Tax payment and gamification

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If taxes were designed with knowledge around behavioral psychology, then the combination of paying taxes and gamification would play a role.

Seit über 13 Jahren dreht sich mein berufliches Leben rund um das Thema ‚Motivation des Menschen‘. Genauer gesagt: die intrinsische Motivation. Also die Motivation, von der wir sprechen, wenn wir etwas ausführen um des Ausführens willen. Da liegt das Thema Steuerzahlung und Gamification doch auf der Hand, oder?

Where does motivation come from? What causes it? Why does it disappear? How do you keep it? This is a topic that now takes me around the world, where I get to know a wide variety of industries and organizations in order to pass on and implement my knowledge.

But life doesn't just revolve around companies. That's why you also think about possible areas of application that can be found outside of business. If possible, you start to look at everything in the context of your passion.

One topic in particular fascinates me: the interplay of motivation & control.

Everyone can understand that this is not exactly a topic of joy. And not only because it costs you money as soon as you are reminded of it by your bank statement. Likewise, just thinking about the tax return with all its associated tasks makes people roll their eyes. But at the same time, almost everyone understands that it's necessary. On the contrary, there are enough high earners who would have no problem paying x% more.

The fact is that the human being, as an individual, is much better than the media, politics and business would have us believe. If we have the opportunity, we like to be part of something bigger. We love to be allowed to contribute a valuable part to this greater with our own abilities/our performance, if...

What is this 'if'?

We want to be able to recognize what our performance can contribute or what it directly leads to. This feedback is elementarily important in the context of our motivation. This is evolutionary and cannot simply be circumvented by structures or laws. This evolutionary programming makes us seek above all to satisfy our need for competence, our desire for autonomy, our search for meaningfulness, and our desire for social connectedness. If we take a look at the top examples of intrinsically motivated activities such as games, sports, music, hobbies, etc., we will always find framework conditions that at least partially satisfy these four needs. For our tax return I see here 'black'. 

It is by far not purposeful to know that the taxes are now thrown into a pot with the taxes of all our fellow men and then investments are made from it. If man were a thoroughly rational being, this would possibly be sufficient, but we are not. Thus, we individuals do not even develop this attachment to the services that can be provided thanks to our taxes. No fulfillment in the search for autonomy, meaningfulness, connectedness or competence.

But this emotional connection is THE basic prerequisite for motivation.

Caption: And when did you first feel like paying taxes with joy?

Why should we even think about how to link the topics of taxes and motivation more closely? After all, there are laws!

Quite simple: 

  • Motivated people will naturally think less about where to get some more tax savings out of it. Because the thought "How do I manage to pay even less tax?" is also just a 'game' that people are motivated to play for very specific reasons. And no, having more money in the account is not necessarily the main motivation here at all, but much more the emotional victory over a system. We humans very often act emotionally and try to rationally justify our actions afterwards.
  • Motivated people are more likely to file their tax returns by the deadline than unmotivated people. Intrinsic motivation is of course much more effective than extrinsic 'incentives' such as reminder fees for missing the filing deadline. Laws can never achieve similar effectiveness.

Apparently, such a change in behavior, and these are just two examples, also saves the state money in the end, pure money. Somewhere I had once read how many millions it costs the state that tax returns are filed late.

(Unfortunately, I no longer know where this was written. Who knows a source here, please gladly a message to me. Thanks!)

So what can we learn, in terms of tax returns, from motivational psychology?

  • We should provide a direct and comprehensible link between the taxes paid individually (even if this is only for 10% of the amount) and the benefits created (meaningfulness & autonomy) and
  • make this, from the point of view of each individual, personal 'Achievement' also historically (at best lifelong) visible. (Competence & Connectedness)
    Of course, only for the person concerned himself.

What might this look like in real terms?

Projects, or necessary investments, planned and needed for public space are presented regionally or locally on a platform. Individuals who submit and settle their tax returns on time can now 

  1. use the already mentioned 10% of the paid tax amount for a specifically selected local project, which can be chosen on the platform.
  2. Or you create the possibility to vote with 9% for a specific project from a project pool and 1% can be spent on a selectable action. The 9% in each case then goes jointly to the most voted project at the end or is distributed proportionally to all votes in the project pool.

Using our own example, this could mean, 

  1. that I vote with 10% of my taxes for the necessary renewal of certain equipment on a playground in a neighboring street. The result of the vote then decides on the final distribution of the money on the playground, or the proportionate use. If the amount is not sufficient, several residents can join forces and jointly use their taxes in the interest of the community.
  2. With the 9%, I vote for the playground renovation, but the tenth % will certainly go towards the purchase of a new swing set on the same playground.

Of course, many rules and variations are possible here. In the end, however, they should all aim to strengthen the connection between autonomy, meaningfulness, competence and the connection between people and their tax payments. This would also be technically feasible thanks to blockchain and the like, or smart contracts.

In Germany, the law of 'non-earmarked taxes' applies. This is definitely the place to start. To cushion this, we have taken the example of the 'mere 10%' of the tax amount. We could also start with 1%. That might leave a little more room for maneuver in the legislation.

Likewise, such an approach can also separate digital and real. That means: As soon as the playground is renewed by the public authorities, my virtual profile is 'attached' to this playground on the platform already mentioned. This is valid until there is a need for investment in the playground again and someone wants to use their 10% for this.

Over the years, a person thus accumulates countless investments that benefit the community thanks to their own tax payments. A personal dashboard here provides a view of the overall performance of one's working life. 

Through such a system 

  1. participation in it would remain voluntary
  2. people to whom it is important get the opportunity to achieve a connection to tax-financed investments. The benefit of tax payments thus becomes more tangible and, thanks to the visible results, also more acceptable and possibly even fulfilling.
  3. it is even possible without running afoul of the law of 'non-earmarked tax payments' here. Which does not mean, of course, that an adjustment would be helpful here. But that is then probably a life task.
  4. of course, you always communicate in two directions as well. In this way, the behavior of citizens can be used to identify which public areas and services are in particular demand or where their attention is focused. Such a system beats surveys and the like by far, since people's actions, as a rule, can be seen as a more honest indication of their interests than answers to a questionnaire. These are then nevertheless rather opportunistically and/or idealistically influenced.

Dies ist ein Ansatz, der sowohl auf dem Wissen rund um Verhaltenspsychologie und vor allem der self-determination-Theory von Deci&Ryan ansetzt. Gleichzeitig findet man hier auch teilweise die Rahmenbedingungen wieder, wie Informationstransparenz, Feedback, Entscheidungsfreiheit und in einem gewissen Rahmen auch auf Zielsetzung, die sich in intrinsisch motivierten Aktivitäten wiederfinden lassen. Diese Elemente gehören somit zu den Grundrahmenbedingungen, innerhalb derer der Mensch am ehesten eine selbst getriebene Motivation entwickelt.

Such a 'design' also communicates a level of values, making them tangible for one's own decisions. 

Wer gerne mehr in das Thema Gamification einsteigen möchte und sowohl die Wissenschaft dahinter, als auch praktische Anwendungen beherrschen will, für den gibt es auf den richtigen Kurs dafür.

It is in the nature of things that personal achievements, status and benefit creation within such a system, by sharing what has been achieved with others, gains added value. Such frameworks create a natural behavior in people to continue to contribute their share within the community. And if you can achieve this by consciously contributing a part of your tax amount to local improvements, this will also benefit the acceptance of economically successful people. At the moment, this is rather the opposite case in Germany. Bill Gate and Warren Buffett had already addressed similar issues with their idea of creative capitalism. In doing so, however, they called upon fellow human beings to behave sensibly. 

With an approach coming from the direction of behavioral psychology, as it is described here, one provides framework conditions that simply make it more native to behave in the sense of the community. Humans are evolutionarily designed to collaborate, but the system must also allow it. According to the motto: "Don't blame the gamer, blame the game!"

We have taken here 'public places' as a possible target of course only representative of countless other possibilities. Such an approach develops over time and here there are further application possibilities. Also these will, by the created attachment of the fellow citizens with such a system, efficiently come to the 'daylight'.

This example of application to our tax system is presented here in a very simple way, and of course requires a deeper dive into both taxation and behavioral psychology. 

What I want to achieve with this article is that it can be quite useful to question old systems or rules and regulations again and again and to adapt them to new developments. 

In einer Welt, die mittlerweile von digitaler Transparenz, individuellen Informationen und on-demand Systemen beherrscht wird, erwartet der Bürger auch dementsprechende Services, die diesen Nutzen auch für sich einsetzen. Warum? Einfach weil wir es so gewohnt sind, damit aufwachsen und wir beginnen es überall zu erwarten. Das mag einem nicht unbedingt gefallen, sollte einem aber auch zu denken geben, wenn man uns, in dem Fall die Bürger, für etwas gewinnen möchte und im Idealfall sogar ein persönliches Commitment erreichen will.

Laws are a means of cooperation, but every parent knows from his or her own experience how great the difference is between wanting to achieve something in one's own household through simply set rules or through the voluntary participation of the children.

From the point of view of behavioral psychology, that doesn't change just because it's now a matter of paying taxes.

If the population is offered a tax system that creates such a link between the service to be paid and the resulting outcome, I am sure that this will increase the acceptance of such a system and thus, of course, the willingness to pay taxes (on time).

Let me now give you a real-life example that also relates to a not inconsiderable issue for the common good and also depends on the willingness of individual fellow citizens to cooperate:

the blood donation.

In Sweden, blood donors receive a text message as soon as their own donated blood is used there. In Germany, people continue to rely on extrinsic rewards and emotional campaigns to get people to donate blood. Unfortunately, the moderate success of these efforts is well known.

Speaking to the Independent, Karolina Blom Wilber, public relations officer, says, "We are constantly looking for new ways to highlight the relevance of blood donation. We want to provide feedback for those who go to donate and this is a good way." So far, this campaign seems to be successful in Sweden.

Here, Sweden clearly relies on the intrinsic reward approach such as the feeling of being actively involved in something meaningful (meaningfulness & connectedness), as opposed to extrinsic reward such as material remuneration. The difference clearly lies in the direct connection with the action of donating blood itself. In Germany, on the other hand, you give some blood and that's it. No other way to see what influence this personal behavior can have. No way to experience the fulfillment, through community togetherness, of donating blood. Although it happens. The blood is used. But unfortunately, a huge potential is given away by the fact that the donors never experience it. There is hardly anything more emotionally intense to experience than saving lives thanks to one's own blood. 

To transfer such an example to other areas of public life, the knowledge around behavioral psychology and thus gamification can be a powerful ally. Just think of your own tax return!

How do you see it? What would you like to see when it comes to your own taxes?

Here you can find more articles about gamification.

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