Economic psychology and the emotional perception of fiscal illusions

Abstract

Objectives Economic psychology is a discipline that deals with the mental mechanisms and processes underlying consumer and other economic behaviour of a fiscal illusionary nature, through specific perceptions of nominal and real values in taxed and financial processes (psychology of taxation, interest rates, or inflation. Material and methods The main objective of the thesis is to present the elements of perception of tax reality through the prism of fiscal illusion related to nominal and real rates of taxation, taking into account elements of behavioural psychology. Results The general assumption is that public authorities subject to the constraints of fiscal policy rules should implement reforms to improve public finances. In practice, it is possible to encounter actions to ‘circumvent’ these rules by deliberately creating fiscal illusions. In this respect, they have a rich catalogue of measures at their disposal. Conclusions As a result, they build up a false perception of the possible democratic choices, i.e. they are subject to fiscal illusion. This results in permanent budget deficits that lead to rapid debt accumulation

Keywords

• economic psychology
• behavioural psychology
• emotional behaviour
• social justice
• behavioural economics
• fiscal illusions
• adams' theory of justice