Oleh: Yudistira Permana PhD

Bulan Desember dan Januari, masa di mana hujan sedang deras-derasnya turun di Indonesia. Hampir semua orang mempersiapkan diri dengan membeli dan memakai payung/jas hujan di kala pergi ke luar, memperbaiki kembali talang rumah dan gorong-gorong, sampai pengerukan sungai yang mendangkal. Pun orang-orang hampir pasti mengharapkan laporan perkiraan cuaca adalah hujan pada hari-hari di bulan tersebut. Namun bagaimana jika laporan perkiraan cuaca, di suatu hari di bulan Desember dan Januari, melaporkan bahwa cuaca hari itu adalah cerah? Apakah Anda akan mempercayai sepenuhnya atau berpikir sebaliknya jika hari itu akan hujan?

Kerumitan berpikir terjadi ketika prediksi cuaca tersebut berasal dari lembaga kredibel, seperti BMKG. Lembaga tersebut tentunya telah melakukan prediksi berdasarkan logika ilmiah serta pengukuran yang baik berdasarkan data yang tersedia. Namun individu mungkin saja memiliki intuisinya sendiri yang berlawanan dengan logika ilmiah yang dilakukan lembaga tersebut. Pertanyaannya adalah manakah yang seharusnya lebih dipercaya, intuisi atau logika? Apakah keduanya berlawanan? Ataukah logika berarti berpikir menggunakan akal dan intuisi adalah berpikir menggunakan hati?

Manakah yang benar, berlogika atau berintuisi?

Pertanyaan di atas, setidaknya bagi saya, cukup menggelitik. Apa benar bahwa logika itu harus melepaskan intuisi dan intuisi harus menafikan logika? Baik, sekarang ambil contoh sederhana lainnya. Ketika Anda ditanya berapa rata-rata dari satu set angka [3,2,4,2,1,5,6,5,3,6,8,7,6] maka yang akan Anda lakukan adalah menghitungnya dengan menjumlahkan seluruh angka tersebut lalu dibagi dengan banyaknya kemunculan angka. Dengan sedikit waktu (baik menggunakan kalkulator atau menghitung sendiri) maka Anda akan mendapatkan jawaban sekitar 4.46. Apakah prosedur ini merupakan hasil dari logika atau intuisi?

Dalam hal ini baik intuisi maupun logika bekerja sama untuk menghasilkan prosedur di atas: melalui metode “maximum likelihood” atau “kemungkinan terbesar”. Metode ini mencari kemungkinan terbesar suatu angka untuk muncul sebagai rata-rata set angka tersebut; Ronald Fisher adalah pionir metode ini (Fisher 1922, Fraser dkk 1995). Dengan sedikit “bermain-main” probability density function dari distribusi normal (yang mengakomodasi angka kontinyu antara -¥ dan ¥), Anda akan dapatkan kemungkinan terbesar rata-rata set angka tersebut jatuh pada m dengan formula: . Sekiranya formula yang bagi banyak orang sudah hafal di luar kepala!

Ini bukanlah sebuah kebetulan bahwa pada akhirnya intuisi sama dengan logika. Penggunaan maximum likelihood merupakan ‘jembatan’ yang menghubungkan logika dan intuisi bahwa nilai harapan atas rata-rata dari set angka tersebut berada pada m.

Intuisi atas sebuah logika intuitif

Hal yang mungkin membingungkan bagi pembaca adalah batasan antara intuisi dan logika. Herbert Simon, penerima nobel ilmu ekonomika, berargumen bahwa ada perbedaan karakteristik antara logika dan intuisi (Simon 1987). Logika biasanya dibangun dari alternatif kombinasi dengan perhitungan dan konsekuensi yang jelas. Di sisi lain, intuisi biasanya adalah respon atas kebutuhan untuk memutuskan suatu hal dengan cepat berbasis keyakinan dari pengalaman. Dari sini mulai bisa terlihat koneksi antara keduanya yang mana intuisi dibangun dari logika yang diyakini benar dan dilakukan secara berulang. Sebagai tambahan, intuisi memberikan gambaran secara cepat atas sebuah proposisi, seperti pada contoh kasus prediksi cuaca di atas (Parsons 1980).

Lalu apakah seseorang yang menggunakan intuisi untuk contoh prediksi cuaca di atas melakukan kesalahan, atau ngawur? Bisa jadi tidak karena setidaknya intuisinya telah dibangun dari pengetahuan dan pengalaman yang ada. Studi menyebutkan bahwa manusia pada dasarnya memiliki pengetahuan implisit mengenai logika dasar dan mengalaminya secara berulang dalam rentang waktu yang cukup Panjang (Nakamura & Kawaguchi 2016, Neys 2012). Hanya saja kemungkinan intuisinya akan terjadi lebih kecil daripada prediksi cuaca BMKG mengingat perbedaan data, akurasi alat ukur, dan keunggulan kognitif lainnya.

Bagaimana jika seseorang tersebut, tanpa pengetahuan dan pengalaman, mengatakan punya prediksi dari sebuah intuisi? Nah itu mungkin baru bisa disebut ngawur, atau intuisinya tidak pernah dibangun melalui logika yang baik.

Referensi

[1] Fisher, R. A. (1922). On the mathematical foundations of theoretical statistics. Philosophical Transactions of the Royal Society of London, 222: 309-368.

[2] Fraser, D. A. S., McDunnough, P., Naderi, A., & Plante, A. (1995). On the definition of probability densities and sufficiency of the likelihood map. Probability and Mathematical Statistics, 15: 301-310.

[3] Nakamura, H., & Kawaguchi, J. (2016). People like logical truth: Testing the intuitive detection of logical value in basic propositions. PLoS ONE, 11(12): e0169166. doi:10.1371/journal.pone.0169166

[4] Neys, W. D. (2012). Bias and conflicts: A case for logical intuitions. Perspective on Psychological Science, 7(1): 28-38.

[5] Parsons, C. (1980). Mathematical Intuition. Chapter in “Proceedings of the Aristotelian Society Vol. 80”: Oxford University Press.

[6] Simon, H. A. (1987). Making management decisions: The role of intuition and emotion. The Academy of Management Executive, 1(1): 57-64.

by Lury Sofyan

PhD Candidate at University of Nottingham

Although humankind creates institutions as a foundation for human interactions, there are some circumstances where an institution does not perform well in providing adequate control to inhibit or punish unethical behaviour, nor to stimulate or grant the positive. We have seen that institution, in particular in developing countries, is ineffective in curbing corruptions, bribery and other rule violation acts.

When an institution is weak, it produces an “unbinding” law since the value of the law is not internalized into the belief that touches the heart of the individual in the society and applied in day to day behaviour. The weak institution promotes a corrupted political system that does more harms than goods and most of the time allows only elite groups to gain privileged access to valuable information and resources. Mostly this practice compromises market institutions which in turn benefits only the haves, left behind the destitute, and worsen inequality. The haves, later on, support their political networks as payback through money politics and media control to channelled propaganda which in turn undermining democracy.

A weak institution also damages state capacity. Government spending does not reach its objective since procurement system is corrupted. Tax morale is degraded. People unwilling to pay tax and the tax authority itself is politically weakened to benefit the haves. Quality of public services becomes poor since the government is running out of the budget. Hard Infrastructure such as roads, terminals, ports, public transportations is remained underdeveloped contributing to high transportation cost, higher price of goods & services, and inflation; making the whole economy inefficient. Soft infrastructure such as educations, health and social security system is also inadequate thus discourage human capital development. These all are hindering country capacity to develop and gain prosperity.

One thing that avoids individual to break the law when institution underperformed, among others, is intrinsic honesty. Since honesty construct trust and trust is a key aspect of sustainable performance of firms, industry and even nations (Cohn, Fehr, & Maréchal, 2014). Most importantly, study shows that country which has high honesty or low-rank PRV (prevalence of rule violation) index is found to be rule obeyed (Gächter & Schulz, 2016). Hence, understanding honesty and lie is important to shape a better institution.

General lie theory suggested 3 different perspectives of lie. First, the lie theory that assumes people are dishonest. This theory is in line with the standard economic theory which perceives people as homo-economicus thus lie when they get benefit out of it (Fischbacher & Heusi, 2008). This theory is also in line with the standard cost-benefit model which perceived people as purely individual who think about them self, calculating for their own benefit, and only care about external rewards (Mazar, Amir, & Ariely, 2008). Second, lie theory that assumes people are honest. People are honest because they avoid guilty feeling if others expectation is violated (Dufwenberg & Gneezy, 2000). Third, there is an increasing support of lie theory that situated in between. This theory argued that there is no sharp difference between full honesty and dishonest, rather than a continuum that spread between this contradicts two ends – suggesting elastic justification (Hsee, 1995, 1996). (Mazar et al., 2008) also claimed so-called Self-Concept Maintenance that people are not fully cheating even they have the opportunity to do so. They argued that when people had the ability to cheat, they cheat, but, the magnitude of dishonesty per person is low relative to the possible maximum amount.

When a child born, however, he or she is not inherited with a tendency to lie or honest. It is the surrounding environment that influences people’s belief since people internalize the norms and values of their society (Henrich & Gil-White, 2001). Lie and any other rule violation attitude is contagious; if people live and grow in the area when lie is prevalent, it will affect individual to tend to act lie too. Bad environment crowding out honesty (Frey, 1992; Romaniuc, 2016) and weak institutions and cultural legacies impair individual intrinsic honesty (Gacther & Schultz, 2016). People also react to the unethical behaviour of others, and their reaction depends on the social norms (Gino, Ayal, & Ariely, 2009). When elders do lie, the juvenile will copy and then passes this to future generations as an accepted culture. This fact suggesting a vicious circle effect that keeps institution difficult to move to better equilibrium.

In this very moment, the only question left is the role of religion. How is the role of religion in preventing rule violation act? Does religion prevent people from breaking the rule such as corruptions and bribery? Does religion promote positive social norm such as: keep promises, don’t cheat, do queue, and don’t tell lies? Unfortunately, PRV index shows that religious countries in particular Moslem majority country such as Indonesia, Malaysia, Kenya, Guatemala, Tanzania, Maroco, and so forth have higher rule violation act (higher PRV rank) than less religious country.

More research must be done to understand this. However, learning from the history of Islam, it suggested contrasting phenomena. Historically, Islam gave an external shock to bad institutions at that time and bring the era of darkness to brightness. Islam promoted the value of humankind as the basis of economic, politic and social institution. For example, before the ritual of 5 times prayer and fasting took place, honesty became one of the first fundamental things that Prophet Muhammad S.A.W delivered to Arabian society. His positive attitude became an effective preach of Islam religion and brought him to become a model of a truthful, honest, trustworthy person; the “Al-Amin”. Honesty and trust is lubricant of any transactions and contracts. Prophet Muhammad S.A.W had shown us an example that honesty had brought him to become a successful trader and respected political leader.

While incorporating Sariah study in above the line system such as financial syariah, political syariah, etc. is important, emphasizing the act of honesty and other positive values are crucial since honesty is the fundamental driven of positive behaviour that works below the line in whatever system human live. A study in asset market experiment (Smith, Suchanek, & Williams, 1988 - and its variances) gives a perfect example that dealing only with market institutions - such as excluding interest in the market - in fact, do not omit the incident of price bubbles. Individuals still racing up to trade in the market even the market price is higher than fundamental value showing the animal spirit forcing individual to gain profit as much as possible.

In Quran, the word “honest” appears 64 times, while “lie” 4 times. This two words represent good and bad and have become the root of all human decision making. Supposedly, it shapes individual belief to do something good, it prevents individual to cheat, avoid corruption and bribery. How this honesty in Islam is internalized and rooted in every Moslem behaviour is an important issue that must be tackled and, in my opinion, it must be the centre of Indonesia cultural transformation. Honesty shall underpin every decision in the economy, politics, and social life. In that way, honesty will promote cooperation, stimulate trade, boost economic growth and shape better institution for better prosperity.

If we can generalize rule compliance model by Allingham & Sandmo (1972) – and its variances - besides role model and law enforcement, education perhaps is the key to stimulate honesty. However, it is a challenge to design an educational based system that could effectively influence day to day behaviour and does not stop at school curricula, good grades, and formality perspectives only.

References

Allingham, M. G., & Sandmo, A. (1972). Income tax evasion: A theoretical analysis. Journal of Public Economics, 1 (3-4), 323-338.

Cohn, A., Fehr, E., & Maréchal, M. A. (2014). Business culture and dishonesty in the banking industry. Nature, 516. https://doi.org/10.1038/nature13977

Dufwenberg, M., & Gneezy, U. (2000). Measuring Beliefs in an Experimental Lost Wallet Game. Games and Economic Behavior, 30, 163–182. https://doi.org/10.1006rgame.1999.0715

Fischbacher, U., & Heusi, F. (2008). Learning and Peer Effects Lies in Disguise An experimental study on cheating. Research Paper Series Thurgau Institute of Economics and Department of Economics at, 40.

Frey, B. S. (1992). Tertium Datur: Pricing, Regulating, and Intrinic Motivation. Kyklos, 45 (2), 161–184.

Gächter, S., & Schulz, J. F. (2016). Intrinsic honesty and the prevalence of rule violations across societies. Nature, 531(7595), 1–11. https://doi.org/10.1038/nature17160

Gino, F., Ayal, S., & Ariely, D. (2009). Contagion and Differentiation in Unethical Behavior. Psychological Science, 20(3), 393–398. https://doi.org/10.1111/j.1467-9280.2009.02306.x

Hsee, C. K. (1995). Elastic justification: How tempting but task irrelevant factors influence decisions. Organizational Behavior and Human Decision Processes, 62, 330–337.

Hsee, C. K. (1996). Elastic justification: How unjustifiable factors influence judgments. Organizational Behavior and Human Decision Processes, 66, 122–129.

Henrich, J., & Gil-White, F. J. (2001). The evolution of prestige: Freely conferred deference as a mechanism for enhancing the benefits of cultural transmission. Evolution and Human Behavior. https://doi.org/10.1016/S1090-5138(00)00071-4

Mazar, N., Amir, O., & Ariely, D. (2008). Dishonesty of Honest People: a theory of self-concept maintenance. J. Mark. Res, 45, 633–644.

Romaniuc, R. (2016). Intrinsic motivation in economics: A history. Journal of Behavioral and Experimental Economics, 10(0), 1–9. https://doi.org/10.1016/j.socec.2016.10.002

Smith, V. L., Suchanek, G. L., & Williams, A. W. (1988). Bubbles, Crashes, and Endogenous Expectations in Experimental Spot Asset Markets. Econometrica, 56(5): 1119–1151.

Note: this article has been published previously in GoLiveIndonesia

Oleh: Lury Sofyan

Beberapa waktu lalu, MRT Jakarta baru saja memperbaiki signage (petunjuk arah) yang dipasang di Stasiun Blok M. Info yang didapat dari sosial media @mrtjkt, MRT Jakarta mencoba melakukan mock-up review untuk mendapatkan feed back atas desain signage tersebut. MRT Jakarta paham bahwa keberadaan signage sangat penting untuk membantu membentuk perilaku pengguna MRT (behavioural change) yang dimulai sejak pengguna mencari stasiun, masuk ke stasiun, membeli tiket, masuk ke ticket gate, menunggu kereta, masuk ke kereta, dan seterusnya sampai dengan mereka keluar dari stasiun.

Perilaku pengguna MRT bukan hanya dipengaruhi oleh rasionalitas pikiran mereka, tetapi juga dipengaruhi oleh stimulus kontekstual yang mereka hadapi ketika berada di lingkungan stasiun tanpa disadari. Melakukan desain signage yang intuitif adalah langkah tepat yang dilakukan MRT untuk menjadikan human behaviour sebagai pusat dan tujuan dari suatu kebijakan. Dalam jangka panjang, digabungkan dengan potensi intervensi behavioural science di wilayah lain, lingkungan kontekstual yang dibangun MRT Jakarta dapat menyediakan lingkungan yang menyokong cognitive ease sehingga menggunakan MRT akan selalu menjadi pengalaman yang menyenangkan.

Masih terjadi di Jakarta, belum lama ini Pemda DKI berinisiasi untuk membuka atap beberapa Jembatan Penyeberangan Orang (JPO). Hal ini menuai banyak pro dan kontra. Pertimbangan Pemda DKI membuka atap JPO adalah untuk menjadikan JPO sebagai daya tarik pengguna untuk berswafoto karena pemandangan pencakar langit menjadi jelas terlihat jelas. Dalam kasus ini, lagi-lagi perilaku manusia menjadi pusat perdebatan. Dan memang sudah seharusnya demikian, bahwa perancangan kebijakan atau produk atau jasa harus menempatkan perilaku manusia (human behaviour) sebagai pusat dari diskusi.

Permasalahan yang mengemuka adalah apakah betul kebijakan membuka atap JPO akan berakibat baik pada perubahan perilaku (behavioural change) pengguna jalan? Apakah akan meningkatkan pengguna JPO? Perlu pendalaman yang holistik untuk menjawab ini dan behavioural science menyediakan pendekatan yang menjanjikan.

Kasus lain yang lebih luas yaitu rencana kenaikan cukai rokok mulai 1 Januari 2020 sebesar 16%-26% (tergantung jenis rokok). Kebijakan pemerintah ini menyasar dua keuntungan (double dividen). Pertama, untuk memberikan disinsentif bagi perokok sehingga konsumsi rokok berkurang. Kedua, sebagai sumber tambahan penerimaan negara. Seperti halnya dua kasus sebelumnya, tujuan utama dari kebijakan kenaikan cukai ini untuk mengubah perilaku (behavioural change).

Asumsi rasionalitas bahwa manusia responsif terhadap insentif/disinsentif banyak melatarbelakangi lahirnya kebijakan konvensional. Sayangnya mengubah perilaku dengan pendekatan tradisional melalui pemberian informasi dan stick and carrot seperti ini sering tidak cukup efektif. Walaupun semua tahu bahaya dari rokok dan tahu bahwa hal tersebut adalah keputusan ekonomi yang tidak baik, masih banyak orang tetap mengkonsumsi rokok, bahkan banyak dari mereka berasal golongan masyarakat berpendidikan atau berpendapatan rendah.

Cukup menggembirakan, ternyata pemerintah sudah mencoba menggunakan pendekatan behavioural science untuk mengubah perilaku merokok yaitu melalui framing bungkus rokok yang menggambarkan penyakit yang berbahaya akibat rokok. Apakah ini efektif? Bisa ya, bisa juga tidak; lagi-lagi perlu pengkajian yang mendalam. Tetapi, banyak kesempatan yang terbuka untuk penerapan behavioural science di berbagai bidang yang secara ilmiah sudah banyak terbukti berhasil mengubah perilaku merokok di negara-negara maju.

Ketiga contoh di atas adalah fragmen-fragmen kecil yang menggambarkan keterhubungan yang secara lebih besar menggambarkan hubungan antara institusi dan behaviour di Indonesia. Seperti halnya di belahan dunia lain, tujuan dari seluruh institusi baik itu pemerintah, swasta, ataupun NGO adalah mengubah perilaku (behavioural change).

MRT Jakarta, Pemda DKI, dan Pemerintah Indonesia berkepentingan untuk mengubah perilaku sehingga pada hakikatnya mereka bukan hanya institusi yang berkutat di transportasi (transportation enterprise) atau institusi publik pelayan masyarakat (public service agent). Mereka dan institusi lainnya adalah behavioural center institutions yang seharusnya meletakkan human behaviour sebagai pusat sekaligus tujuan dari kebijakan atau barang atau jasa yang dihasilkan.

Behavioural science berkembang sangat pesat dalam dasawarsa terakhir. Behavioural science mempelajari cara manusia mengambil keputusan dan bagaimana mempengaruhi perilaku manusia. Behavioural science menggabungkan perspektif dari multidisiplin ilmu seperti behavioural economics, sosiologi, antropologi, dan psikologi sebagai perekat di tengahnya.

Richard Thaler adalah orang menggemakan behavioural economics menjadi suatu pendekatan yang dikenal karena lebih mudah dipahami dan bisa dirasakan nyata manfaatnya. Berkat kontribusinya terhadap behavioural economics, dia mendapat Hadiah Nobel pada 2017 melengkapi pemenang Nobel sebelumnya yang telah membangun fondasi behavioural economics seperti Herbert Simon, Vernon Smith, dan Daniel Kahneman.

Thaler mengenalkan istilah "nudge" yaitu suatu pendekatan mengubah perilaku dengan mengubah konteks daripada perubahan pikiran (changing the context instead of changing mind). Istilah nudge ini muncul ketika Thaler dalam mengaplikasikan behavioural economics ke dalam kebijakan pemerintahan Inggris pada masa pemerintahan David Cameron. Thaler kemudian menggunakan judul yang sama untuk buku behavioural economics terlaris sepanjang masa, Nudge.

Behaviour science juga merambah ke engineering. Perpaduan engineering dan psikologi melahirkan konsentrasi keilmuan yang sering disebut human factor. Human factor sekarang semakin banyak digandrungi karena desain suatu produk sudah barang tentu memerlukan penilikan dari sisi perilaku manusia. Aplikasi human factor ini bisa dibilang tidak ada batasan dan sangat bermanfaat. Sebagai contoh di University of Nottingham tempat saya sekarang berafiliasi, seorang peneliti doktoral asal Indonesia mendesain tata letak interface pada cockpit pesawat yang dapat mengurangi beban kognitif pada pilot sehingga kualitas pengambilan keputusan seorang pilot menjadi lebih baik.

Khusus dalam desain apps, human behaviour diadopsi dengan istilah user experience. Fokusnya sama yaitu agar desain apps sesuai dengan kebutuhan dan perilaku manusia. Di area marketing, behavioural science juga semakin dominan dengan mengkapitalisasi perkembangan di bidang neuroscience dan mengadopsinya ke dalam strategi marketing yang lebih maju.

Di Indonesia, perkembangan behavioural science masih sedikit tertatih-tatih. Walaupun kampus-kampus besar dan perusahaan bonafid sudah mulai merambat mengejar ketertinggalan, aplikasinya masih sangat terbatas di tengah potensi besar manfaat yang dapat dirasakan.

Dari sisi akademik, riset behavioural science di Indonesia memberikan comparative advantage pada keilmuan yang sekarang didominasi oleh WEIRD (Western, Educated, Industrialized, Rich, and Democratic). Keunikan budaya dan pribadi orang Indonesia bisa jadi menyimpang dari teori-teori behavioural science yang banyak berasal dari WEIRD tadi.

Dalam praktik, untuk mengubah suatu perilaku, pendekatan konvensional biasanya menggunakan pendekatan stick and carrot melalui law and order terkadang tidak efektif dan memerlukan waktu yang lama dan mahal. Sebagai contoh, dalam konteks kebijakan publik, perlu proses politik yang mahal melibatkan legislatif untuk menelurkan suatu aturan. Tetapi mengubah perilaku melalui pendidikan juga belum tentu efektif.

Behavioural science dapat memperkaya pendekatan konvensional tersebut dengan penerapan behavioural insight ke dalam desain suatu kebijakan atau barang atau jasa. Behavioural science memberikan pemahaman yang lebih mendalam tentang bagaimana manusia membuat keputusan, bagaimana manusia sering terperangkap oleh "bias", bagaimana manusia sangat dipengaruhi oleh faktor kontekstual di sekelilingnya, dan lain-lain.

Melihat arus penerapan behavioural science di negara-negara maju, dan melihat besarnya kesempatan dan manfaat dari behavioural science, bukan hanya MRT Jakarta dan pemerintah Indonesia saja yang akan mencoba menerapkannya; seluruh institusi akan sangat berkepentingan untuk mengubah perilaku dengan cara yang simple, scientific, dan impactful melalui aplikasi dari behavioural science.

Behavioural economist di University of Nottingham, Koordinator Indonesia Behavioural Economics Forum (IBEF)

Tulisan ini dimuat juga di: https://news.detik.com/kolom/d-4809132/mrt-jakarta-jpo-tanpa-atap-cukai-rokok-dan-behavioural-science?tag_from=mnews_beritaTerkait

The frontier of a modern tax system: Tax transparency

by Lury Sofyan

Prabowo’s presidential candidate team recently proposed a strategy to increase tax revenue by lowering the tax rate. Adopting from Russia, they claimed that tax cut will attract more people to pay tax hence widening the tax base. Our understanding of how people pay tax however is not that simple. It is way beyond a traditional micro economics assumption that taxpayers are fully rational hence they will comply more if the tax gets cheaper.

In fact, in line with economics theory, taxation theory has move away from assuming that taxpayer is fully rational. Their decision making is not only determined by tax rate but also influenced by other variables such as society and culture, psychology, personality, cognitive ability, etc. For example, Kirchler ( 2011 ) contended that the element of trust to the government is important in shaping tax compliance; in a higher (lower) trusted government, the level of tax compliance is high (low).

Empirical research also found that lowering tax rate does not necessarily in line with higher tax revenue. In broader context, it stimulates raising to the bottom issue where countries compete to lower their tax rate putting higher pressure to government revenue and compromising the quality of public services. Rather than simply cutting the rate, increasing tax compliance covers a broader and more fundamental effort.

One of the most vivid ideas to level up tax compliance was brought in President Joko “Jokowi” Widodo’s Nawa Cita program. The approach is to construct a more agile tax institution which has already taken place in most of developed countries. Some pros argue that more resources and flexibility given to the tax office is needed to tackle the tax dodger, yet the cons view that too much power could also invigorate animal spirit of fraud. The cons argument, unfortunately, are more profound despite a huge potential benefit from implementing this strategy for the whole nation. This agenda has never been put into practice until now.

The asymmetric information issue between the tax office and the taxpayers also must be understood as the classical root problem of tax compliance that must be tackled at the first place. When the scale of asymmetric information is huge, taxpayers choose to hide their income and become a free rider. But when the scale is low, the space for taxpayers to hide their income is limited and the force to comply with the tax rule is bigger.

In modern approach, third-party data is considered more effective and cheaper to narrow the asymmetric information compare to audit and law enforcement. The data from financial institutions for example could unearth the wealthy individuals who dodge to pay tax. This international movement of easing financial secrecy has been adopted by Indonesia through the Law No.9/2017 and it shows that Indonesia tax jurisdiction has caught up with the latest international act to increase tax compliance. Nevertheless, the latest innovation of the tax system to increase the compliance is unthinkable and out of the box approach.

Industrial revolution 4.0 has been revolutionaries’ humans’ life and put the idea of sharing information to a new path affecting how people interact, trade and live. This way of thinking has its potential to alleviate the problem of asymmetric information in the area of taxation.

Finland has become the frontier to use this information sharing to narrow the asymmetric information and bring transparency at front to level up tax compliance. Every Nov.1, the Finns celebrate the national jealousy day where the tax office open tax data to all citizens. Basically, the idea is that everybody could know how much income and tax that everybody earns. The tax that is paid by neighbor, college, businessman, politician, etc is open to public. The idea is controversial, because it compromises individual right to keep private information. Nevertheless, the benefit for the whole society is potentially immense.

Tax transparency triggers the surrounding society to become a watchdog for every taxpayer. It constructs a network of control which creates a social pressure for everyone to pay tax. This social pressure is a cheap and effective tool to shape a sound comply tax society. This social pressure can be channeled as a whistleblowing mechanism that every citizen could report a potential free rider in the economy who benefited a lot from economic growth but choose not to give it back to the economy through paying tax. It narrows the asymmetric information between the tax office and taxpayer.

It goes without saying that the tax transparency also acts as the monitoring system for the tax authority itself. The tax fraud so far happens because only certain parties have access to data. The risk perception of being caught will alter if the information is put on the table where everybody can see it.

On top of all, in a longer term, this transparent tax system has its potential to shape a more trustable society where family, peers, neighbors, law enforcer, judges, politician and leaders have nothing to hide. Economic literature has stressed that trust is an important social capital that defines economic development path. Higher trust society stimulates more cooperation among citizens, it promotes simpler contract hence inhibits cost of transaction, penalizes corruptive behavior, and give incentives to positive behavior.

Note: this article is also appear in www.thejakartapost.com