Encouraging Tax Compliance With Positive Incentives: A Conceptual Framework and Research Directions *

Drawing on learning and social psychological research, we identify the processes by which positive incentives induce compliance with regulatory laws, using tax as a specific example. We evaluate the likely effects of various positive incentives on four different dimensions of compliance decisions: instrumental consequences, normative considerations, internalized motivation, and allegiance to authority. Linking incentives specifically to compliant behavior invokes a cost/benefit analysis, lowers intrinsic motivation and allegiance to authority, and requires authorities to monitor citizens and to distinguish between compliant and noncompliant behaviors. The alternative is to present the incentives as an attempt by the enforcement authorities to cooperate with the citizens. This method is less likely to invoke cost/benefit calculations; requires less intervention by authorities; and increases intrinsic motivation, consideration of normative issues, and allegiance to authorities. Prior research suggests that respectful treatment and praise may be more effective incentives for inducing long‐lasting compliance than are materialistic incentives because people have a strong tendency to reciprocate actions they receive from authorities. Our analysis leads to proposals for program implementation and evaluation and raises some theoretical questions that need additional research.