ABSTRACT
Introduction Neoclassical welfare economics offers normative prescriptions premised on the preferences and capabilities of homo economicus. This actor is described as:
i “rational”; ii egoistic; iii with egoism predicated on self-interest narrowly defined in terms of income
or wealth. (Brennan and Lomasky, 1993)
“Rational” behavior is consistent behavior. Predictions are made when homo economicus faces new constraints (relative prices, income) but when preferences are assumed exogenous and constant (Stigler and Becker, 1977). This is the essence of the Allingham and Sandmo (1972) tax evasion as a crime model of evasion. In this chapter, the focus is on the extent to which homo economicus might be deemed “unrepresentative” and the associated implications when considering the question of tax evasion in the light of a different actor. An established behavioral empirical literature now describes a homo-realitus (see Cullis and Jones, 2007) as:
i reliant on bounded rationality; ii concerned with more than pure self-interest;
iii responsive to reference frames (with endogenous preferences).
