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Behavioral Economics For Dummies® by Morris Altman, PhD

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Chapter 10

Why Smart People Pay Taxes, Recycle, and Even Break the Law

In This Chapter

arrow Understanding why people pay taxes

arrow Looking at why people are willing to pay more for green products

arrow Identifying why and when economic deterrents reduce crime

Criminals and good citizens come from the same social and economic groups: You can find examples of rich criminals and poor criminals, rich law abiders and poor law abiders. Basically, controlling for differences in income and costs, we see a tremendous variation of behavior.

In conventional economics, however, differences in relative prices and income should explain differences in behavior. In addition, changing the price of criminal behavior or the price of being a good citizen should change people’s behavior in the expected way. People should commit more crime if it pays and less if it’s too costly. They should be more ethical if it pays and less ethical if it doesn’t.

In this chapter, I discuss different perspectives on what causes a wide range of behaviors and choices — from paying taxes to recycling to committing crime. I also examine the relationship between economic and non-economic factors affecting choice behavior.

Why Most People ...

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