Study: Taxes Aren’t Painful


Often, neuromarketing and neuroeconomic research seems to mostly confirm what we already knew, but a study at the University of Oregon produced results that are counter to what one might expect: rather than activating pain centers in the brain, paying taxes activates reward centers – the same areas of the brain that fire in response to food and social interaction.

A three-member team ? a cognitive psychologist and two economists ? published its results in the June 15 issue of the journal Science. The scientists gave 19 women participants $100 and then scanned their brains with functional magnetic resonance imaging (fMRI) as they watched their money go to the food bank through mandatory taxation, and as they made choices about whether to give more money voluntarily or keep it for themselves. The participants lay on their backs in the fMRI scanner for an hour-long session and viewed the financial transfers on a computer screen. The scanner used a super-cooled magnet, carefully tuned radio waves and powerful computers to calculate what parts of the brain were active as subjects saw their money go to the food bank and made yes or no decisions on additional giving.

Researchers found that two evolutionarily ancient regions deep in the brain ? the caudate nucleus and the nucleus accumbens ? fired when subjects saw the charity get the money. The activation was even larger when people gave the money voluntarily, instead of just paying it as taxes. These brain regions are the same ones that fire when basic needs such as food and pleasures (sweets or social contact) are satisfied. [From Paying Taxes Lights Up the Brain]

To be sure, the format of this study isn’t an ideal simulation of real-life taxpayer behavior. First, the money was given to the subjects at the inception of the experiment rather than being, say, taken out of their bank account or paycheck. Second, the “taxed” money was being donated to a charity, perhaps quite different from being absorbed by a faceless bureaucracy perceived to be wasteful and inefficient if not entirely misguided.

The study also confirmed that altruism in general is more or less wired into our behavior. When we behave in a way that helps others, in this case by donating to charities voluntarily, our brain reward centers light up. The Chicago Tribune covered the charitable giving aspects of the study in Donating to charity is good for the brain:

The reward reaction was more intense with the voluntary giving, which the authors argue supports the notion of a “warm glow” phenomenon. “It’s mysterious that human beings among all mammals are so hyper-social that our brains are wired to help other people, even strangers. There’s very little evidence that other animals have that capacity,” said Paul Zak of the Center for Neuroeconomics Studies at Claremont Graduate University. “Economists have always been shocked [by unselfish altruism], and now we have a reason for it: It feels good to do this.”

Not long ago I posted The Joy of Giving vs. The Pain of Buying that looked at other neuroscience-based altruism research. We don’t have any doubt that most people do get a warm glow from donating to a charity they feel is worth – I’m not quite as convinced that writing a check to the IRS will do the same. In fact, one of they key elements of “buying pain” is the perception of value. Buying an item that looks like a bargain is less painful than purchasing an item thought to be overpriced. When one writes a big check to the IRS on April 15, is one thinking, “Wow, what a deal – all these great government services for so little money!” Probably not.

In the real world of taxpayers, we are likely to see conflicts – some definite buying pain based on a perception that the taxpayer is not receiving government services proportional to the amount of taxes paid, and perhaps a bit of altruistic pleasure if the taxpayer perceives that taxes are being used efficiently to support less fortunate citizens. In my case, even though I haven’t stuck my head in an fMRI machine, I’m pretty sure the pain side of tax payments is winning.

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