Tax evasion and shadow economy activities vary significantly across Europe, yet our understanding of how these variations affect survey responses about illegal economic behaviors remains limited, especially in diverse tax morale settings. This study addresses this knowledge gap by investigating the impact of tax compliance cultures on social desirability bias in surveys about tax evasion. Focusing on Denmark, Italy, and Latvia – countries with distinct combinations of tax morale and shadow economy sizes – the research employs an innovative design that combines list experiments with vignettes.

By engaging 6,600 participants across these three countries, the study examines how social norms and tax morale influence self-reported tax evasion behaviors. Participants were randomly assigned to control and treatment groups, with the treatment group receiving an additional sensitive item about tax evasion in their list. A placebo test using a non-sensitive item (house purchase) was also conducted to validate the method. Additionally, the study incorporated belief updating about tax morale norms to investigate their impact on tax evasion disclosure and tax morality.

While the list experimental results do not yield conclusive evidence of social desirability bias, the inconsistencies in list experiment responses for sensitive questions suggest that social desirability bias may still subtly influence how people report illegal behaviors. The findings also underscore the importance of considering how information about social norms, as employed in the vignettes, can influence individual attitudes towards tax compliance. Notably, when participants’ beliefs about the prevalence of tax evasion acceptance were updated to reflect a lower acceptance rate than previously assumed, it correlated with a decrease in tax morale. This study thus contributes valuable insights to our understanding of tax morale formation and highlights the potential unintended consequences of norm-based interventions in tax policy.