About the research and insights
We reviewed more than 50 theoretical and empirical research papers from Australia, New Zealand, Canada, the United Kingdom, the United States, and Scandinavian countries. Our priority was to locate and examine scholarly, peer-reviewed studies focusing on consumer and financial literacy education, with a particular emphasis on teaching and learning about taxation and superannuation. Search terms included: financial literacy education; citizenship education; taxation education; superannuation education; pension education; tax culture; ethics education; and moral education. Studies of adult populations were consulted with a view to drawing sensible inferences and implications for school education. We found there to be a lack of robust research measuring the impact of taxation and superannuation education at school. In this section, we present and discuss insights from our critical review in 4 parts: studies involving adults (which usually draw inferences about financial literacy education at school); studies involving teachers; issues in evaluating educational impact; and implications for educating children and adolescents.
Studies involving adults
Financial literacy education is widely acknowledged as an important aspect of schooling. In research recently commissioned by the ATO, more than 1500 adults, two thirds with school age children, completed an online questionnaire (Rutley, Bishop, and Gurney, 2018). The participants were asked to self-report their level of knowledge and confidence about taxation and superannuation. The Report, Teaching the Youth, reveals interesting insights for schools and teachers. First, parent participants typically expressed low levels of personal knowledge and confidence about taxation and superannuation. Second, regardless of parental status, the majority of those surveyed believed that such knowledge is a critical life skill for young people, and an educational responsibility that could be shared between families and schools. Third, almost all participants supported the compulsory inclusion of tax and super education in the school curriculum and signalled their view that such teaching and learning might appropriately occur in upper primary school and again in Year 10, when students reach working age.
Studies of financial literacy levels and financial literacy education often ask adult participants to reflect on their learning opportunities at home and at school. For example, in the United States, Bernheim, Garrett, and Maki (2001) investigated whether compulsory financial literacy education in high school correlated with responsible financial behaviour in adulthood. They surveyed 2,000 adults aged 30-49 who graduated from high school during the period curriculum mandates were introduced in many states and found that self-reported saving rates were higher for students in states where financial literacy education had been compulsory for 5 years. This study highlighted that there is no 'quick fix' solution to financial literacy education and there is merit in taking a long-term view when developing and evaluating policies and programs.
In terms of understanding educational needs related to taxation, a number of Australian studies have explored the relationship between culturally mediated narratives of fairness and perspectives on taxation administration and compliance (see Rawlings, 2016; Torgler and Murphy, 2004). These studies acknowledge that young people are socialised into financial practices over the course of their lifetime by family and social networks. A comparative study involving participants from Australia, Singapore, and the United States found that the first and most influential factor affecting taxation compliance is taxpayers’ own personal moral beliefs, along with the beliefs of those close to them (eg, family and peers) (Bobek, Roberts, and Sweeney, 2007). The next most significant factor was societal views of 'proper behaviour'. Similarly, Braithwaite, Reinhart and Smart (2010) sought to discover whether low taxation compliance among young adults is associated with lack of knowledge, less moral obligation, or a greater general scepticism towards government authority. They found that a 'loss of tax ethics, lack of knowledge about what is required, interest in game playing with the tax authority, reliance on family and friends, and low likelihood of being caught for evasion all play a role in weakening the normative fabric of taxpaying culture' (Braithwaite et al., 2010, page 274). Sweden has a reputation as a socialist country because of its redistribution of a relatively high level of taxes (almost 45%) relative to the OECD average (Dawson and Smith, 2018). A recent analysis of all Swedish taxpayers found tax avoidance behaviour spreads within communities however not all individuals choose to participate in this behaviour (Alstadsæter and Jacob, 2017). These studies reveal that taxpayer attitudes and behaviour are influenced not only by knowledge, skills and understanding, but by complex and interacting affective, social, and ethical considerations that school education might purposefully explore.
With reference to superannuation, Worthington (2008) investigated the role of demographic, socioeconomic, and financial characteristics in determining knowledge and perceptions of Australia’s system. He found Australians’ understanding of superannuation to be limited in a number of key areas, including knowledge of the compulsory employer contribution, interpretation of fund performance statements, and retirement planning. He also found that knowledge varies by demographic and socioeconomic groups, and is low for students, the unemployed and those from non-English speaking backgrounds. Likewise, Chardon (2014) measured levels of tax knowledge, confidence, and attitude amongst Australian and found that 'confidence in tax and superannuation issues is likely to be lower for females, younger age brackets, those on lower incomes and those with less exposure to paid work' (page 47). With reference to pension reform in the United Kingdom, Whitehouse (2000) found that while confidence in the superannuation system is important for all people, the young have the most to gain from superannuation education since retirement is still a long way off. Grace, Weaven and Anderson (2008) found that engagement with superannuation grows with age, perception of own superannuation knowledge, and consideration of future consequences, but not with knowledge or education about the mechanics of superannuation.
Psychological research recognises that the cognitive processes associated with problem-solving and decision-making are both rational and emotional (e.g., Panksepp and Biven, 2012). Values learned within families have been found to be particularly influential in the formation and development of attitudinal and behavioural tendencies (Homer and Kahle, 1988), including financial behaviour (Shim, Xiao, Barber, and Lyons, 2009). This means that financial problem-solving and decision-making are highly complex activities. It is therefore unsurprising that behavioural economics research compels us to consider that financial problem-solving and decision-making depends as much on affective factors (values, expectations, emotions, and family experiences) as information taught at school (de Meza, Irlenbusch, and Reyniers, 2008). As Lusardi and Mitchell (2007) argue, while financial literacy contributes to positive financial behaviour, school education alone is not sufficient to encourage people to take action.
Studies involving teachers
To the extent that they are ultimately responsible for enacting the curriculum, teachers are fundamental to financial literacy education at school. Various studies in the United States have sought to explore teachers’ attitudes, knowledge, and capacities when it comes to financial literacy education. Loibl (2008) found that in most Ohio high schools, financial literacy topics were addressed as part of elective, rather than compulsory, courses. Way and Holden (2009) undertook a national survey of preservice and practising K-12 teachers in the US. They found that while most of the respondents agreed that financial literacy education was important, only 30% were involved in teaching personal finance topics. Almost half believed that financial literacy education is too complex for primary school-aged children. By contrast, Otter (2010) found that the majority of California classroom teachers believed that financial literacy education should begin in elementary school (the equivalent of primary schooling in Australia), with the most appropriate approach being stand-alone courses and embedding concepts in other courses (i.e., an interdisciplinary approach).
A study by Neill, Berg and Stevens (2014) in New Zealand explored the financial literacy of secondary students and its place within secondary school programs. They found that while nearly all school leaders and teachers agreed it was important for all students to learn financial literacy, slightly fewer agreed that it should be included in their school’s programs. There was agreement between the surveyed teachers and students that parents and caregivers were the most important source of financial literacy teaching. Interestingly, there was disagreement between teachers and students related to the other key sources for financial learning for students. For example, while half of the teachers viewed banks as a key source of financial literacy learning, only 11% of students agreed that they learnt a lot from banks. By contrast, teachers ranked peers as the least influential source of financial literacy learning, whereas a third of the students responded that they learned some money management skills from their peers. Overall, these findings indicate that many teachers have a limited understanding of financial literacy and how it might be most impactfully integrated into school programs and classroom teaching.
In Australia, Sawatzki and Sullivan (2017) explored primary teachers’ perceptions of the opportunities for building financial literacy among 10-12 year-old children. While three quarters of the teacher participants in their study agreed or strongly agreed that they were financially literate, only around half indicated being confident about teaching financial literacy and there was strong interest in professional learning in this area. Sawatzki and Sullivan (2017) argued that there is a need to expand teachers’ notions of what it means to be financially literate beyond best buy and change calculation activities and to equip them with sophisticated pedagogical practice. They noted the importance of classroom tasks with multiple possible solutions, which provide students with the opportunity to learn to identify the various options available and compare and contrast these in order to make an informed financial decision.
Sawatzki, Zmood, Forsyth and Downton (2017) found that few Victorian secondary schools offer compulsory and/or elective subjects or units that are dedicated to teaching and learning about consumer and financial literacy. They asked secondary school commerce teachers to nominate the 3 most important things students should learn about money by the end of Year 10. Taxation ranked fifth on the list, being suggested by one in 5 of the teacher participants. Superannuation ranked tenth on the list, being suggested by only one in 10 teacher participants. While the vast majority of the teachers surveyed (75%) reported having taught Year 7-10 Economics and Business, only 75% of these reported teaching students to make sense of a payslip, including tax and superannuation calculations (Sawatzki et al., 2017). Less still (66%) had taught students to make sense of financial documents like tax invoices and bank statements (Sawatzki et al., 2017). These findings reveal that despite a robust curriculum and significant efforts to raise the profile of consumer and financial literacy over the past decade, the way the curriculum is enacted in schools and classrooms still varies.
Issues in evaluating educational impact
Despite a proliferation of online curriculum resources for teaching and learning about money, there is limited research to support that this approach is measurably improving student learning outcomes. Amagir, Groot, van den Brink and Wilschut (2018) completed a systematic literature review to evaluate the effectiveness of financial literacy education programs and interventions for children and adolescents. They found that school financial literacy programs may improve children’s and adolescents’ financial knowledge and attitudes, but there is little research on the impact of this learning on actual financial behaviour long-term. Similarly, Fernandes, Lynch and Netemeyer (2014) conducted a meta-analysis of the relationship of financial literacy and financial education to financial behaviour in 168 papers covering 201 prior studies. They concluded that the impact of educational interventions, even large educational interventions, decays over time with negligible impact beyond 20 months. They also noted the importance of tying teaching and learning to specific financial contexts and behaviours.
In Australia, consumer and financial literacy education research is characterised by surveys, education programs, and program evaluations typically backed and branded by the finance industry. This style of research tends to equate educational impact with web hits, program reach, and stories of engagement and enjoyment. Such findings should be treated with caution. For example, ASIC reports that MoneySmart TeachingExternal Link has been accessed by more than 6200 (over half of all) Australian schools (ASIC, 2017). Likewise, the Commonwealth Bank reports that its Start Smart program reaches more than 550,000 students in more than 2,000 schools annually (Commonwealth Bank, 2018). While these program evaluations confirm that schools and teachers choosing these resources find them to be engaging and enjoyable, neither includes an analysis of student financial literacy assessment data before and after specific interventions.
The OECD Programme for International Student Assessment (PISA) is the only benchmarked and rigorous measure of student financial literacy learning in Australia. OECD PISA assesses 15 year-olds’ ability to apply knowledge and skills when problem-solving. OECD PISA included a financial literacy assessment in 2012 and 2015. Broadly, Australia’s results reveal the important contribution of reading and mathematical literacies to financial literacy. A strong correlation was noted between Australian students’ reading literacy and financial literacy (0.75) and mathematical literacy and financial literacy (0.80) (Thomson and de Bortoli, 2017). These findings suggest that teaching and learning programs designed to build reading and mathematical literacies through meaningful and useful real world financial contexts could be the key to improving financial literacy achievement. With specific reference to taxation, OECD PISA 2015 asked student participants to distinguish between gross and net pay (the difference between one’s pay before and after tax and other payments have been deducted). Only 37% of Australian student participants were able to do this. Since only half (52%) of the Australian student participants reported working outside school hours, a payslip is an example of an everyday financial document that would be within the realms of some, but not all, adolescents’ personal experience. It seems reasonable to expect that school might prepare Australian students to read and interpret these and other financial documents.
Implications for educating children and adolescents
Educating school students about taxation and superannuation is an example of anticipatory socialisation. This means that the knowledge, skills, and capabilities being developed relate to adult roles and may have limited relevance for children and adolescents (Shim, Barber, Card, Xiao, and Serido, 2010). Teaching about superannuation can be particularly challenging given that retirement planning is generally not a priority for adolescents, who have more immediate financial goals and interests. School students bring to their learning knowledge and understandings filtered through their social and cultural lenses (Vale, Atweh, Averill, and Skourdoumbis, 2016). Given that Australia is multicultural, such knowledge and understandings will inevitably reflect families’ financial values and practices based on exposure to taxation, pension and superannuation systems in families’ countries of origin (Kountouris and Remoundou, 2013). Research shows that financial literacy learning is enhanced when teaching and learning is strategically situated in both familiar and unfamiliar contexts that students deem to be meaningful and useful to their lives beyond school (Sawatzki, 2017). This suggests that the onus is on schools and teachers to convince students that teaching and learning about taxation and superannuation can be meaningful and useful. Doing so requires finding interesting, if not novel, ways to connect students’ informal and formal opportunities to learn.
The studies considered in this discussion suggest that education must aim to do more than transmit knowledge. Education must intrinsically motivate young people to actively seek out and engage critically with financial information. Such a critical orientation is important to identifying and understanding the financial choices one will face over a lifetime, including the potential impact of any future economic and financial reforms. Educating students about taxation and superannuation needs to be nuanced, acknowledging the complexity of the current systems, and preparing young people for the possibility that these systems may change over the course of one’s working life. There are calls to better educate teachers about the potential impact of affective factors on students’ ability to adequately deal with the financial problems and decisions they will encounter in their everyday lives and beyond school (Sawatzki and Goos, 2018). Given Australia’s tax culture, it is inevitable that children and adolescents are, to varying degrees, exposed to family conversations and practices related to tax and super. These socialisation processes are how values are shared from generation to generation and highlight what knowledge, skills, and capabilities are valued as teachable. These are likely to include tax minimisation strategies, like paying cash (see Dulleck, Fooken, Moy, and Torgler, 2018 for an appraisal of the impact of the cash and hidden economies in Australia), making tax-deductible purchases, and making voluntary pre-tax super contributions. Students may also be privy to social and political commentary about the fairness of the taxation and superannuation systems. What is their reaction to 36% of the largest public and multinational entities in Australia paying no tax in the 2015/16 financial year (ATO, 2017)? And do they realise that the gender pay gap also means a superannuation gap for women? Related to this, education that engages school students in considering moral and ethical understandings may be useful.
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