reciprocity and peer effects).