Tax Literacy of Students: Conceptions and Misconceptions

Author(s):

Nora Cechovsky(presenting / submitting)

Conference:

ECER 2017

Network:

Emerging Researchers' Group (for presentation at Emerging Researchers' Conference)

Format:

Paper

Session Information

ERG SES H 02, Vocational Education and Training

Paper Session

Time:

2017-08-22

11:00-12:30

Room:

W3.11

Chair:

M. Allyson Macdonald

Contribution

Nowadays, young people all over the world start making economic decisions at an early stage of their lives. Economic and financial decisions should be based on knowledge rather than on impulse as was already stated in 1970 by the economist George Stigler (1970):

“The citizen of a democracy is called upon to judge public policy in a thousand directions–military, educational, medical, economical and recreational, for example–he will make better decisions if he is well-informed.” (p. 77)

International organizations such as the OECD foster initiatives and research in the field of economic literacy (Greimel-Fuhrmann, 2012/13, p. If). In Austria, the importance of economic education is reflected by a recently issued fundamental decree on an educational principle. This decree is valid for all schools in Austria, therefore, economic education should be integrated into various subjects. In detail, this decree would enable students “[…] to exercise their roles of economic citizens, members of the workforce, and consumers in a competent and ethical manner” (BMBF, 2015, p. 2).

Tax literacy is one integral part of economic literacy that has not yet been thoroughly researched yet. Therefore, this project builds on previous research in the field of economic literacy and economic competence. There are several definitions of economic literacy or economic competence (“ökonomische Kompetenz”), which can be seen as a similar concept within the German research area (Schlösser & Schuhen, 2011 p. 6). Schumann, Oepke and Eberle (2011, p. 55) in accordance with various other authors (Baethge et al., 2006; Wuttke, 2008) define economic competence as economic knowledge, a prerequisite for solving economic problems, interest in economic problems as well as the motivation to solve them and attitudes and values to be able to responsibly deal with the problems.

Thus, three major areas of interest for research within economic competence can be derived:

cognitive aspects related to economic content,
motivational-affective aspects and
behavioural aspects towards individual and societal well-being.

The main goal of this research project is to study these three areas as well as their interrelationships among students from commercial colleges in Austria. Therefore, the following research questions will be answered:

What tax-related knowledge, conceptions and misconceptions do students of commercial colleges in Austria have? (interview study)
What knowledge, attitudes, social norms and perceived behavioral control concerning taxation do students of commercial colleges in Austria have? (quantitative study)
What interest concerning taxation do students of commercial colleges in Austria show? (quantitative study)
What behavioral intentions towards tax compliance do the students show? (quantitative study)
Which relationships can be found between the different factors constituting tax literacy as well as demographic variables? (quantitative study)

Within this project factual, conceptual and procedural knowledge (Krathwohl, 2002, p. 214) within the field of taxation is relevant. Furthermore, this project will focus on knowledge that is needed when acting as an economic citizen, a member of the workforce or a consumer (Remmele, 2016, p. 22f). Interest is defined as individual interest, that is enduring and related to knowledge and performance (Renninger et al., 2014, p. 7). The theoretical base for the relationship between attitude and behavior is the theory of planned behavior by Ajzen (1991). Kirchler & Wahl (2010, p. 333) detected four different behavioral intentions from existing literature, which can be measured through the tax compliance inventory: TAX-I. The behavioral intentions for compliance can be voluntary or enforced. The intentions underlying non-compliance are tax avoidance or tax evasion.

Since problem-centered interviews on the conceptions and misconceptions of the students (research question one) have already been conducted and analyzed, these results will be presented. The quantitative study is currently in its pre-test phase.

Method

Within this study qualitative and quantitative methods are applied in a sequential way. Since there is limited prior research on the tax literacy of students in Austria, the first phase concentrated on a qualitative exploration. Therefore, teaching materials and textbooks were analyzed and interviews were conducted. The results as well as relevant items from existing instruments now provide input for developing a questionnaire on tax literacy (knowledge, interest, attitude, social norms, perceived behavioral control, behavioral intentions). After conducting the quantitative study and analyzing the data, the qualitative results will be revisited to get in-depth information for explaining the quantitative results. The target group consists of students who attend the 4th level of commercial colleges in Austria. Twenty-two interviews were conducted. For the quantitative part of the study a sample of at least 500 students attending the 4th level of commercial colleges in Austria will be part of the main study. For the pre-test of the self-completion paper- and-pencil questionnaire a sample of approximately 100 students will be chosen. The interviews provide an insight in the concepts and misconceptions of the students (Osborne & Gilbert, 1980). Students can perceive a topic differently than the way it is understood and taught by the teacher (Marton, 1981, p. 183). Furthermore, tax related issues are complex and a lack of knowledge leads to myths and misinterpretations (Kirchler, 2007, p. 40). Therefore, a guideline for problem-centered interviews according to Witzel (2000) was developed. The interviews started with open-ended questions (e.g. “What do you associate with the term “taxes”?) followed by in-depth questions depending on the students answer (Lamnek, 1995). The interviews were then be transcribed and analyzed to get insights into the conceptions and misconceptions of the students and to develop a test for tax literacy. Concerning the questionnaires developed during the project, special attention will be paid to meet the quality criteria of test development: objectivity, reliability and validity. The evaluation of the scales depends on the test format. The format of the knowledge test will be multiple choice and the other items will be based on the Likert rating scales.

Expected Outcomes

The results of this study can impact on three different levels. Firstly, they add to the growing field of research on tax literacy. Secondly, the findings can stimulate discussion on an educational-policy level. Thirdly, the results can add value on a didactical level. This project will be a contribution to the broad field of economic literacy and stimulate future research on the interrelationships between interest, knowledge, attitudes and behavioral intentions. As mentioned in the introduction, there are only a small number of studies, which deal with the aspect of tax literacy although taxes are an omnipresent topic in business. Furthermore, it should spread light on one specific facet of economic literacy, by applying an interdisciplinary approach. Theories from research within pedagogy, psychology and economy will be combined within this project. On an institutional level this study should stimulate discussion about the importance of tax knowledge for tax compliance. Therefore, this study could result into arguments for explicitly integrating this topic into school curricula or for increasing the efforts concerning adult education programs within the field of tax literacy. Additionally, the results can emphasize the importance of a rather simple tax law, education and training offers on tax literacy as for example Kirchler (2007, p. 39) proposes. On a practical school level the identified conceptions and misconceptions can be relevant. Previous research shows that attitudes change, if the topic is relevant and the arguments are good (Bierhoff, 2006, p. 343). Furthermore, the identified knowledge areas, resulting in a test on tax knowledge and abilities, can be seen as relevant competences for consumers, members of the workforce and economic citizens.

References

Ajzen, I. (1991). The theory of planned behavior. Organizational behavior and human decision processes, 50(2), 179-211. Baethge, M., Achtenhagen, F., Arends, L., Babic, E., Baethge-Kinsky, V. & Weber, S. (2006). Berufsbildungs-Pisa. Machbarkeitsstudie. Stuttgart: Steiner. Bierhoff, H.-W. (2006). Sozialpsychologie: Ein Lehrbuch: W. Kohlhammer Verlag. BMBF (2015). General Decree on the cross-curricular principle of economic and consumer education. Retrieved from https://www.bmb.gv.at/ministerium/rs/2015_15_en.pdf?51qvsg. Greimel-Fuhrmann, B. (2012/13). „Don’t Know Much about Economics and Business.“ Economic und Financial Literacy als wesentliche, jedoch vernachlässigte Bildungsziele. WissenPlus, 13(4), I-VIII. Kirchler, E. (2007). The economic psychology of tax behaviour. Cambridge University Press. Kirchler, E. & Wahl, I. (2010). Tax compliance inventory TAX-I: Designing an inventory for surveys of tax compliance. Journal of Economic Psychology, 31(3), 331-346. Krathwohl, D. R. (2002). A revision of Bloom's taxonomy: An overview. Theory into practice, 41(4), 212-218. Lamnek, S. (1995). Qualitative Sozialforschung. Bd. 2: Methoden und Techniken (Vol. 3. Auflage). Weinheim, München: Beltz. Marton, F. (1981). Phenomenography—describing conceptions of the world around us. Instructional science, 10(2), 177-200. Osborne, R. J. & Gilbert, J. K. (1980). A technique for exploring students' views of the world. Physics Education, 15(6), 376. Renninger, A., Hidi, S. & Krapp, A. (2014). The role of interest in learning and development: Psychology Press. Remmele, B. (2016). Was sie umfassen und wie man sie misst. Ökonomische Kompetenzen. DIE Zeitschrift für Erwachsenenbildung(1), 22-25. Schlösser, H. J. & Schuhen, M. (2011 ). Ökonomische Grundbildung. Siegener Beiträge zur Ökonomischen Bildung 4/2011 Schumann, S., Oepke, M. & Eberle, F. (2011). Über welche ökonomischen Kompetenzen verfügen Maturandinnen und Maturanden? Hintergrund, Fragestellungen, Design und Methode des Schweizer Forschungsprojekts OEKOMA im Überblick. In U. Faßhauer, J. Aff, B. Fürstenau & E. Wuttke (Eds.), Lehr-Lernforschung und Professionalisierung. Perspektiven der Berufsbildungsforschung (pp. 51-63). Opladen: Farmington Hills. Stigler, G. J. (1970). The case, if any, for economic literacy. The Journal of Economic Education, 1(2), 77-85. Wuttke, E. (2008). Zur Notwendigkeit der Integration ökonomischer Bildung in die Allgemeinbildung und in die Lehrerbildung. In D. Bolscho & K. Hauenschild (Eds.), Ökonomische Bildung mit Kindern und Jugendlichen (pp. 133-144). Frankfurt a. M: Peter Lang. Witzel, A. (2000). The problem-centered interview. Paper presented at the Forum Qualitative Sozialforschung/Forum: Qualitative Social Research.

Author Information

Nora Cechovsky (presenting / submitting)

Vienna University of Economics and Business

Institute for Business Education

Vienna

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