Directory UMM :Data Elmu:jurnal:J-a:Journal of Economic Psychology:Vol21.Issue1.Feb2000:

Journal of Economic Psychology 21 (2000) 21±41
www.elsevier.com/locate/joep

A schema-theoretic approach to politiciansÕ de®nitions of
tax issues
John Ashworth a, Bruno Heyndels
a

b,*

Department of Economics, University of Durham, 23-6 Old Elvet, Durham DH1 3HY, UK
b
CEMS, Vrije Universiteit Brussel, Pleinlaan 2, B-1050 Brussels, Belgium

Received 5 March 1998; received in revised form 21 September 1998; accepted 10 September 1999

Abstract
This paper investigates how politicians de®ne the level of the tax burden in their jurisdiction
in terms of a scale from low to high. This de®nition is driven by evaluative components in
politiciansÕ tax burden schema. These components are, in part, a€ective and, in part, a confrontation of a€ect and cognition. Assuming that politicians have an objective function in
which electoral and ideological objectives exist along with the maximisation of self-esteem, we

present an empirical model of politiciansÕ de®nitions. The model is tested, using ordered probit
analysis, on a sample of survey responses of 682 Flemish politicians who were active at the
local (municipal) level. The results indicate that all aspects of the politiciansÕ schema are
represented by signi®cant variables. In addition to the measured tax burden, there are signi®cant roles for the ideological position of the electorate, the proportion of taxes that can be
exported, the income of the population and the tax burden in neighbouring municipalities
together with the ideological position of the politician and whether (s)he has been directly
involved in creating the burden. Ó 2000 Elsevier Science B.V. All rights reserved.
PsycINFO classi®cation: 2260; 2340; 2960

*

Corresponding author.
E-mail addresses: John.Ashworth@durham.ac.uk
(B. Heyndels).

(J.

Ashworth),

bheyndel@vnet3.vub.ac.be

0167-4870/00/$ - see front matter Ó 2000 Elsevier Science B.V. All rights reserved.
PII: S 0 1 6 7 - 4 8 7 0 ( 9 9 ) 0 0 0 3 4 - 3

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J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

JEL classi®cation: D78; H71
Keywords: Tax choice; Schema theory

1. Introduction
The positive economic literature considers existing tax systems as the
result of constrained maximising behaviour by self-interested politicians
(Hettich & Winer, 1999). Government is seen as a black box modelled as if
it were an individual maximising expected votes, plurality, or as if it pursues ideological goals. At a lower level of aggregation, the literature starts
from as if assumptions on rational behaviour of representatives and bureaucrats. Typically, in¯uences from decision-making processes at the individual level are assumed away. Psychological and experimental
economics, however, show that these processes have immediate relevance
for economic behaviour, also in the political arena where tax choices are
made (Conlisk, 1996).

A politicianÕs tax choices are based on what he thinks he is deciding on and
on which options he thinks are available and relevant. Therefore, ``(b)efore
we apply the methods of economic reasoning to political behavior we must
characterise the political situation, not as it appears ÔobjectivelyÕ to the analyst, but as it appears subjectively to the actors'' (Simon, 1985, pp. 297, 298).
The present paper looks at how politicians de®ne issues of taxation and
analyses how this de®nition can be explained by current behavioural assumptions from the tax choice literature. To do so, we organise the current
assumptions from (politico-)economics in a schema-theoretical framework
from the psychological literature. As such, the hypothetical economic actor is
linked to the ¯esh-and-blood actor from psychology.
The approach is used to analyse opinions on the level of the tax burden
held by Flemish politicians who were active at the municipal level. A question
on tax opinions was introduced in a large-scale survey which was sent during
the summer of 1994 to local spokesmen of the six ``national'' parties 1 in all

1
These are: ``Agalev'' (green), ``SP'' (socialist), ``CVP'' (Christian democrat), ``VLD'' (liberal), ``VU''
(nationalist) and ``Vlaams Blok'' (extreme right).

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J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

308 Flemish municipalities. 2 They were asked to rate the tax burden in their
municipality onto a discrete opinion scale by answering the following question:
Do you feel the tax burden in your jurisdiction is low, rather low, average,
rather high or high?
Completed questionnaires were returned by 682 local politicians. In Section 2 we discuss how politicianÕs de®nitions can be explained by their tax
burden schemata. Section 3 presents the empirical analysis of the data. A
summary and conclusion are in Section 4.

2. A politicians tax burden schema
In general, a politicianÕs opinion (O ) corresponds with how he de®nes the
level of the burden, that is with where he classi®es the burden on a continuous scale from low to high, so that O 2 Š ÿ 1; ‡1‰. As a rule, we expect
opinions to be positively related to the actual level of the tax burden …TAX †:
O ˆ f …TAX † ‡ k;

f 0 > 0;

…1†

where f …TAX † is the ``true'' translation of tax burdens on the o€ered
opinion scale. 3 The k-term captures biases of individual responses.
Fig. 1 illustrates the transformation. The lower line gives the range of
actual tax burdens. The upper line depicts the o€ered opinion scale. The

2

Our survey was organised ®ve months before the elections of October 1994. It is clear that this timing
may have in¯uenced the relative importance of the respective determinants of politiciansÕ opinions. More
precisely it is possible that electoral determinants of opinions may be at their ``relative peak'' whereas
ideological determinants are less important. Such a dynamic aspect corresponds with the political business
cycle approach in Pommerehne and Schneider (1983) where behaviour ± instead of opinion ± is more
driven by electoral considerations to the extent that the time before election is smaller. A set of panel data
would be needed to test for potential political business cycle e€ects in politiciansÕ opinions. Replies were
received from 760 politicians. The ®nal sample of 682 was achieved by randomly ®ltering multiple
respondents (so that we had at most one respondent of any political party in any municipality) and
checking for a complete set of information (removing a further seven respondents). The full sample is 51%
of the population.
3
We assume that f(TAX) captures the ``cognitive grounds'' of the translation of a tax burden onto an

existing opinion scale. Individual subscripts have been omitted for ease.

24

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

Fig. 1. Translation of tax burden onto opinion scale.

transformation implied by (1), corresponds with an arrow from the lower to
the upper line. Assuming the actual tax burden is TAX , the ``true'' or
``cognitive'' translation is depicted by the plain arrow. Actual responses of
individuals i, j and k (dotted arrows), however, depart from this.
Schema theory suggests that politicians when ``choosing'' k activate an
associative network (Fiske & Taylor, 1991). Here, the concept of taxation is
related to what the decision maker considers relevant characteristics. The
concept of tax burden is the superordinate node and relevant characteristics
of the tax burden are contained in subordinate nodes of the schema. The
schema concept is in the ®rst instance cognitive. Still, ``affective tags'' are
attached to all nodes within the network (Lodge & McGraw, 1991, p. 1361).
Thus, given an ``objective'' reality, evaluative components within the schema

determine k and introduce subjectivity. This arises because the question requires active interpretation and processing of information. Beliefs about
whether a tax burden is high or low correspond with what Boudon (1996)
terms ``type III beliefs''; beliefs that cannot be validated by a confrontation
with the real world because of their inherent subjectivity. The question under
consideration is built around two concepts: the Ôtax burdenÕ and the (implicit)
scale from low to high. It is the latter which involves active information
processing and brings in subjectivity. No ``unique'' scale for tax burden exists: it is not possible to de®ne a ``high'' or a ``low'' tax burden objectively.
Therefore, each respondent must construct a scale for himself, which is by
de®nition subjective.
In order to proceed, it is necessary to, ®rst, de®ne the nature of the nodes
within politiciansÕ tax burden schemata (i.e. the relevant characteristics of the
concept ``tax burden'', where ``relevance'' indicates that the politicianÕs objectives are a€ected), and, second, identify the nature of the a€ective tags on
both superordinate and subordinate nodes.

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

25

2.1. Nature of nodes
A set of subordinate nodes extend the meaning of the concept ``tax burden''. The precise contents of individualsÕ tax burden schemata are unknown.

However, when he thinks about the tax burden, the individual politician
inevitably thinks about these characteristics and the subordinate nodes are
mentally inseparable from the object tax burden.
We hypothesise that the schema nodes can be deduced from his objectives. The way a politician thinks about the tax burden depends upon the
expected in¯uence from this tax burden on the goals he wants to attain. A
basic tax burden schema is given in Fig. 2. We assume that the politician has
a triple objective function with electoral and ideological objectives supplemented by a psychological objective, corresponding to the maximisation of
self-esteem.
The ®rst two objectives correspond to the current politico-economic assumptions of vote-maximisation and maximisation of ideological objectives.
Attainment of the electoral objective is a€ected to the extent that higher tax
burdens lead to more political opposition (loss in votes). Thus, political
opposition associated with the tax burden is a relevant characteristic. From an
ideological perspective, a relevant characteristic of the tax burden is the
implied government intervention. The ®nal objective, self-esteem, is an obvious one in a context where politicians evaluate their own work. Such esteem
is based on self-reference ``through which humans judge their own lives and
relationships'' (Aaron, 1994, p. 15).

Fig. 2. The tax burden schema.

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J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

2.2. Nature of a€ective tags
As taxes are bad, 4 O in fact measures ``how bad'' respondents feel a given
tax burden is. This evaluation may be purely a€ective or it may imply a
confrontation of a€ect and cognition. The former re¯ects a respondentÕs
attitudes (A) towards the symbolic content of the schema nodes. The latter
relates to his appreciation (g) of the actual contents of the nodes. Thus, we
can write the individual speci®c biases in expression (1) as
k ˆ k‰A…S T †; g…RT †Š;

…2†

where ST and RT are the symbolic and real contents of the schema nodes.
2.3. Attitudes
A politicianÕs evaluation depends on his predisposition to be more or less
in favour of given concepts (nodes). Given the nature of taxes, negative
(positive) attitudes towards a speci®c node translate into positive (negative)
values of k. From the political opposition node perspective, politicians expect

the electorate to dislike taxes, and therefore they associate higher taxes with
losses in votes. 5 Taxation thus has negative symbolic value from an electoral
perspective. As a result, politicians classify a given tax burden as higher than
would have been the case if they would have had no electoral motivations.
From an ideological perspective, taxation has clear symbolic content as it
is immediately linked to the (abstract) notion of government intervention.
Unlike electoral objectives, ideological objectives have an individual speci®c
impact. Whereas left-wing politicians are expected to consider government
intervention a ``good'', right-wing politicians will consider it a ``bad''.
Therefore we expect a negative relationship between politiciansÕ ideological
position (IDEO) along a left±right scale and their attitude, and a positive
relationship between ideology and k: left-wing politicians more likely classify
a given tax burden as low than their right-wing colleagues.

4

Some (left-wing) politicians may treat the abstract concept ``taxation'' as a good to the extent that it
symbolises government intervention (see below). Even then, they are assumed to consider the actual tax
burden as a bad.
5

Note that this attitude exists irrespective of the nature of actual opposition: the respondent ``just''
dislikes the idea of opposition.

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

27

Like the intervention node, the ``self '' node generates individual speci®c
attitudes. More precisely, a politicianÕs attitude is expected to depend on his
involvement (INVOL). A respondent maximising his self-esteem de®nes
situations in which he is a part as favourably as possible. We expect a positive
relationship between involvement and attitude, and thus a negative relationship between involvement and k. A respondentÕs involvement depends on
his political position: a given tax burden is more likely classi®ed as low by a
member of a party holding an absolute majority (SINVOL), than by a
member of the opposition. Members of parties within a coalition (CINVOL)
hold intermediate positions.
2.4. Appreciation
The appreciation of the relevant characteristics of the tax burden relates
directly to the ``real world'' contents of the schema nodes (as opposed to the
symbolic contents which underlie attitudes). For example, the political opposition node contains information on actual opposition. Politicians will
classify a given level of the tax burden as higher to the extent that they believe
that it induces more political opposition.
Relevant characteristics within the government intervention node are the
actual size of government intervention and the actual redistribution among
taxpayers or progression of the tax system. As with attitudes, appreciation is
individual speci®c here. A larger intervention or redistribution will be welcomed by one respondent, while another will disapprove. In general, we
expect reactions to depend on a respondentÕs ideological position (left-wing
politicians welcome positive changes in the degree of actual intervention or
redistribution). Formally, this means that opinions on the level of the tax
burden depend on the interaction of IDEO and the actual size and redistributive aspects of government intervention; the latter two empirically de®ned in the next section.

3. Flemish politicians' opinions on the level of the tax burden
Our analysis aims to identify determinants of the expressed opinions. More
precisely, we want to test how evaluative aspects of tax burden schemaÕs
a€ect politiciansÕ opinion. Given the inherently ordered nature of the
responses we proceed by using the ordered probit model of McElvey and
Zavoina (1975). This starts from a generally speci®ed relationship between

28

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

politiciansÕ ``true'' opinions …O † on the one hand and a vector of explanatory
variables (X) on the other:
O ˆ b0 X ‡ e;
where b0 is a vector of coecients and e is the error term. A number of exogenous variables can readily be deduced from the hypotheses in Section 2.
However, the analysis has in effect an unobserved dependent variable and
crucial independent variables are also unobserved (more precisely politiciansÕ
beliefs about the real content of the schema nodes).
Dependent variable: the ``true'' opinion of politicians …O † is unknown. What
we do have are the politiciansÕ opinions as they are translated on the offered
taxation opinion scale. Given the question posed in the survey, ®ve possible
answers are observed and so the actual response O is derived as follows:
O ˆ Low ˆ 0

if O 6 0;

O ˆ Rather low ˆ 1

if 0 < O 6 l1 ;

if l1 < O 6 l2 ;
O ˆ Rather high ˆ 3 if l2 < O 6 l3 ;

O ˆ Average ˆ 2
O ˆ High ˆ 4

if l3 < O ;

where the l's are unknown parameters which delineate the boundaries for
the responses. As Greene (1993) states ``this is a form of censoring'', and the
unknown parameters must be estimated with the parameters of the basic
model.
Independent variables: PoliticiansÕ opinions depend on the actual level of
the per capita tax burden (TAX) but also on their attitudes and appreciation
(which determine k). Their attitudes can be proxied by their ideological position and their involvement with tax policy and so IDEO and INVOL
readily enter X along with TAX. Appreciation, however, is based on politiciansÕ unobserved beliefs about real world events. We assume that politicians
make estimates based on information which is readily available. They can use
the size of the tax burden as a measure of the actual size of government
intervention and some measure of the progression inherent in the tax code
(PROG) as a proxy for the distribution among taxpayers.
With respect to the actual political opposition, matters are more complicated. Information on opposition is only available after elections. When this
information (and also political poll data) is unavailable, we assume
that politicians solve a causal model summarising relevant determinants of

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

29

electoral outcomes. The tax choice literature identi®es sources of opposition
and shows that their impact depends on the form and organisation of opposition (Ashworth & Heyndels, 1997).
The ultimate source of political opposition is public opinion (PO) on
taxation and its burden. This contains cognitive as well as a€ective elements.
In general, public opinion re¯ects the publicÕs attitudes (PA) towards taxation and its appreciation ± h ± of the quantity (Q) and quality (QUAL) of
government intervention. Public opinion determines ``latent'' opposition.
This is translated into actual opposition with the help of interest group activity (IG). Thus, politiciansÕ beliefs on political opposition will be positively
related to public discontent and to the activity of interest groups. Actual
political opposition (OPPOS) can thus be written as
OPPOS  OPPOSfPO ‰PA; h…Q; QUAL†Š; IGg:

…3†

Note that the information problem is not solved by expression (3). The
publicÕs attitudes as well as its appreciation of actual government intervention cannot be observed. Neither can be the activity of interest groups. One
more step is needed to identify observable determinants. Interest group activity is proxied by the number of active interest groups (NIG). The existing
tax choice literature provides a large number of (observable) determinants of
public opinion:
· PA: Public attitude is positively related to the publicÕs ideological position
on a left±right scale (ELEC). A more right-wing electorate will have a
more negative attitude and will therefore more strongly oppose taxation.
Thus, the model predicts that the electorateÕs ideological position a€ects
politiciansÕ opinions: irrespective of their own ideological position, politicians will de®ne a given tax burden as higher to the extent that the electorate is more right-wing. Second, the publicÕs attitude towards taxation
depends on past experience. As suggested by Peacock and Wiseman
(1961), citizens use an historical perspective when evaluating their government. Higher taxes in the past increase political acceptance of higher burdens today. We expect opposition to be positively related to the recent
evolution of the burden (TAXCH).
· h(.,QUAL): VotersÕ appreciation of the quality of governmentÕs performance takes into account the so-called ``®scal connection'' (Lewis,
1982): when evaluating the tax burden, people consider the public services
they get in return. For the individual voter, this quality corresponds with
the inverse of his tax price. In other words, QUAL re¯ects how much
``value for money'' the citizen gets. The ``value'' he gets is negatively re-

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J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

Table 1
Ordered probit estimation of politicians' opinions on tax burdena
Expected sign

Linear

Intercept

+

TAX

+

IDEO

+

SINVOL

ÿ

CINVOL

ÿ

ÿ4.207
(6.471)
0.643
(0.188)
ÿ0.129
(0.204)
ÿ0.841
(0.201)
ÿ0.537
(0.099)

INVOL

ÿ

PROG
NIG

+

ELEC

+

TAXCH

+

DEBT

+

EFFIC

ÿ

EXPO

ÿ

CGRAN

ÿ

UGRAN

ÿ

POP

ÿ

INC

ÿ

FRAG

+

NEIGH

ÿ

TAX  IDEO

+

PROG  IDEO

+

TAX  ELEC

+

PROG  ELEC

+

Logarithmic
ÿ0.001
(1.460)
0.567
(0.108)
0.047
(0.022)

4.314
(9.537)
10.605
(2.265)
0.232
(0.187)
ÿ0.879
(0.203)
ÿ0.551
(0.110)

ÿ0.530
(0.092)
0.105
(0.781)
0.022
(0.026)
1.973
(1.268)
ÿ0.024
(0.046)
0.014
(0.029)
ÿ0.240
(0.423)
ÿ0.064
(0.010)
ÿ1.578
(0.972)
ÿ1.124
(0.829)
0.002
(0.002)
ÿ0.133
(0.017)
1.798
(1.211)
ÿ0.032
(0.017)
0.008
(0.007)
0.002
(0.003)
ÿ0.104
(0.037)
ÿ0.016
(0.015)

0.825
(0.296)

ÿ0.067
(0.008)

ÿ0.011
(0.001)

ÿ0.026
(0.014)

ÿ0.086
(0.021)

8.113
(4.723)
7.262
(1.658)
0.047
(0.022)

ÿ0.524
(0.092)
0.106
(0.071)
0.014
(0.027)
3.511
(1.793)
ÿ0.041
(0.444)
0.059
(0.176)
ÿ0.093
(0.440)
ÿ0.062
(0.010)
ÿ0.766
(0.754)
ÿ0.914
(0.928)
0.030
(0.104)
ÿ5.524
(0.630)
0.973
(1.091)
ÿ0.209
(0.147)
0.144
(0.101)
0.002
(0.003)
ÿ1.241
(0.468)
ÿ0.013
(0.014)

2.197
(0.879)

ÿ0.067
(0.008)

ÿ3.819
(0.391)

ÿ0.270
(0.139)

ÿ0.982
(0.347)

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J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41
Table 1 (Continued)
Expected sign
l1
l2
l3
LL
LL0
v2
Pseudo-R2
v2 (R)
q2
j

Linear
0.690
(0.077)
2.239
(0.099)
3.324
(0.114)
ÿ829.017
ÿ920.905
183.774
0.290

0.498
0.155

Logarithmic
0.671
(0.073)
2.190
(0.097)
3.248
(0.111)
ÿ833.642
ÿ920.905
174.524
0.279
9.250
(13)
0.490
0.144

0.722
(0.079)
2.344
(0.105)
3.460
(0.117)
ÿ812.889
ÿ920.905
216.032
0.330

0.506
0.198

0.689
(0.075)
2.245
(0.099)
3.322
(0.113)
ÿ820.783
ÿ920.905
200.242
0.311
15.788
(13)
0.506
0.194

a

Notes: Estimated standard errors are in parentheses; LL is the maximised value of the log-likelihood
function; LL0 the log-likelihood computed with only the constant term; v2 the test of overall signi®cance
of the equation; v2 …R† the test of the omission of variables from the general model with R the number of
omitted variables; and q2 the proportion of predictions that is correct; Pseudo-R2 is the measure suggested
by Veall and Zimmermann (1996) following Aldrich and Nelson (1984); j is a measure dealing with
predictions outlined by Veall and Zimmermann following Bishop et al. (1975). The test of the differential
effect between the opinions of those with sole involvement and those in a coalition indicates at a 10%
signi®cance level that there is no signi®cant difference between the two groups. Testing using grants instead of the sub-divisions did not lead to signi®cance of the variable.

lated to the share of debt expenditures (DEBT). In fact, debt expenditures
could be seen as payments for services with zero present bene®t. Further,
the ``value'' a citizen gets for his tax money is positively related to the ef®ciency of public non-debt expenditures (EFFIC).
The ``money'' he pays for a given amount of public expenditures may be
lowered by exporting taxes, that is by having non-residents pay part of the
local tax burden. The larger the share of taxes that can be exported (EXPO)
the lower is the e€ective tax price. The presence of grant ®nancing (GRAN)
may have a similar e€ect. Under tax exportation or grant ®nancing, nonresidents pay part of the ``money''. Thus, for any given set of government
services, the perceived ``value for money'' will go up. Finally, the ``value for
money'' a citizen gets is a€ected positively by the size of the local population
(POP). This will be the case if the publicly provided services display some
publicness: in the limiting case of pure public goods, the ``value'' of public
services to any given citizen is not a€ected by the number of people using the
service. So, if additional inhabitants contribute (by paying taxes) the value
for money for initial citizens increases.

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J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

h(Q,á): The level of government intervention can be proxied by the tax
burden. The publicÕs appreciation of this intervention depends ®rst of all
on the publicÕs preferences. These can be proxied by the average income
(INC) and by the ideological position of the population (which adds to
the ``attitude effect'' of ELEC already discussed). At the same time,
evaluation of government intervention is affected by the underlying cognitive process. The complexity of public intervention typically creates informational problems which are likely to persist as the individual has
little incentives to inform himself (Downs, 1957). Systematic misperception of ®scal variables can result. The literature on ®scal illusion gives a
number of sources of such misperception. 6 Most important are the
complexity of the tax system and the role of grant ®nancing. The complexity hypothesis of ®scal illusion says that citizens underestimate the
actual tax burden to the extent that the tax system is fragmented, that
is: composed of many small taxes (FRAG). The illusionary role of
grants is associated with the so-called ``¯ypaper e€ect'': the idea is that
voters underestimate their marginal tax burden to the extent that expenditures are ®nanced more by unconditional grants (these lower the average
tax burden; the ®scal illusion explanation is that voters confuse average
and marginal tax burdens). As we already showed that the mere presence
of grants lowers political opposition, the ®scal illusion hypothesis suggests
that this effect will be even stronger to the extent that the grants are unconditional in nature.
Finally, even given correct information on the tax burden, voters may ®nd it
hard to evaluate this. Therefore, the mimic literature suggests that the individual may use information on the tax burden in neighbouring jurisdictions
(NEIGH) as a yardstick to evaluate the burden in their own jurisdiction. 7
·

6

Oates (1988) and Dollery and Worthington (1996) provide reviews of the literature on ®scal illusion.
The tax complexity hypothesis is typically associated with Wagner (1976). Heyndels and Smolders (1995)
give a detailed discussion. The ¯ypaper e€ect refers generally to the empirical observation that
unconditional grants coincide with larger levels of spending. Many theoretical explanations can be found
in the literature. The ®scal illusion explanation goes back to Courant and Rubinfeld (1979) and Oates
(1979).
7
More generally, it is suggested that voters will compare with ``jurisdictions of reference'' which may or
may not be geographic neighbours. Empirical studies on tax mimicking include Alm, McKee and
Skidmore (1993), Case (1993), Genser and Weck-Hannemann (1993) and Besley and Case (1995). In a
context of small scale local governments it is argued that geographic neighbours make up the relevant set
(Ladd, 1992; Heyndels & Vuchelen, 1998).

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

33

4. Results
As all the above gives no indication of the appropriate functional form to
be used, Table 1 gives results for two di€erent functional forms; a linear and a
logarithmic representation of the independent variables. 8 In each case an
estimation of the complete model is provided, followed by results which
apply various linear restrictions and remove insigni®cant variables. For ease
of interpretation, the anticipated sign indicated in the previous sections is
provided in column 2. As can be seen from the v2 statistics provided, the
removal of the insigni®cant variables and the imposed restrictions are supported by the data.
Overall, the explanatory power is in line with that anticipated from studies
of this type as can be seen by the pseudo-R2 in the 0.28±0.33 region. A
summary indicator for the predictive power of the model is provided by j.
The value shows that there is an improvement in the prediction beyond that
of using the most selected answer (``average'') for all respondents. However,
this improvement, whilst signi®cant, is only moderate. 9 The weight of evidence, certainly in terms of the likelihood function, favours the logarithmic
speci®cation indicating that proportionate changes in the variables so delineated is the more likely manner in which the politicians view these
variables when forming their opinions. This is consistent with the Weber±
Fechner Law which suggests that people consider relative instead of absolute
(price) di€erences (Thaler, 1980). 10
The internal predictions are more explicitly illustrated in Table 2. Here, the
rows and columns give the actual and predicted responses respectively. For

8

A description of the variables and the data sources is given in Appendix A. Only those variables where
taking a log is appropriate are transformed.
9
The statistic is a version of CohenÕs kappa, see Veall and Zimmermann (1996). Following Bishop,
Feinberg and Holland (1975), the null hypothesis that the true value of j is zero is rejected with a test
statistic of 8.00. Further, the 95% con®dence interval for j is [0.132, 0.255] which re-inforces the view that,
whilst signi®cant, j is not large.
10
It can be seen that the general implications of the results are the same for both speci®cations of the
model in terms of the signs and signi®cance of the variables. Diagnostic tests following Murphy (1996)
were considered. These indicated that both models pass the tests imposed and so did not aid in correct
model selection. However, the use of a Davidson and McKinnon (1993) style J-test on a standard probit
where the highest two and the lowest two classi®cations were amalgamated with the middle class assigned
to either the lower or the higher classi®cation indicated that at a 10% signi®cance level, there is evidence
that the logarithmic form contains information omitted from the linear but there is no evidence of the
reverse. This can be taken as further tentative support of the preference for the logarithmic form but is
clearly not overwhelming.

34

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

Table 2
Internal predictions from the logarithmic model
Predicted

Low

Rather low

Average

Rather high

High

Total

Actual
Low
Rather low
Average
Rather high
High
Total

6
8
2
0
0
16

14
13
27
0
0
54

28
55
266
119
22
490

0
0
23
39
19
81

0
0
6
14
21
41

48
76
324
172
62
682

example, of the 48 politicians responding that their tax burden was low
(O ˆ 0), the model predicts only six correctly. What is important, however,
is that predictions which are incorrect fall in one of the neighbouring
categories. This is illustrated by the zero-values in the distant off-diagonal
cells. 11 We can therefore conclude that the equations help explain the formation of opinions about tax burden.
Before turning to a discussion of the signi®cant variables in the restricted
model, it is worth noting that only the growth in burden and population have
unexpected signs. As regards population (POP), the e€ect is positive: the
greater the population, the greater is the perceived burden. This is at odds
with the theoretical prediction in the situation of scale economies. Our result
suggests the existence of diseconomies of scale (crowding e€ects) but these are
insigni®cant. The growth in the tax burden (TAXCH) a€ects opinions negatively, thus rejecting the idea of the presence of an historical benchmark for
the evaluation of the present tax burden. All other variables a€ect opinions
on tax burden in the anticipated manner. For grants (CGRAN and UGRAN), interest groups (NIG), debt (DEBT), the degree of fragmentation
(FRAG) and the interaction terms involving ideology the e€ect is, however,
not signi®cant. 12

11

As the internal predictions for each speci®cation are broadly the same with a small improvement from
the logarithmic model, Table 2 provides only the predictions from this model. Following Siegel and
Castellan (1989), it is possible to calculate a c statistic which measures the relationship between two
ordinally scaled variables. In this case, c ˆ 0.775, which is signi®cant at 1% with a test-statistic of 13.31.
Again, this suggest that the model o€ers some prediction without being in any sense a good ®t.
12
The linear functional form ®nds a more signi®cant role for grants which is not present in the
logarithmic formulation. For the linear model, an alternative restricted speci®cation additionally
containing GRAN and POP is rejected just below a 10% signi®cance. However, the likelihood function is
still lower than that for the logarithmic formulation hence the preferences of the text.

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

35

Table 3
Marginal e€ects of signi®cant variables in the logarithmic model
TAX
IDEO
INVOL
ELEC
EXPO
INC
NEIGH

Burden ˆ 0

Burden ˆ 1

Burden ˆ 2

Burden ˆ 3

Burden ˆ 4

ÿ0.018
ÿ0.004
0.056
0.019
0.006
0.001
0.002

ÿ0.028
ÿ0.007
0.081
0.032
0.009
0.002
0.004

ÿ0.027
ÿ0.006
0.051
0.029
0.009
0.002
0.003

0.049
0.011
ÿ0.128
ÿ0.053
ÿ0.016
ÿ0.003
ÿ0.006

0.024
0.006
ÿ0.060
ÿ0.026
ÿ0.008
ÿ0.002
ÿ0.003

As expected, the tax burden (TAX) has a strongly signi®cant and positive
e€ect. Higher tax burdens are in general classi®ed as higher, indicating the
``cognitive'' benchmark around which opinions vary (as in Fig. 1). Accounting for the interaction with the political colour of the electorate modi®es, but does not change, this interpretation. This can be seen in Table 3,
which contains the marginal e€ects for the signi®cant variables. 13
The politicianÕs ideological position (IDEO) is a ®rst signi®cant ``evaluation'' variable. We ®nd the expected positive e€ect: right-wing politicians
view the burden to be higher ceteris paribus, re¯ecting a more negative
predisposition towards government intervention. 14 Comparatively, the e€ect
of a one unit change in ideological position to that of a 1000 BEF change in
the tax burden suggests that the change in ideological position has around a
quarter of the e€ect of the tax change.
The involvement of politicians (INVOL), indicating whether they are
member of the ruling party or coalition leads them to classify a given tax
burden as lower. This corresponds to the prediction that respondentsÕ in-

13

The marginal e€ects in Table 3 re¯ect the in¯uence of a 1 unit change in TAX (where 1 unit
corresponds to 1000 BEF ± see Appendix A) on the predicted probabilities of each answer occurring. For
example, a 1000 BEF rise in the (average) tax burden would increase the probabilities of answers ``3'' and
``4'' while decreasing the probabilities of the other answers (the marginal e€ects all sum to zero from the
requirement that the probabilities sum to unity). It should be remembered that, whilst the size of the e€ect
is a matter of interest, the signi®cance, i.e. whether an e€ect exists is taken as being more important than
the actual size of that e€ect. The aim of our analysis is to establish the salient features in the politiciansÕ
opinion formation. If a variable is signi®cant, it is important and cannot be omitted without bias, no
matter how small the e€ect.
14
There is a considerable degree of multicollineaity in the full equations, particularly relating to the role
of ideology. As a group the ideology variables are signi®cant but the impact is obscured by the presence of
the interaction e€ects. Removal of pairs of the variables indicated that the ideology term alone was the
dominant variable hence the restricted equation provided.

36

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

volvement leads them to have more positive attitudes. Although the results of
the full model give some evidence of greater involvement if sole power
(SINVOL), as opposed to power in a coalition (CINVOL), exists, it is possible to impose the restriction that the e€ect of power is the same no matter
how exercised (INVOL). Thus, whether an incumbent politician has to share
the political power or not with coalition members does not a€ect his
opinions. In that sense, politicians within a coalition have homogenous
opinions (which is especially interesting given that the survey was organised a
few months prior to elections). It is also interesting to note in Table 3 that the
e€ect of involvement (INVOL equal to 1 instead of 0) is approximately the
same size as the full range of the ideological spectrum.
As for the politiciansÕ attitudes, we ®nd that the electorateÕs attitude, as
proxied by its ideological position (ELEC) has the expected signi®cant e€ect.
This is an important result as it indicates that what politicians think about
the tax level depends also on what the electorate thinks about it. Irrespective
of his own ideological position, a politician classi®es a given tax burden as
higher to the extent that he is confronted with a more right-wing electorate.
This is clear indication that politicians, when forming an opinion, are in¯uenced by the position of the local voters. It reveals the presence of electoral
considerations and motives. Whereas the ideological position of the electorate has the expected e€ect, the interaction of this with the burden has a
negative sign despite the anticipation of a positive e€ect. The results indicate
that there will be more ± not less ± political opposition towards a given tax
burden to the extent that the electorate is more left-wing. It can be seen from
the marginal e€ects that this is the dominant e€ect.
Consideration of possible electoral e€ects also appears from the negative
e€ect generated by the proportion of exportable taxes (EXPO), the populationÕs income position (INC) and the tax burden in neighbouring municipalities (NEIGH). The more taxes are paid by the own (voting) residents, the
higher is the opinion of the burden. The ability to export taxes appears as an
important factor in the minds of Belgian local politicians and, indeed, the size
of the marginal e€ect of EXPO indicates that the perceived impact of increasing the share of exported taxes by one percentage point is around 50%
higher than a marginal change in ideological position. Income of the population has the anticipated e€ect in that the richer the populace the lower is the
perceived burden. A relatively less taxed populace will be less opposed to a
given absolute tax burden. Therefore, a politician who takes into consideration electoral consequences of policy classi®es the tax burden as lower.
Finally, we ®nd evidence of a neighbourhood effect, or ``yardstick opinions'':

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

37

politicians consider a given tax burden as higher to the extent that it exceeds
the level in neighbouring municipalities. This may lead to mimicking behaviour (as is indeed found to exist among Belgian municipalities in Heyndels
& Vuchelen, 1998). As can be seen from Table 3, the marginal effect of a unit
change in neighboursÕ burden has about an eighth of the effect of the same
change in the municipalityÕs own burden.

5. Summary and conclusions
PoliticiansÕ behaviour depends on how they perceive the world. In this
paper, we illustrate how schema theory can link current behavioural assumptions from the tax choice literature to how politicians de®ne tax issues.
The general idea is illustrated through the analysis of how politicians de®ne
the level of the tax burden in their jurisdiction.
We hypothesise a triple objective function in which the politician cares
about electoral, ideological and self-esteem motives. A politicianÕs tax burden
schema summarises what the tax burden ``truly means'' for him and how he
evaluates its di€erent aspects. An ordered probit analysis of a sample of
survey responses of 682 Flemish politicians who were active at the municipal
level of government, shows that di€erences in opinions can be attributed to
evaluative components of the politicianÕs tax burden schema. This evaluation
takes place at two distinct conceptual levels. First, at a symbolic level, politiciansÕ attitudes toward the tax burden a€ect how they de®ne its level. More
precisely, it is observed that the politicianÕs ideological position and his involvement with tax policy a€ect his opinion. Second, at a ``real'' level, politiciansÕ appreciation of relevant characteristics plays a role. We ®nd evidence
that characteristics of the tax burden relating to the respondentÕs ideological
and electoral objectives a€ect his de®nition of the tax burden.
Overall, our results suggest that both attitudes and appreciation have a
bearing on the opinions that politicians hold regarding tax burden and so
provide tentative support for the approach adopted. They o€er some support
for SimonÕs subjective view, suggesting that extensions of the current economic framework are necessary for the positive analysis of taxation. All
aspects of the politiciansÕ schema are represented by signi®cant variables. For
example, self-esteem is re¯ected in the involvement proxy; government intervention by the ideology variable; and political opposition by the all other
signi®cant variables. The latter demonstrates that politiciansÕ opinions on tax
burdens depend also on the electorateÕs views.

38

Table 4
data de®nitions and sources
De®nition

Sources

Average value

TAX

Actual per capita tax burden in the municipality (in 1994) in thousands BEF

12.23

IDEO

Ysebaert and
Asselberghs
(1994)
Ministry Flemish
Community

0.37

TAXCH

Respondents located themselves on a leftÿright scale with values from 0 for
extreme left up to 10 for extreme righta
Dummy that takes the value 1 (0) if the respondentÕs party is (not) a member
of the ruling group. This variable is separated into dummies capturing sole or
coalition power (SINVOL and CINVOL)
Progression of the tax system calculated as the percentage share of income
taxes in the combined revenue from income and property taxes (these taxes
together account for 80% of local tax revenues on average, the former is far
more progressive)
(potential) in¯uence of organised interest groups. Respondents were asked
if various groups had contacted their party in order to in¯uence the political
programme or the list of candidates for the 1994 local elections. NIG gives
the number of interest groups which contacted the respondentÕs party
ElectorateÕs ideological position, calculated as a weighted average of the votes
at the (most recent) 1988 election with the weights being the average value
party members gave to our ideology-questionb
Change in tax burden between 1987 and 1994 in thousands BEF

Ministry Flemish
Community
Own survey

DEBT

Level of per capita debt in the municipality (budget data) in thousands BEF

EFFIC

Eciency of government non-debt expenditures. Calculated as the complement
of the measure of government ineciency as given for the Flemish
municipalities (based on FDH analysis)
Indicator for the share of taxes paid by non-residents (i.e., ®rms and nonresident house-owners) (budget data).c Expressed as a percentage
Share of grants in municipal revenues (budget data). Also sub-divided into
conditional (CGRAN) and unconditional grants (UGRAN)
Number of inhabitants in the municipality in thousands

INVOL

PROG

NIG

ELEC

EXPO
GRAN
POP

4.17

54.31

Own survey

1.41

Ysebaert and
Asselberghs (1994)
and own survey
Ministry Flemish
Community
Ministry Flemish
Community
De Borger and
Kerstens (1993)

4.85

Ministry Flemish
Community
Ministry Flemish
Community
Ministry Flemish
Community

2.55
6.39
0.93

10.36
0.53 (0.37 & 0.16)
24.47

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

Name of
variable

Table 4 (Continued)
De®nition

Sources

Average value

INC

Average income within the municipality in thousands BEF

305.41

FRAG

Fragmentation of the tax systemP
calculated using a standard Her®ndahl index
(this index is given by FRAG ˆ i r…i†2 , where r…i† is the share of tax revenue
coming from tax source i†, as is standard practice in the literature on ®scal
illusion (Wagner, 1976). The greater the fragmentation the smaller the value
Average per capita tax burden in neighbouring municipalities in thousands
BEF

National Institute
of Statistics
Ministry Flemish
Community

Ministry Flemish
Community

12.08

NEIGH
a

0.36

This approach has the advantage that it is directly aimed at the respondentÕs actual position. However, it is likely that individualsÕ have di€erent
conceptions about the scale itself. Di€erences in positions along the left±right axe may then re¯ect di€erences in these conceptions. Therefore, in a
second stage we chose an alternative measure for the ideological position. This measure is based on the respondentÕs party aliation. Each party was
located along the left±right scale on the basis of the average value its members gave to our ideology-question. The underlying assumption is that on
average respondents from any given party have the correct conception of our left±right scale and that within-party di€erences in ideological position
can be attributed totally to di€erences in conceptions of the scale itself. Use of this scale did not materially a€ect the results hence only one set of
estimations is recorded.
b
As a substitute, the ideological position of the electorate was approximated by the share of socialist votes in the 1988 elections, which again did not
have any signi®cant e€ect on the results.
c
The de®nition used in the text implies that local income and property taxes are assumed to be paid by residents. Especially with respect to the
property tax, alternative assumptions are feasible. To account for the possibility that renters shift the tax to home-owners who live outside the
municipality, we added to EXPO a proportion of the property tax corresponding with the proportion of renters in the population. This gave similar
results to those in the text and all signi®cant variables remained unchanged. A still stronger assumption is that property taxes are fully capitalised
into house values and are therefore ``sunk costs'' for all taxpayers. Under this very extreme assumption all property taxes could be considered to be
``exported'' in the long run. Use of this most extreme option increased the signi®cance of FRAG in the preferred logarithmic model and GRAN in
the linear model with all other inferences remaining the same.

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

Name of
variable

39

40

J. Ashworth, B. Heyndels / Journal of Economic Psychology 21 (2000) 21±41

Acknowledgements
We thank Marc Deloof, Harold Hochman, Veronique Weets and two
anonymous referees for useful suggestions. Earlier versions of this paper
were presented at seminars at the Institute for Empirical Research, University of Zurich and at the University of Science and Technology, Dragvoll
(Norway). We thank Iris Bohnet, Lars-Erik Borge, Isabelle Busenhart, J
urg
de Spindler, Reiner Eichenberger, Bruno Frey and Jùrn Rattsù for valuable
and stimulating comments. The British Council and the Fonds voor Wetenschappelijk Onderzoek Vlaanderen are acknowledged for their ®nancial
support.

Appendix A. Data de®nition and sources
See Table 4.

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