Tax compliance researchers begin with the supposition that people compare the marginal benefit of noncompliance (reduced tax payments, for example) with the expected marginal costs, which account for both the likelihood of punishment and its severity. That perspective provides an approach for evaluating the effective penalties uninsured people could anticipate under an individual health mandate. Allingham and Sandmo (1972) first analyzed tax compliance under the assumption that taxpayers are risk averse and policymakers have three policy tools: the marginal tax rate, the probability of audit, and the penalty for misreporting income
