Should we publicly shame tax delinquents?

There was good news in the Woodbury bureau of NewsCut this week when the state tax return finally showed up. It was short-lived. It —  and a lot more — went right back out as part of what I owe to the federal government.

This dance is repeated in hundreds of thousands of homes across the country this week, of course, because of today’s deadline for filing tax returns.

Some people, it’s safe to say, cheated on their returns. Some choose not to file at all.

What should be done to these people?

In today’s New York Times, Ricardo Perez-Truglia, a researcher at Microsoft Research in New England; and Ugo Troiano, an assistant professor of economics at the University of Michigan, argue that theys hould be shamed. Publicly.

They sent letters to 34,344 individuals who were publicly listed as tax delinquents in Kansas, Kentucky and Wisconsin.

We divided recipients into two groups. In the first, only the recipient was chosen to get information about an online list of tax delinquents. In the second, the recipient and other people from the same community were given that information. Those in the second group should have felt that their delinquent status could be monitored by neighbors.

In the following months, people in the second group — the “shamed” delinquents — were more likely to pay off their debts than those who did not feel monitored. This intervention was effective mostly for people who owed tax amounts up to $2,500. For this group, the shaming treatment increased the probability of leaving the list by 20 percent.

Since tax agencies already send several letters to delinquents, our results suggest that including a shaming list of delinquent neighbors can result in a highly cost-effective way to raise revenues.

In addition, although we shared the shaming information only with neighbors, exposing the delinquency status to friends, relatives, co-workers, clients and bosses as well could make the policy effective even for higher debt amounts.

Shaming could be even more effective, they argue, with the use of social media, which is perfect for heaping shame on its users, of course.