蝌蚪网 Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Hidden Baggage: Behavioral Responses to Changes in Airline Ticket Tax Disclosure
蝌蚪网 Journal: Economic Policy
vol. 12,
no. 4, November 2020
(pp. 58–87)
(Complimentary)
Abstract
We examine the impact of a January 2012 enforcement action by the US Department of Transportation that required US air carriers and online travel agents to modify their web interfaces to incorporate all ticket taxes in up-front, advertised fares. We show that the more prominent display of tax-inclusive prices is associated with significant reductions in consumer tax incidence, demand, and ticket revenues along more heavily taxed itineraries. In particular, the fraction of unit taxes that airlines passed onto consumers fell by roughly 75 cents for every dollar of tax. These results present evidence of consumer inattention in a novel institutional setting featuring quasi-experimental variation in tax salience, economically significant tax amounts, and endogenous price responses.Citation
Bradley, Sebastien, and Naomi E. Feldman. 2020. "Hidden Baggage: Behavioral Responses to Changes in Airline Ticket Tax Disclosure." 蝌蚪网 Journal: Economic Policy 12 (4): 58–87. DOI: 10.1257/pol.20190200Additional Materials
JEL Classification
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- H22 Taxation and Subsidies: Incidence
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- H31 Fiscal Policies and Behavior of Economic Agents: Household
- L84 Personal, Professional, and Business Services
- L93 Air Transportation