Adaptive Political Attitudes: Duty, Trust, and Fear as Monitors of Tax Policy

Theory: Attitudes toward collective obligations adapt in ways that enhance both individual and social well-being. A citizen's trust and duty toward the collective and fear of retribution change in response to changes in costs or benefits associated with the collective. Compliance with collective obligations (e.g., paying taxes) varies with these attitudes, producing an unexploitable strategy capable of maintaining cooperative solutions despite the conflict between collective benefits and individual incentives to free-ride. Hypothesis: Citizens monitor the net benefits gained from collectives by altering their attitudes of trust, duty, and fear. Method: We analyze the natural experiment created by the Tax Reform Act of 1986 to estimate the impact of individual tax changes on attitudes of upper-income taxpayers, using tax returns and two waves of survey data from a national panel of 292 taxpayers. Findings: Trust, duty, and fear increase significantly when taxes decrease, and decrease when taxes increase, thereby adapting as predicted to changes in net benefits. The magnitude of change suggests a modest rate of adaptation that may enhance the stability of cooperative equilibria.