Abstract

Taxation has been the subject of a great deal of study in the tradition of neoclassical economics. By examining the rational self-interested response of individuals in different situations, mainstream economics has been able to provide a great deal of understanding of the effects of taxation in areas such as the supply of labor, saving, and enterprise. However, even in such clearly defined “economic” areas, behavioral economics can offer further insights and explanatory power beyond that provided by conventional economic theories. For example, even in modern times, labor market and household investment decisions might still be influenced by a range of social factors such as traditional gender roles (James 1992, 1995a, 1996).