Pay Taxes - Be Happy

Author:  Gowda Shilpa

Date:  July 2007

Collaborating at the University of Oregon, associate professor of economics William Harbaugh, professor of psychology Ulrich Mayer, and economics graduate student Dan Burghart published results in Sciencethis week, suggesting that giving money voluntarily or paying taxes brings about the same satisfaction that well-documented pleasures such as food and social contact do. The researchers measured the satisfaction through brain activity, a breakthrough in providing concrete scientific evidence for human incentives involved in donation and taxation. Their discovery could greatly impact fund-raising techniques by charities and future policies by public officials. Mayer remarks, "What this shows to someone who designs tax policy is that taxes aren't all bad. Paying taxes can make citizens happy."

In their study, Harbaugh, Mayer, and Burghart gave 19 female subjects 100 dollars. The subjects could either keep the money or donate it to a local charity, but some subjects would receive a "tax," requiring them to donate the money to charity. To minimize their influence on the subjects' decisions, the researchers also ensured that they would not know what the subjects chose to do. Using a computerized system, the subjects were able to anonymously make their donation and then communicate their satisfaction with the decision to the researchers using a four-point rating scale. The researchers then imaged their brains using functional magnetic resonance imaging (fMRI) as the subjects made their decisions.


The researchers found that the brains of subjects who donated to charity, either through their own choice or because of a tax, showed activation in the caudate nucleus and nucleus accumbens. These are the same areas that are activated after fulfilling desires such as eating or socializing.


This study may be relevant to the 2008 presidential race, in which tax is one of the key issues. The study seems to forgive lawmakers for raising taxes, because the results show that taxpayers actually benefit from the tax. However, there is one caveat: citizens still prefer choice. The satisfaction ratings from the study indicated that the subjects preferred giving voluntarily to being taxed, by 10 percent. Similarly, FMRI imaging of the subjects showed higher activation in the caudate, nucleus accumbens, and the insulae for individuals who voluntarily gave their money compared to individuals who gave the money because of a mandatory "tax." Therefore, the answers to taxation policy spark further debate and require more investigation.

-Written by Shilpa Gowda.