An Experimental Study of Taxes

I went to a psychology study at the Harvard Business School last week. It was an interesting experiment. I was told to type in a series of 9 symbols repeatedly, and that I would make 2 cents apiece for each line I typed. Easy enough. For ten minutes, I typed furiously away trying to see how fast I could type and how much money I could make as a broke college student. I ended up making $2.22. Not bad for ten minutes work, but also a low value for what I thought would be achievable. Afterwards, I was shown what I had typed with each line stacked atop the next. It looked like hieroglyphs from Ancient Egypt or a Totem Pole from the Native Americans in the Northwest Pacific, I could not decide which. I was then again asked to type rows of nine for ten minutes, but this time the game changed. I was told that I was “taxed” one penny per line, or about fifty percent, of my earnings. This, to me, meant that I was still making one penny per line rather than two, which was more money than I would have had sitting at home for the same ten minutes. Both ten minute intervals had the option of surfing the web instead of typing for cash. As I typed furiously away the second round, my earnings adding up to a measly $1.35, I could not help but listen to the key boards around me. Many fell silent on the second ten minute interval. This just made me want to type faster to make even more pennies, hoping to pay at least for my bus fare to the campus. At the end of the session, we were asked what we saw when we typed.

At that point, I could not tell if we were being studied to see our actions when faced with a “tax” of fifty percent of our earnings, or a kind of ink-blot test in which they determined our emotions from what we saw in the symbols. I have since decided that it was the former. But as I mindlessly typed during the second ten minute session, I could not help but think about how the tax translated to the “real” world, as opposed to our virtual world of typing hieroglyphs. A fifty percent tax is one higher than any American pays, and is equal to some countries considered to have the highest taxes in the world (for example in Scandinavia). But I still worked hard to earn the cash I would not have otherwise had, regardless of the diminished earning potential due to taxes. I wonder if this would hold true when considering real lifetime wages. I think for a person like myself, I would continue to work hard to keep my head afloat. However, clearly there are some people who would rather surf the web than make an extra dollar, and that must be accounted for in public policy making.