CeDEx Seminar - Seung-Keun Martinez (University of Nottingham)

Procrastination in the Field: Evidence from Tax Filing

This paper attempts to identify present-biased procrastination in tax filing behavior. In a sample of around 22,000 low-income tax filers we demonstrate substantial deviations between exponentially-predicted and realized filing behavior, particularly as the tax deadline approaches. Present-biased preferences not only provide qualitatively better in-sample fit than exponential discounting, but also have improved out-of-sample predictive power for responsiveness of filing times to the 2008 Economic Stimulus Act recovery payments. Additional experimental data from around 1100 individuals demonstrates a link between experimentally measured present bias and deviations from exponential discounting in tax filing behavior.

Keywords: Time Preferences, Procrastination, Tax Filing, Present Bias, Quasi-hyperbolic discounting