Minimizing the Shadow Economy
How to minimize the use of cash?
Cash money is an acceptable and easy form of payment – especially popular for money launderers, criminal organizations and terror funding, when lacking the proper supervision. In Israel, the extent of the shadow economy is one of the highest in the West – about a fifth of the financial activity. This does not only harm the country's treasury, but also increases the tax burden for the law-abiding citizens, damages the ability of businesses to compete with those "working in the shadows", intensifies the feeling of injustice and effects the social cohesion and the values of the rule of law. As part of a series of experiments, we are testing the effect of using behavioral tools such as: a foot in the door, personal appeal, default, social norm and more, regarding the responsiveness to pay taxes and on minimizing the use of cash.