Satu Metsälampi’s dissertation: Essays on Behavioral Public Economics 

M.Sc.Econ, MA Satu Metsälampi will defend her doctoral research ”Essays on behavioral public economics” on May, 30 at University of Turku. The thesis was supervised by Kaisa Kotakorpi (Tampere University, FIT), Janne Tukiainen (University of Turku), Topi Miettinen (Hanken School of Economics) and Heikki Kauppi (University of Turku). The doctoral dissertation consists of four essays.

The first essay studies the causal effects of tax reporting institutions on market outcomes and tax compliance, and how these institutions interact with non-pecuniary motivations, such as preferences for truth-telling and image concerns. The essay shows that self-interest and moral motivations – in the form of lying costs and a preference to appear honest – can influence tax reporting, pricing decisions, and the resulting division of the tax burden between buyers and sellers. 

Essays II-IV explore the causes and consequences of social comparisons. More specifically, we ask: Who do we compare ourselves to, why do we compare, and what are the consequences of these comparisons?  

We find that the comparisons people engage in, when given a choice between several reference groups and the stated motivations for that choice tend to align with comparisons that are actionable on pecuniary, fairness or other grounds. Reference groups can include compatriots, educational or occupational peers, age cohort, or residents in the same municipality.

We show that comparison information causally affects self-reported income-related well-being. However, not all information has the same impact: Learning about one’s position among one’s compatriots has a negligible effect compared to more circumscribed reference groups. 

Social comparisons and reference groups matter not only for subjective well-being, but also influence economic decision-making. We find that changes in perceived relative income – absent any change to actual, absolute income – impacts the level of charitable donations. Similarly, we find that it impacts actual earned income in the short-term. By contrast, we do not observe any influence of relative income information on an individual’s reported or actual risk-taking. 

Our research also highlights the importance of the nature of misperceptions individuals hold about their own income position, and the implications for income transparency policies such as publicly available tax records or wage transparency. If the vast majority of individuals, as in our study, greatly underestimate their relative position, then making their relative standing more salient can improve welfare in the aggregate.

Authors and Funding

Kaisa Kotakorpi, Tuomas Nurminen, Topi Miettinen, Satu Metsälampi: Bearing the Burden – Implications of Tax Reporting Institutions on Evasion and Incidence. 

Xiaogeng Xu, Satu Metsälampi, Michael Kirchler, Kaisa Kotakorpi, Peter Hans Matthews, Topi Miettinen: Which Reference Groups Matter and How? A Relative Income Information Experiment with Administrative Data. 

Satu Metsälampi, Xiaogeng Xu, Michael Kirchler, Kaisa Kotakorpi, Peter Hans Matthews, Topi Miettinen: Which Ponds Do We Choose, And Why? Choices of Income Reference Group and Its Consequences.  

Satu Metsälampi, Xiaogeng Xu, Michael Kirchler, Kaisa Kotakorpi, Peter Hans Matthews, Topi Miettinen: Effect of income rank information rank on risk taking. 

Funding: Finnish Cultural Foundation and Research Council of Finland. 

Doctoral Thesis Defence

M.Sc. Satu Metsälampi will defend her doctoral research” Essays on behavioral public economics” publicly on the 30th of May. The opponent is Professor Edvard Johansson (Åbo Akademi) and the custos is Professor Janne Tukiainen (University of Turku). The event is held in in English. The defence can also be seen online; the link to the event and more information about it can be found on the website of the University of Turku.  

Finnish Centre of Excellence in Tax Systems Research warmly congratulates Satu Metsälampi on the completion of her PhD journey! 

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