Nonlinear Dynamics, Psychology, and Life Sciences, Vol. 21, Iss. 1, January, 2017, pp. 89-112
@2017 Society for Chaos Theory in Psychology & Life Sciences

 
 
 

A Cusp Catastrophe Model of Tax Behavior

Ioannis Katerelos, Panteion University of Athens, Greece
Nikolaos Varotsis, Panteion University of Athens, Greece

Abstract: The paper addresses the timeless failure of the tax system in Greece despite its constant reform, highlighting the study of tax evasion phenomenon with a different approach. This study aims to assess tax behavior with a model of cusp catastrophe, where fear and peer pressure are control parameters. The survey involved 320 taxpayers from the entire Greek territory. Mathematical study using linear analysis and catastrophe modelling showed that a non-linear system is dramatically better in representing tax behavior than is any linear model. Specifically, the Cusp catastrophe model is much more accurate (R2 = .911) bettering the corresponding linear model (R2 = .003). These results strongly infer the conclusion that tax behavior in Greece might involve systemic uncertainty.

Keywords: tax behavior, tax evasion, fear, peer-pressure, cusp catastrophe