When people refer to humans as “sheep,” it frequently sets my neck hair on edge. Mostly because I’m a speciesist, but also because people lump together a wide variety of disparate behaviors to imply that people “mindlessly” follow social norms. If you falsely establish that people have no will of their own, then it seems harmless to push (or nudge) them around. However, people frequently mimic the behaviors of others for laudatory reasons.
- A loud talker might moderate his voice to set someone at ease. You might refrain from wearing certain types of clothing for the same reason.
- You might drive on the right side of the road to avoid blood guilt.
- You might watch the TV shows your friend likes because you enjoy the camaraderie of a shared culture.
There are many reasons why “sheepish” behavior is distinctly human.
Minnesota experimented to determine what increases tax compliance. Groups of tax payers were sent two different informative messages. One message described the beneficial things the tax money would be spent on: education, health care, law enforcement, etc. Not too surprisingly this strategy didn’t work. You probably fall into one of two camps: (i) you think the government spends money wisely, or (ii) you think the government is willing to pretend it does in order to get more of your money.
The second message informed people that “Audits by the Internal Revenue Service show that people who file tax returns report correctly and pay voluntarily 93 percent of the income taxes they owe.” The fact that the second message worked is often chalked up to fact that people follow social norms. But what does this mean? When you learn that more people pay taxes than you expected, you might pay your taxes because you are a mindless follower, or you might adhere to a certain notion of fairness. If other people pay their taxes, you might not want to be a free rider. However, a high level of tax compliance doesn’t mean that people accept that the tax is just. People might pay a tax out of fairness even if the tax itself is unfair.
Imagine a state of anarchy (a lack of government not a house full of boys). An evil genius announces that he will impose a sucker tax. Everyone will be taxed ten dollars, and the proceeds will be redistributed back to all the citizens in equal shares without reference to who paid the tax. In a certain sense, this tax maximizes unfairness. It serves no other purpose than to punish people in direct proportion to how much of the tax they paid. To make tax compliers feel even more ridiculous, the evil genius announces that he will make no effort to punish “tax cheats.” A fair outcome of the game requires that there be no suckers. This will occur if everyone evades the tax. However, it will also occur if everyone pays the tax. Under this scenario, you probably wouldn’t pay the tax (even if you believed in fairness) because you would assume that no one else was going to pay the tax.
Now imagine that the evil genius announces that unless everyone pays the tax one person will be punished. The “everyone evades the tax” strategy is no longer socially optimal. What to do? You then learn that everyone else is paying the tax because they think everyone else is paying the tax. With this new information, people motivated by fairness will pay the tax. Tax compliance is 100 percent even though everyone despises the tax.
Compliance does not mean consent.
P.S. I’m not fanatically against sheep imagery; some of my best friends use it.
READER COMMENTS
TS
Feb 3 2014 at 10:37pm
Welcome to Econlog, James! This is a nifty use of thought experiment to argue a subtle point. A nitpick though: I don’t think all your examples you gave are true examples of following social norms. I don’t drive on the right side of the road primarily because everyone else is doing it; I do so to avoid hitting people. There is some component of social pressure to it, but it plays a much smaller role than the other examples you gave.
John T. Kennedy
Feb 4 2014 at 4:25am
James,
I don’t understand the final example. I think I’m motivated by fairness, but I don’t think fairness requires that I pay the tax so I wouldn’t pay. Any unfairness in the result would be the responsibility of the evil genius, wouldn’t it? (One assumes this is why he is recognized as an evil genius.)
I can’t imagine holding a tax evader responsible for any unfair result imposed by another.
James Schneider
Feb 4 2014 at 6:50am
@John, Certainly the evil genius is the culprit. However, in the last example, paying the tax leads to the same outcome as if no one paid the tax (since everyone just gets their tax payments reimbursed in equal shares). This is the outcome that most people would consider fair.
Peter H
Feb 4 2014 at 11:29am
I thought the 93% statistic was surprisingly low. Maybe the sample of audits is highly skewed towards taxpayers who have substantial means to dodge taxes, which would be a sensible policy when doing audits. For most people, all or nearly all of their income that could be found in an audit is reported on a W-2, 1099 or the like. A salaried employee simply does not have the means to commit much tax fraud.
gwern
Feb 4 2014 at 12:34pm
Wait, is this quote correctly written? I can’t make heads or tails of it as an example. (I don’t think it’s even grammatical as presented: ‘people who file X and pay Y do’… what?)
BLM4L
Feb 4 2014 at 1:49pm
“Audits by the Internal Revenue Service show that people who file tax returns report correctly and pay voluntarily 93 percent of the income taxes they owe.”
@gwern,
I had the same issue. After 10 minutes of staring at the sentence, I got it to make sense by parsing it this way:
There is a set of persons who file tax returns.
This set of persons owes a certain amount of tax.
For an amount of tax equal to 93% (on average) of what they owe in tax, this set of persons (1) report their taxes voluntarily, and (2) pay their taxes correctly.
Robin Hanson
Feb 4 2014 at 1:56pm
The conformity habit is indeed often and even usually very useful to humanity. But since high status people can more easily get away with defying conformity pressures, it is often a signal of high status to not conform.
MingoV
Feb 4 2014 at 5:44pm
Most people are sheep. But there are many flocks. Some people flit from flock to flock. Most do not.
Many of those who aren’t sheep try to be shepherds. Many shepherds gather flocks and lead them to new places: most to places no better than they were in before, some to cliffs or raging rivers, and a tiny number to lush pastures.
Some people who aren’t sheep don’t want to be shepherds. The sheep and the shepherds think they are strange. These people call themselves libertarians.
Ted
Feb 4 2014 at 6:19pm
What does “voluntary” mean in this context? I pay my taxes, but I wouldn’t do it if I weren’t afraid of the people with guns who’d come for me if I didn’t.
Zachary Bartsch
Feb 5 2014 at 10:24am
Might it also be the case that:
If I think that tax evaders are more likely to be audited, then other people paying taxes would increase the risk of my neglect to file. Therefore, other people filing taxes gives me an incentive to also file due to the larger threat.
A lot of sheepish, or moral, appearing behavior might be rooted in self interest…
James Schneider
Feb 5 2014 at 4:45pm
@Zachary Good point. Another “sheepish” interpretation of the Minnesota study is that if everyone else is paying their taxes, then it is more of a social disgrace if you do get caught.
I just think that intellectuals have a tendency to describe situations where people act alike as conformity without thinking why. On the other hand, whenever people are different, there isn’t as quick a reaction to assume that people are actively trying to be different.
AMT buff
Feb 5 2014 at 6:26pm
Read the book “Tax Cheating” by Donald Morris for a comprehensive exposition of this subject. You’ll learn all sorts of new facts about philosophy and taxes. The only omission is economic effects: For example, if every restaurant owner is evading taxes, does the benefit of that evasion end up flowing mostly to customers in the form of lower prices?
John T. Kennedy
Feb 5 2014 at 11:55pm
@James
I think I am motivated by fairness, by which I mean I think I should treat people fairly. I initially misunderstood your example but I’m still having trouble with your conclusion.
Upon reconsideration I would pay the tax if I thought the punishment to a random individual greatly outweighed the $10, but otherwise not. If I paid it would be out of a desire to help the victim avoid very bad consequences, not because I thought it would be unfair to others to withhold payment.
I don’t think my motivation to treat others fairly requires that I produce fair results for them in unfair situations, it just requires that I don’t don’t impose unfair burdens on them.
I think that should still count as being motivated by fairness.
Comments are closed.