Journal of Business Ethics (2007) 74:4964
DOI 10.1007/s10551-006-9219-x
The Social Norms of Tax Compliance:
Evidence from Australia, Singapore,
and the United States
ABSTRACT. Tax compliance is a concern to govern-
ments around the world. Prior research (Alm, J. and
I. Sanchez: 1995, KYKLOS 48, 319) has attributed
unexplained inter-country differences in compliance rates
to differences in social norms. Economics researchers
studying tax compliance in the United States (U.S.) (see for
example J. Andreoni et al.: 1998, Journal of Economic Liter-
Donna D. Bobek is an Associate Professor in the Kenneth G.
Dixon School of Accounting at the University of Central
Florida. Her research focuses on taxpayer and tax professional
judgment and decision-making, with an emphasis on
ethical decision-making. Donna has published in a number of
academic journals including Accounting, Organizations &
Society, Behavioral Research in Accounting, the Journal of
the American Taxation Association, Advances in Taxation
and Advances in Behavioral Accounting Research.
John T. Sweeney is the Ted Saldin Distinguished Professor of
Accounting and the Chair of the Department of Accounting at
Washington State University. His research interests include
accounting ethics and organizational justice. He has published
in a number of accounting research journals, including Ac-
counting, Organizations, & Society, The Accounting Re-
view, Behavioral Research in Accounting, the Journal of
Accounting & Public Policy, the Journal of Business Ethics,
and Research on Accounting Ethics.
Robin W. Roberts is the Al and Nancy Burnett Eminent
Scholar and Director of the Kenneth G. Dixon School of
Accounting at the University of Central Florida. His recent
research focuses on ethics and regulation in the accounting
profession and on corporate social responsibility. Robin has
published in a number of academic journals including Ac-
counting and the Public Interest, Accounting, Organizations
& Society, Advances in Accounting, Auditing: A Journal of
Practice & Theory, Critical Perspectives on Accounting,
Journal of Accounting and Public Policy, Journal of Ac-
counting Research, Journal of Business Ethics, Public Bud-
geting, Accounting & Financial Management, and Research
in Governmental and Nonprofit Accounting.
Springer 2007
Donna D. Bobek
Robin W. Roberts
John T. Sweeney
ature 36, 818860) have called for more attention to social
(as opposed to economic) influences on tax compliance. In
this study, we extend this prior research by explicitly
examining the role of social norms [Cialdini, R. and M.
Trost: 1998, The Handbook of Social Psychology (Oxford
University Press, New York)] on tax compliance in three
different countries. We test our research hypotheses using a
hypothetical compliance scenario, which was administered
in Australia, Singapore, and the U.S. There were differences
in compliance rates and social norms among the three
countries. Factor analysis of the social norm questions
identified three distinct social norm constructs. Two of these
factors were significant in explaining tax compliance
behavior. The first and most influential factor was taxpayers
own personal moral beliefs, along with the beliefs of those
close to them (e.g., friends and important others). The sec-
ond significant factor represented societal views of proper
behavior. We conclude that social norms help to explain tax
compliance intentions and why tax compliance rates are
higher than would be predicted by strictly economic models.
KEY WORDS: social norms, tax compliance
Introduction
Tax compliance is a concern of governments around
the world (see e.g., Alm and Sanchez, 1995; Feige,
1989; Frey and Weck-Hanneman, 1984). In the
United States (U.S.) alone, non-compliance is esti-
mated to cost the federal government over $300 bil-
lion annually (http://www.irs.gov). However,
traditional economic models of tax compliance,
which primarily emphasize enforcement and detec-
tion variables (for a review see Andreoni et al., 1998),
are unable to explain current levels of compliance. In
fact, particularly in the U.S., compliance is much
higher than these economic models would suggest.
50 Donna D. Bobek et al.
For this reason, researchers have begun to incorporate
non-economic variables into their models. Econo-
mists in particular have focussed on the concept of
social norms (e.g., Alm et al., 1999; Pommerehne
et al., 1994; Scholz and Pinney, 1995; Wenzel, 2004).
However, most of these economic studies (Wenzel,
2004 is a notable exception) do not specify precisely
what these social norms are; instead they model a
variable that affects compliance in a manner consistent
with a strong effect from some outside social influ-
ence. With tax return audit rates continually declining
(Schnepper, 2004), a better understanding of this
important influence on tax compliance is essential.
In the present study, we directly test Alm and
Sanchezs (1995) supposition that differences in
compliance across countries are the result of differ-
ences in social norms. We draw on Cialdini and
Trosts (1998) taxonomy of social norms in an effort
to measure a comprehensive set of social influences
on tax compliance. We tested our research hypoth-
eses with a questionnaire administered in three sep-
arate countries: Australia, Singapore, and the U.S.
The questionnaire included a hypothetical compli-
ance scenario and items designed to measure each of
the four types of social norms identified by Cialdini
and Trost (1998). Factor analysis of the social norm
questions revealed three distinct factors. The most
influential factor on tax compliance was a factor that
included both personal norms (self-based standards or
expectations for behavior) and subjective norms (a
persons perception of how most people important to
him/her think he/she should behave). The second
factor represented injunctive norms (general societal
expectations of behavior) and was also significantly
related to compliance. The third factor, which rep-
resented descriptive norms (standards that develop
out of observation of others behavior), was not sig-
nificantly related to subjects compliance intentions.
We believe this research is important for several
reasons. First, from a theoretical perspective we offer
important extensions to both the tax compliance lit-
erature and accounting cross-cultural research. This
study represents the first attempt to develop and test a
comprehensive set of social norms for tax compliance.
In addition to adding specificity to the inter-country
tax compliance literature, we also address the recent
call for research that investigates the effect of culture
on ethical decision-making (e.g., Blodgett et al.,
2001; Chanchani and MacGregor, 1999).
Second, from a practical perspective, tax non-
compliance is a widespread problem that costs gov-
ernments, and thus its citizens, billions of dollars each
year. There is evidence in the U.S. that public opinion
toward cheating is becoming more lax. In a recent
survey, the percentage of people who believed it was
every Americans civic duty to pay his fair share of
taxes was only 68%, compared to 81% in 1999
(Dalrymple, 2003). Thus, to the extent that we can
identify the antecedents of these attitudes, new strat-
egies to address non-compliance can be developed.
Third, with increasing economic globalization,
there is a greater need to interact with people from
other countries as well as understand different ap-
proaches to ethical decision-making (Blodgett et al.,
2001; Cohen et al., 2002; Hsee and Weber, 1999).
For example, differing social norms regarding tax
compliance may lead to misunderstandings between
business associates in different countries, or may
hinder the effective international transfer of
employees. Bolstering this concern is evidence that
individuals are not good at predicting what their
counterparts from other countries would do if faced
with a similar situation (Hsee and Weber, 1999).
Thus, a better understanding of the social influences
on individuals ethical decision-making can be
helpful to researchers as well as participants in the
global economy.
The remainder of this paper is organized as fol-
lows: in the next section, we synthesize prior tax
research relating to social norms and cross-cultural
tax compliance. Based on this discussion we propose
research hypotheses for the present study, followed
by a discussion of our method for testing the research
hypotheses. Next, the results of the study are re-
ported. In the final section, we draw conclusions and
offer suggestions for future research.
Prior research and hypothesis development
The proposition that social norms are influential in
tax compliance decisions is consistent with the moral
psychology literature (Kohlberg, 1969; Rest, 1986).
Kohlberg (1969) identifies three distinct hierarchical
levels of moral development: (1) preconventional,
where judgments are motivated by self-interest, (2)
conventional, where individuals form moral judg-
ments based upon referent norms and the expecta-
 Social norms of tax compliance
tions of significant others, and (3) principled, where
self-chosen principles guide decisions. Cross-cultural
research has indicated that most adults are at the
conventional level of moral reasoning (Rest, 1986),
and would therefore be influenced by referent social
norms in their tax compliance decisions. Jones
(1991) proposes that ethical decision-making is is-
sue-contingent, whereby social consensus reduces
the moral ambiguity of alternate actions, and pro-
vides guidance as to appropriate behavior. Thus, we
maintain throughout this study that tax compliance
is an ethical as well as economic decision and that
social norms influence individual ethical decision-
making.
Social norms are defined as rules and standards
that are understood by members of a group, and that
guide and/or constrain social behavior without the
force of law (Cialdini and Trost, 1998, p. 152). The
four categories of social norms identified by Cialdini
and Trost are: descriptive norms, injunctive norms,
subjective norms, and personal norms. Descriptive
norms are standards that develop out of observation
of how others actually behave in particular situations.
Injunctive norms, on the other hand, specify what
should be done and are therefore the moral rules of
the group. Subjective norms relate specifically to the
expectations (i.e., injunctive norms) of referent others
(e.g., family, friends, coworkers). Finally, personal
norms are ones own self-based standards or expec-
tations of appropriate behavior, which may arise
from the internalization of injunctive, subjective
and/or descriptive norms.
Individuals may have different motivations to
comply with social norms (Cialdini and Trost,
1998). These motivations include building and
maintaining social relationships (injunctive and
subjective norms) and making effective decisions in
novel situations (descriptive norms). On the other
hand, personal norms are primarily an internal
influence on decision-making that relate to ones
desire to maintain a positive self-image and live up to
self-based standards or expectations (Schwarz, 1977).
Table I details the differences between these four
constructs.
Some tax compliance researchers (e.g., Alm et al.,
1999; Cowell, 1990; Davis et al., 2003; Porcano and
Price, 1993) use terms similar to social norm to
represent one or more of the social norm constructs
discussed above, without specifying which type of
51
norm may be affecting behavior. For example,
analytically, Cowell (1990) modeled the tax com-
pliance dilemma as including a social stigma
influence that serves to increase compliance. Por-
cano and Price (1993), using a survey methodology,
found that subjects were more likely to comply if a
social sanction (e.g., cheaters being publicized in the
newspaper) supplements enforcement efforts. Fur-
ther, the effect of social sanctions increased as the
likelihood of being caught (i.e., the audit rate) in-
creased. They also concluded that many of their
subjects did not exhibit internalized norms (i.e.,
personal norms) toward compliance while partici-
pating in their experiments because when the audit
rate was very low and no social sanction was present,
cheating was very high. Alm et al. (1999), in an
experimental economics setting, manipulated social
norms via voting. They found that when the social
norm (i.e., the results of the vote) tended toward
non-compliance, almost all the subjects cheated.
However, when cheap talk1 was allowed prior to
voting, subjects generally voted in favor of stronger
enforcement mechanisms, which then lead to more
compliance.2
Alm and Sanchez (1995) examined cross-cultural
tax compliance in an experimental setting. Subjects
in the U.S. and Spain participated in virtually
identical experimental economics tasks and yet,
controlling for all other factors, compliance was
different between the participants in the two coun-
tries. While they did not explicitly measure the social
norms of the participants, Alm and Sanchez attrib-
uted the unexplained disparity in compliance to
differences in societal attitudes toward tax com-
pliance (Alm and Sanchez, 1995, p. 4). Further,
they argued that a multi-faceted approach to
improving compliance requires taxing authorities to
emphasize, among other things, the social obligation
of paying ones taxes.
While these prior studies focussed on an inferred
general societal compliance pressure, other studies
have addressed the impact of moral influences and
referent others on compliance decisions. Scholz and
Pinney (1995) investigate the concept of tax duty
and find that it not only has a positive effect on
compliance, but also increases the subjects sub-
jective probability of the likelihood of detection.
Hanno and Violette (1996) and Bobek and Hatfield
(2003) employ two different versions of Ajzens

Descriptive
norm
Definition Descriptive norms are
derived from observation
of what other people do in
any given situation.
Watching others provides
information about what is
normal in a novel or done.
ambiguous situation.
Social goal norm helps to Descriptive norms are
achieve helpful for maximizing
effectiveness in social sit-
uations. They help indi-
viduals make accurate
choices about how to be-
have.
When will the norm be Descriptive norms will be
influential? most influential when the
situation is novel, ambig-
uous, or uncertain. Indi-
viduals are most effective
when they model behav-
ior of those who are
similar to them but also
successful. Individuals
should be more likely to
imitate others who have
visible signs of success.
TABLE I
Social norm constructs
Injunctive Subjective
norm norm
Injunctive norms repre- Subjective norms repre-
sent the perceived sent an individuals per-
behavior of which most ception of the injunctive
people approve (or disap- norms held by referent flow
prove). They specify what others (e.g., family,
should (should not) be friends, and coworkers).
Injunctive norms prescribe Subjective norms repre-
appropriate behavior and sent the injunctive norms
thus aid in building and of those closest to an
maintaining social rela- individual. Thus, they aid
tionships. in building and maintain-
ing social relationships
with people whose
opinions matter the most.
Injunctive norms motivate Subjective norms will
behavior by promising influence behavior when
social rewards or punish- individuals are motivated
ments. They need not be to comply with the norms
expressed in order to di- of referent others.
rect behavior. There is
evidence that they can be
primed and are more
powerful when they are
brought into focus.
52
Personal norm
Personal norms are self-
based standards or expec-
tations for behavior that
from internalized
values.
Behaving consistent with
ones personal norms helps
to enhance or maintain
ones sense of self-worth.
Donna D. Bobek et al.
Personal norms are en-
forced through the antic-
ipation of self-
enhancement or self-dep-
recation (i.e., they are
self-reinforcing).
 Social norms of tax compliance
(1991) Theory of Planned Behavior. In both of these
studies, moral obligation (i.e., personal norms) and
the opinions of important others (i.e., subjective
norms) influence compliance decisions. Kaplan et al.
(1997) find that taxpayers moral development is
significantly correlated with compliance and also
influences the effectiveness of certain educational
communications to improve compliance. Bosco and
Mittone (1997) test the role of moral obligation in
an experimental economics setting and, while they
were only partially successful at creating an artificial
sense of moral obligation, they find that there is a
natural cultural constraint that deters evasion.
We found only one published study that examines
the influence of both general social norms3 and
personal norms4 on tax compliance behavior
(Wenzel, 2004). In this study, conducted in Aus-
tralia, personal norms are more influential than social
norms. In addition, the importance of social norms is
mediated by how strongly the subjects identified
with being Australian.
The present study extends prior research (e.g.,
Wenzel, 2004) in several ways. First, we consider
compliance in three different countries: Australia,
Singapore, and the U.S. Second, we develop and
measure a more comprehensive set of social norm
constructs. Third, Wenzel asks his subjects about
their actual compliance behavior. This is often
problematic as subjects are hesitant to admit to
unethical and illegal behavior (Wenzel, 2004),
potentially contributing to the relatively low R2
(11%) of his compliance model. In the present study
we consider taxpayers compliance intentions, rather
than requesting subjects to reveal their actual tax
compliance behavior. Behavioral intentions have
been shown to be highly correlated with actual
behavior (Ajzen, 1991).5 The methodological
improvements incorporated in this study enable our
tax compliance model to explain more than three
times the variance explained in Wenzel (2004).
Hypotheses
Two of the four types of social norms identified by
Cialdini and Trost (1998), descriptive and injunc-
tive, relate to the views/behavior of society in
general. Alm and Sanchez (1995) and most other
economic researchers are likely referring to these
53
two types of norms when modeling tax compliance
behavior. However, as noted, Wenzel (2004) finds
that personal norms (he did not measure subjective
norms) are more influential than general social
norms. Knowing which specific social norms influ-
ence tax compliance intentions is critical if the
ultimate goal is to understand and change behavior.
Based on this review of prior research, we offer the
following two hypotheses (in the alternate):
Hypothesis One. Social norms (descriptive,
injunctive, subjective and personal) are related
to tax compliance intentions. Specifically,
stronger non-compliance social norms are re-
lated to an increased likelihood of cheating
intentions.
Hypothesis Two. Personal norms will be more
important than injunctive and descriptive norms
for explaining subjects compliance intention.
Most inter-country accounting research focusses
on the construct of cultural norms, defined by
Hofstedes (1980) seminal work, as opposed to social
norms. [See Harrison and McKinnon (1999) and
Chanchani and MacGregor (1999) for a review].
However, Hofstedes operationalization of na-
tions as the unit of analysis, implying that each
nation has its own singular culture, has been criti-
cized as overly simplistic and inaccurate (Baskerville,
2003; Gernon and Wallace, 1995; Kohn, 1996).
Most critics contend that a single nation represents
multiple cultures, and that individuals are likely
influenced more by the norms of their immediate
social system. An indirect test of this proposition is to
examine the influence of participants referent
country on tax compliance intentions. If Alm and
Sanchez (1995) are correct in attributing the differ-
ence in tax compliance behavior to social norms,
then after accounting for social norms, we would
expect that country would not be significant in
explaining compliance. This leads us to the follow-
ing hypothesis:
Hypothesis Three. Differences in compliance
intention among countries will be accounted for
by differences in the social norms (descriptive,
injunctive, subjective and personal) of the sub-
jects of the countries.
54 Donna D. Bobek et al.

TABLE II
Sample demographics

Australia Singapore United States Total sample

Average age (in years) 22a 35.9 35.7 29.7

Gender (% male) 55% 49% 54% 53%
Who prepares tax return
Self or spouse 63% 96% 37% 63%
Paid preparer 17% 54% 24%
Other 20% 4% 9% 13%
Education
High school or less 16% 2% 6% 9%
Some college 39% 44% 31%
College graduate 37% 31% 35% 35%
Post-graduate study 8% 67% 15% 25%
Average annual household income $67,808 $78,272 $56,537
(in local currency)b
Number of subjects 76 45 54 175
a
Significantly different from other two countries at 0.000 significance level.
b
At the time the data was collected, $1 Singapore was approximately equal to $1 Australian. However, $1 American was
equal to $1.75 Singapore. Thus, the income of U.S. subjects was actually higher (in equivalent currency) than in
Singapore and Australia. There was no statistical difference between Singapore and Australia.

Methodology paid preparer use, while virtually all of the Singapo-

Subjects
Convenience samples of student and non-student
subjects were obtained in three countries: Australia,
Singapore, and the U.S.6 Three countries were se-
lected for this cross-country comparison because it
allows us to test for differences in social norms. These
three countries were selected because all three rep-
resent developed nations with relatively sophisticated
income taxation systems.7 In addition, the author
team had contacts in each of these countries and, thus,
was able to have the instruments administered reliably.
Table II reports the overall sample demographics and
the demographics of subjects in each country. As
expected, there are some differences in the demo-
graphics among countries that will be controlled for in
our statistical tests (discussed later). Specifically, in
Australia the subjects are predominantly students, and
consequently the average age was much lower
(22 years) than in the U.S. (35.7 years) and Singapore
(35.9 years). The U.S. has the highest percentage of
rean subjects prepare their own tax returns.8 The
Singaporean subjects are also better educated than
the subjects from the U.S. and Australia. Finally,
household income is highest (once the exchange rate
is considered) in the U.S.
To investigate for non-response bias, we compared
the mean item responses between early and late U.S.
and Singaporean subjects (all of the Australian data was
collected at the same time). There were no differences
in the means of any of the variables between early and
late responders from the U.S. Early responders in
Singapore, however, were less compliant than late
responders. The dependent variable mean was 1.95
for early responders vs. 0.65 for late responders. This
difference was significant at a p-value = 0.01. This
difference appears to relate to differences in personal
norms. Specifically, their response to the following
question: I think it would be morally wrong to take
the additional $1,400. The response was measured
on a 7-point scale with 1 = strongly agree and
7 = strongly disagree. The mean response for early
(late) responders was 3.04 (1.95). This difference was
 Social norms of tax compliance
significant at p-value = 0.04. The fact that non-
responding Singaporeans might be more compliant
than responders does not change the interpretation of
our results.
Experimental instrument
Subjects responded to an experimental instrument
that presented a hypothetical tax compliance
dilemma. Due to differences in tax laws among the
three countries, the dilemma was modified some-
what to conform to a realistic compliance decision
for subjects in each country. In Australia and the
U.S., subjects responded to a scenario regarding
business use of their personal automobile. In Singa-
pore, subjects responded to a scenario regarding
international travel expenses.9 The scenarios are
reproduced in the Appendix. The instrument was
initially pilot tested with 91 students, who also an-
swered debriefing questions. Based on their feed-
back, some of the questions were revised for clarity.
After reading the scenario, subjects determined
what course of action they would take in response to
the tax compliance dilemma. Specifically subjects
were asked How much of the additional $1,400 in
automobile expense [overseas travel expense] do you
think is closest to the amount you would deduct if
you were in a similar situation? The response scale
had six choices from $0 to $1,400. Each subjects
response to this question forms the dependent vari-
able: Compliance Intention. Subjects then re-
sponded to questions designed to assess each of the
four types of social norms articulated by Cialdini and
Trost (1998). Multiple questions were included for
each construct. We also measured subjects famil-
iarity with the deduction, perceived detection rates,
and risk preference in order to control for each of
these potential influences on compliance. Perceived
probability of detection is included to control for
differences in perceived enforcement levels, both
among and within countries. Prior research has
shown that perceived risk of detection is related more
to compliance choice than actual detection rates
(Carnes and Englebrecht, 1995). We also control for
risk preferences as it may be related to compliance
choice, and has been found to be different across
cultures (Hsee and Weber, 1999). Finally, demo-
graphic information was collected.
55
Results
Descriptive statistics
Table III reports descriptive statistics for the
dependent variable and the control variables by
country. On average, subjects said they would de-
duct approximately 36% of the additional $1,400 in
expenses. Singaporean subjects had the lowest non-
compliance rate at just over 25.8%, and Australian
subjects had the highest at 44.8%. There was a siz-
able minority from all three countries who indicated
they would be completely compliant. Across all
three countries, 39.4% of subjects said they would
not cheat at all. Of course, that implies that
approximately 60% would potentially cheat under
certain conditions. Complete compliance was
highest in Singapore (53.3%) and lowest in Australia
(30.3%).
We proceed with our test of the effect of social
norms as follows: first, we develop a baseline model
which includes only control and demographic vari-
ables as explanatory variables so that we can later
assess the relative importance provided by adding the
social norm variables. Second, we construct the so-
cial norm variables and finally, we test our research
hypotheses.
Baseline model with control variables
Regarding the control variables, in general the
subjects were not familiar with the deduction in
question. The average response was 6.2 on a 7-point
scale, where 7 indicated they had never taken a
similar deduction, and 1 indicated that they had
taken a similar deduction very often. U.S. subjects
were the most familiar (average 5.87), and Singap-
orean subjects were the least familiar with the
deduction (6.56). T-tests of the means between
countries indicated that the U.S. mean was different
from the Singapore mean (p < 0.000).
Risk preference was measured with the following
question: If you want to claim a deduction, but the
tax law is unclear, how certain (as a percentage)
would you want to be that the taxing authority
would allow the deduction before you would deduct
it? Responses ranged from 100 to 0% at 10-point
increments. The overall mean was 3.06, representing
56 Donna D. Bobek et al.

TABLE III
Descriptive statistics

Australia Singapore United States Total sample

Compliance intentiona 2.24* 1.29 1.67 1.82

Percentage of completely compliant subjects 30.3% 53.3% 40.7% 39.4%
Familiarity with deductionb 6.18 6.56 5.87*** 6.18
Risk preferencec 3.22 3.33 2.58 3.06
Perceived likelihood of being audited (in general)d 6.37 5.50** 6.78 6.27
Perceived likelihood of being audited (specific)e 4.99 4.60 4.81 4.83
Perceived likelihood of disallowance (specific)f 3.68 3.09 3.48 3.47

*Significantly different than other two countries at 0.10 significance level; **significantly different than other two
countries at 0.05 significance level; ***significantly different from Singapore at 0.05 significance level.
a
Measured on a 6-point scale where 0 is no cheating at all and 5 is cheating as much as possible. Thus, 2.5 is the midpoint
of the scale.
b
Measured on a 7-point scale with 1 = has taken a similar deduction very often and 7 = has never taken a similar
deduction.
c
Measured on a 11-point scale of 0100%. Response to the following question: If you want to claim a deduction, but the
tax law is unclear, how certain (as a percentage) would you want to be that the taxing authority would allow the
deduction before you would deduct it?
d
Measured on a 9-point scale where 8 = less than 1%, 7 = 1%, 6 = 5%, 5 = 10%, 4 = 20%, 3 = 30%, 2 = 20%,
1 = 50%, and 0 = Over 50%.
e
Measured on a 7-point scale with 1 = if take deduction very likely will get audited and 7 = if take deduction very
unlikely will get audited.
f
Measured on a 7-point scale with 1 = if take deduction and get audited very likely that deduction would be disallowed
and 7 = if take deduction and get audited, very unlikely that deduction would be disallowed.

approximately 70% certainty. U.S. subjects wanted
to be the most certain (approx 75%), and Singapo-
rean subjects the least certain (approx 67%). How-
ever, t-tests of the means indicated that there was no
significant difference among the three countries.
The final control variable (other than country)
was perceived risk of detection. We measured this
in several ways. We asked a general question,
....how likely do you think it is that your 2000
tax return will be audited...? The response scale
had nine choices: Less than 1%, 1%, 5%, 10%,
20%, 30%, 40%, 50%, and more than 50%. The
average response for all subjects was 6.27, indi-
cating that the average subject believed their tax
return had a 5% chance of being audited. The
average in the U.S. was 6.78 (which is closer to
1% and approximates the actual audit rate in the
U.S.) and in Singapore 5.50 (which is closer to
7.5%). The mean for the Singaporean subjects was
significantly different from the other two countries
at the 0.05 significance level.
We also asked subjects: (1) how likely they
thought it was that they would get audited if they
took the deduction in the case scenario; and (2) if
they were audited, how likely would it be that the
taxing authority would disallow the deduction. Both
of these questions were on a 7-point likert scale with
1 = very likely, and 7 = very unlikely. There were
no statistical differences in the responses among the
three countries. The overall mean of 4.83 for the
likelihood of audit question, indicates that, on
average, subjects thought it was somewhat unlikely
that their return would be audited. The overall mean
of 3.47 for the likelihood that the deduction would
be disallowed question suggests that, on average,
subjects thought it was slightly more likely than not
that the deduction would be disallowed.
In order to get a baseline model, we ran a
regression analysis with Compliance Intention as the
dependent variable, and the control and demo-
graphic variables as explanatory variables. With all
demographic and control variables included, this
 Social norms of tax compliance
model was significant (p-value = 0.000, Adjusted
R2 = 0.18). Risk preference (0.005 p-value), per-
ceived likelihood of disallowance if audited (0.012
p-value),10 and age (0.008 p-value) were significant
determinants of compliance intention.11 Specifically,
older, better-educated, more risk-averse subjects,
who perceived a greater risk of the deduction being
disallowed, were more likely to be compliant.12
Social norms
Prior tax research has not directly addressed the po-
tential influence of specific social norms on tax
compliance. We therefore developed 14 questions to
assess subjects social norms for compliance based
upon a review of the relevant literature. Eight of
these questions dealt specifically with the scenario in
question (e.g., I think it would be morally wrong to
take the additional $1,400 deduction). Six of the
questions were more general in nature (e.g., Most
people will do anything to avoid paying taxes). The
questions were designed, a priori, to address each type
of social norm. However, due to high correlations
among the items, we subjected the questions to factor
analysis in order to identify interpretable orthogonal
factors. Table IV reports the results of this procedure.
We eliminated three questions because their fac-
tor loadings were less than 0.6 on any of the factors,
leaving 11 questions that loaded on three different
factors. Table IV reports the rotated factor loadings
based on a varimax rotation. The three factors ex-
plained 64.8% of the variance in the data. As can be
seen by an inspection of the questions that loaded on
each factor, the four distinct types of norms identi-
fied by Cialdini and Trost (1998) did not emerge.
Questions representing personal norms (e.g., I
think it is morally wrong and tax evasion is
morally wrong in any amount) and subjective
norms (e.g., if my friends knew ... they would
think it was wrong, and most people who are
important to me would think it was wrong) loaded
together on Factor 1, and explained 33.3% of the
variance in the data. Cialdini and Trost (1998) point
out that personal norms may arise from shared
expectations in social interactions (p. 160). Since it
is important others that we interact with, it is not
surprising that personal and subjective norms are
similar, and thus load on the same factor.
57
Factors 2 and 3 are interpreted to represent
injunctive norms and descriptive norms, respec-
tively. Factor 2 explained 18.8% of the variance.
Three questions loaded on this factor: most
people will do anything to avoid paying taxes, it
is socially acceptable to avoid paying taxes by
whatever means possible, and it is ethical for me
to do anything I think I can get away with to
avoid paying taxes. All three of these questions
relate to what society thinks is acceptable, thus
Factor 2 is best described as injunctive norms.
Finally, two questions loaded on Factor 3: Tax
evasion is widespread in ..., and I think most
people think it is okay to pad deductions by a
small amount... This factor explained 12.7% of
the variance in the data and we believe this factor
best captures descriptive norms.
Panel A of Table V reports the mean factor scores
by country. Based on the coding of the data, a
negative factor score can be interpreted as the norms
being unfavorable toward cheating. Thus, for
example, the U.S. subjects indicated that their per-
sonal/subjective norms and injunctive norms were
negative toward cheating. However, their view of
what actually occurs is that taxpayers do cheat (po-
sitive value for descriptive norms). The Australian
subjects had positive scores for all three factors, and
their personal/subjective mean score was marginally
significantly different than the other two countries
(p-value = 0.07). Finally, the Singaporean subjects
have negative personal/subjective norms toward
cheating (similar in magnitude to the U.S. subjects);
however, their view of society in general is much
different than the U.S. subjects view. The Singap-
orean mean scores for Factors 2 and 3 suggest that
while they believe that society does not view
cheating as wrong (positive value for Factor 2), the
mean for descriptive norms (what is actually going
on) is sharply negative, and significantly different
from the other two countries.
Hypotheses testing
Panel B of Table V reports the results of a general
linear model with Compliance Intention as the
dependent variable, and the three social norm factor
scores along with factor by country interaction terms
as explanatory variables. In addition, we include age,
58 Donna D. Bobek et al.

TABLE IV
Factor analysis social norm questions

Question Factor loadings

description
Factor 1 Factor 2 Factor 3

I think it would be 0.823

morally wrong ...
If I got caught ... I would 0.771
feel ashamed
If I got away with ... I would 0.770
feel guilty
If my friends knew ... they would 0.741
think it was wrong
Most people who are important to me 0.729
would think it was wrong ...
Tax evasion is morally 0.694
wrong in any amount
It is socially acceptable to avoid paying 0.800
taxes by whatever means possible
It is ethical for me to do anything I think I 0.757
can get away with to avoid paying taxes
Most people will do anything to avoid paying taxes 0.745
Tax evasion is widespread in the U.S., 0.845
[Singapore], and [Australia]
I think most people think is okay to pad 0.674
deductions by a small amount to reduce
taxable income
% of Variance explained 33.3% 18.8% 12.7%
Factor description Personal and Injunctive Descriptive
subjective norms norms norms

education, risk preference, and perceived likelihood
of detection as control variables, since they were
significant in our baseline model. The model was
significant (p < 0.000) with an R2 = 0.445, and an
adjusted R2 = 0.389. Including the social norm
factor scores more than doubles the adjusted R2 from
the baseline model (adjusted R2 = 0.180).
The results reported in Panel B of Table V pro-
vide evidence in support of all three hypotheses.
Personal/subjective norms (Factor 1) and injunctive
norms (Factor 2) were significantly related to com-
pliance intentions. This provides support for
Hypothesis One.13 Regarding Hypothesis Two,
personal/subjective norms (Factor 1) were much
more strongly related to subjects compliance
intentions than either injunctive norms (Factor 2) or
descriptive norms (Factor 3). Injunctive norms were
significant (p-value 0.01), but the amount of vari-
ance explained by injunctive norms (Factor 2) was
only 1/6th the amount explained by personal/sub-
jective norms (Factor 1) [standardized regression
coefficient 0.231(Factor 1) vs. 0.043 (Factor 2)].
Descriptive norms were not a significant influence
on compliance intentions. Thus, Hypothesis Two is
supported.
As shown in Table III, there were significant
differences in compliance intentions among the
countries. Hypothesis Three states that social norms
will account for the differences in compliance
intentions across countries, after controlling for
other explanatory variables (e.g., perceived proba-
bility of detection). To test this hypothesis, we in-
clude a country indicator variable in the regression
reported in Table V. We also include interaction
 Social norms of tax compliance 59

TABLE V
Social norm constructs

Panel A mean factor score by country

Australia Singapore United States

Factor 1 personal and subjective norms 0.1970* ) 0.1698 ) 0.1411

Factor 2 injunctive norms 0.0365 0.1785** ) 0.1963
Factor 3 descriptive norms 0.178 ) 0.564*** 0.2057
Panel B regression analysisab
Variable name F-Statistic Significance level Partial Eta-squared
Intercept 23.059 0.000 0.133
Country 1.418 0.246 0.019
Factor 1 45.028 0.000 0.231
Factor 2 6.697 0.011 0.043
Factor 3 0.128 0.721 0.001
Factor 1  Country 4.182 0.017 0.053
Factor 2  Country 1.947 0.146 0.025
Factor 3  Country 1.575 0.211 0.021
Perceived risk of detection 2.809 0.096 0.018
Risk preference 1.531 0.218 0.010
Age 7.982 0.005 0.051
Education 2.864 0.093 0.019

Note: See Table IV for questions that make up each factor.

*Significantly different from other two countries at 0.07 significance level; **Significantly different from U.S. at 0.10
significance level; ***Significantly different from other two countries at 0.000 significance level.
a
Model tested: Compliance Intentions = b0 + b1 Country + b2 Factor 1 Score + b3 Factor 2 Score + b4 Factor 3
Score + b5 Country  Factor 1 + b6Country  Factor 2 + b7Country  Factor 3 + b8Perceived Detection Risk +
b9Risk Preference + b10Age + b11Education.
b
Model statistics
Mean square 16.786
F statistic 8.004 (p-value = 0.000)
Adjusted R2 = 0.389

terms between the indicator variable and each of the
social norm factors. The results provide partial sup-
port for Hypothesis Three. The indicator variable
was not significant, however, the interaction term
between personal/subjective norms and country was
significant.
To explore the interaction terms, we examine
the correlation coefficients between compliance
intention and the factor scores for each country
individually. Inspection of these correlations shows
that it is only in the U.S. that injunctive norms
are related to compliance intention (correlation
coefficient of 0.362, p-value = 0.000). The cor-
relations between injunctive norms (Factor 2) and
compliance intention were not significant for the
other two countries. Further, the correlation be-
tween personal/subjective norms (Factor 1) and
compliance intention, while highly significant in
all three countries, was slightly lower in the U.S.
(r = 0.426), than in Australia (r = 0.570) and
Singapore (r = 0.594). Thus, while social norms
are strongly related to tax compliance and do
explain inter-country compliance differences, the
strength of the effect does vary across countries.
Regarding the control variables, only age re-
mained highly significant (p-value 0.005), with older
subjects being more compliant. This is consistent
with results from prior research (Andreoni et al.,
1998). Perceived detection risk and education were
marginally significant (p-values < 0.10).
60 Donna D. Bobek et al.
Discussion
Inclusion of the social norm variables in the model
(adjusted R2 = 0.39) considerably improved the
variance explained over the baseline model (adjusted
R2 = 0.18). Furthermore, the taxpayer subjects
country of origin was not significant in the model.
All of our hypotheses regarding social norms were
supported. In a setting where cheating was possi-
ble,14 the factor representing personal/subjective
norms was the primary determinant of subjects
compliance choices. This result holds across all three
countries. The direct effect of injunctive norms,
while significant, was not nearly as influential as
personal/subjective norms. Although not tested
here, there may be an indirect effect from injunctive
norms because it is likely that they are one of the
influences on personal and subjective norms. In fact,
Cialdini and Trost (1998) suggest that one way
personal norms are developed is as a result of inter-
nalization of injunctive norms.
Finally, the factor representing descriptive norms
was not related to compliance. Cialdini and Trost
(1998) characterize descriptive norms as arising out
of observation of others behavior. In novel or
ambiguous settings, watching others provides
information. Thus, the fact that the descriptive
norms factor was not useful in explaining the
compliance intentions of our subjects seems rea-
sonable for at least two reasons. First, tax com-
pliance is not easily observable, and second, it is
also not a novel setting.
A striking observation from Panel B of Table V is
the magnitude of the effect of personal/subjective
norms. The influence of personal/subjective norms
was much greater than the influence of traditional
economic variables on cheating intentions. This
observation, combined with the result in Cowell
(1990) and Davis et al. (2003) who found, analyti-
cally, that compliance equilibriums are sticky, should
give policymakers grave concerns that declining
norms toward compliance could create an epi-
demic of non-compliant behavior.
Limitations
Our results cannot be generalized beyond the three
countries studied. Additionally, the fact that the
scenario used in Singapore was slightly different than
the scenario used in Australia and the U.S. may have
introduced additional error into our statistical tests,
which could have muted the effects of the inde-
pendent variables. The differences in the demo-
graphics of the subjects across countries, although
controlled for in the statistical tests, may also have
introduced additional error.15 It is also possible that
subjects were not completely honest about what they
would do if they were in the situation, although the
high level of cheating (over 60% agreed they would
cheat at least a little) indicates that, at a minimum,
they did not appear to fear admitting that they would
cheat. Additionally, as part of the pilot test, we asked
subjects if they believed they could answer the
questions in the questionnaire truthfully (e.g. did you
feel like your identity was sufficiently protected?).
All but one subject responded yes. Finally, in each
country we obtained convenience samples of
taxpayers. Thus generalization of results within each
country must also be made with caution.
Summary, conclusion, and future research
The main purpose of the present study is to test the
conjecture, presented by prior economics and
accounting research, that a primary determinant of tax
compliance is social norms. Further, our aim is to
provide more specificity to what exactly is meant when
we attribute an effect to social norms. We draw on
social psychology research (Cialdini and Trost, 1998)
and identify four potential types of social norms:
descriptive norms, injunctive norms, subjective norms,
and personal norms. A secondary objective of this study
is to determine whether social norms can explain dif-
ferences in tax compliance among countries.
We test our research hypotheses by obtaining re-
sponses to a hypothetical compliance dilemma from
taxpayers in three different countries: Australia, Sin-
gapore, and the U.S. Our results show that the four
different types of social norms are highly correlated;
however, when subjected to factor analysis and vari-
max rotation to obtain orthogonal factors, three fac-
tors emerge. The first, and most important factor, is a
combination of personal and subjective norms. Our
subjects did not show a distinction between their own
personal norms and the norms of important others.
We identify this factor as representing both personal
 Social norms of tax compliance
and subjective norms. The second factor appears to
reflect injunctive norms, which are defined as what
one believes society, in general, views as proper
behavior. This factor also influenced subjects com-
pliance choices. Finally, factor three reflects descrip-
tive norms, which are defined as what one perceives to
represent actual behavior. This factor was not signif-
icant at explaining our subjects compliance choices.
We included a number of control variables in our
regression analysis, including perceived risk of
detection, risk preference, country, subject age, and
education. Consistent with our hypotheses, the so-
cial norms variables displayed the most influence on
the subjects compliance choice, with personal/
subjective norms being four times as important as
any other variable.
While social norms were consistently important in
explaining compliance across all three countries, there
were some differences in social norms between the
countries and also in the relative influence on com-
pliance of the different types of social norms in each of
the countries. Specifically, the personal/subjective
norms of the Australian subjects were much more
favorable toward cheating than were the subjects
norms in the other two countries. This may have
been, in part, because of their age. Additionally,
subjects in the U.S. were more likely than those in
Singapore to have negative injunctive norms (i.e., to
believe that society in general views cheating as
unacceptable). Conversely, the U.S. and Australian
subjects were more likely to agree that cheating was
actually occurring (i.e., positive descriptive norms)
than were the Singaporean subjects. In none of the
countries were the subjects influenced by their
descriptive norms. The most important influence was
personal/subjective norms. The correlation coeffi-
cients between personal/subjective norms and com-
pliance intentions in Australia and Singapore were
more than 0.50. They were slightly less influential in
the U.S. (but still more than 0.40). Finally, only in the
U.S. was there a significant correlation between
injunctive norms and compliance intentions.
These results present a dilemma for policymakers.
How can policymakers influence taxpayers personal
and subjective norms? It is apparent from recent news
accounts (e.g., Dalrymple, 2003) that, at least in the
U.S., taxpayers personal norms toward compliance
are declining. Cowell (1990) and Davis et al. (2003)
demonstrate analytically that compliance equilibriums
61
are sticky, and that when compliance rates change,
they may do so in epidemic proportions. Due to this
possibility, future research should seek to determine
both ways to influence norms directly (e.g., through
advertising appeals) and the effect public policy
decisions have on citizens social norms regarding tax
compliance. For example, do cuts in the Revenue
Departments budget (e.g., in the U.S., the IRS) send
an unintended message to taxpayers that cheating is
okay? Do complex tax laws undermine taxpayers
compliance norms? Does perceived unfairness in the
distribution of the tax burden or in tax law changes
affect compliance norms? Does the level of govern-
ment spending and or spending priorities influence
social norms? These are all important questions for
future research.
Notes
1
Cheap talk refers to the ability of subjects to infor-
mally discuss specific aspects of the experiment.
2
It should be noted that most experimental eco-
nomics studies use neutral terminology. For example,
instead of words like tax and audit they use terms
like fee and check (Alm et al., 1999). Thus, any
effect from a social norm construct arises from the
experimental setting and not as a result of the subjects
tapping into their own social norms of tax compliance
schema.
3
Measured with three questions most people think
it is acceptable ..., most people think they should
honestly declare, most people think ... is a trivial of-
fense.
4
Measured with three questions do YOU think
you should honestly ..., do YOU think it is accept-
able ..., do YOU think ... is a trivial offense.
5
Ajzen (1991) frames his discussion of the link be-
tween behavioral intention and actual behavior in terms
of individuals perceived behavioral control. Specifically,
to the extent that a behavior is under an individuals
volitional control (e.g., voting choice), there is a strong
link from behavioral intention to actual behavior, and
perceptions of behavioral control have been found to be
largely irrelevant (Ajzen 1991). However when an ac-
tion is outside ones volitional control (e.g., winning a
gold medal in the Olympics), regardless of how strongly
one intends to engage in the behavior, his/her actual
behavior will be strongly, and directly, influenced by
his/her actual (or perceived) ability to engage in the
behavior. Thus, in a tax compliance scenario, as long as
the taxpayer believes he has the ability (or opportunity)
62 Donna D. Bobek et al.
to be non-compliant, behavioral intention should be
strongly associated with the actual behavior. Social
norms will only influence tax compliance behavior in
situations where the opportunity exists to cheat. Thus,
it is important to control for perceived detection risk hand, international travel is relatively common in Singa-
(as a surrogate for opportunity or perceived behavioral
control) in our study. This variable was included in the
regressions reported in Table V.
6
The method for obtaining subjects varied some-
what between countries due to logistical considerations.
In Australia, responses were obtained from students in
two different sections of an accounting class. Question-
naires were distributed in class by the instructor and
then returned to the researcher. We are unaware of any
students who refused to participate. In Singapore, a col-
league distributed questionnaires at her university. A to-
tal of 200 questionnaires were sent to our Singapore
colleague, however we do not know for sure that all
200 were distributed to potential participants. Forty-five
completed questionnaires were mailed directly to one of
the researchers in the U.S. In the U.S., students were
offered extra credit to obtain completed questionnaires
from non-accounting students over the age of 25. significant; however as pointed out in Table I, descrip-
The subjects signed a separate page (returned in a sepa-
rate envelope) indicating that they met the criteria and
provided their phone number so that we could ran-
domly verify that the subjects were legitimate. No
problems with subjects were identified. 64 question-
naires were distributed and 54 responses were received
(84% response rate).
7
All three countries have progressive individual in-
come tax systems that tax income earned by individuals
as employees and through self-employment. Income
earned from capital (e.g., interest, dividends, and capital
gains) receives preferential treatment in all three coun-
tries. However, the Australian and U.S. systems are
much more complex than the Singaporean system. Aus-
tralians face the highest marginal tax rate of the three
countries (47%). The highest U.S. marginal rate was
39.6% in 2001 (when this data was collected) and is
35% in 2006. In Singapore the highest marginal rate
was 28% in 2001; and is 21% in 2006. The highest
Australian rate has been the same since 2001. This
information was obtained from the taxing authority
websites of each country (http://www.ato.gov.au for
the Australian Taxation Office, http://www.iras.gov.sg
for the Inland Revenue Authority of Singapore and
http://www.irs.gov for the IRS in the U.S.).
8
A few of the Singapore subjects (10%) were tax
professionals; however, excluding those subjects does
not affect our results in any way.
9
Business-use of a personal automobile is a relatively
common occurrence in both the U.S. and Australia.
However, in Singapore, for tax purposes, automobiles
are either business or personal, they cannot be both.
Therefore, the business-use of an automobile scenario
would not be relevant in Singapore. On the other
pore, thus it was viewed as an appropriate substitute.
10
All three perceived detection variables (i.e., audit risk
in general, audit risk in this particular scenario, and disal-
lowance possibility if audited in this particular scenario)
were included in the regression. It did not appear that the
likelihood of being audited affected subjects compliance
choice. The only variable that was significant is what
they thought would happen if they were audited. Thus,
due to significant correlations between the three vari-
ables, only the perceived likelihood of disallowance
measure will be retained in the subsequent analyses.
11
Education is marginally significant at the 0.06 sig-
nificance level.
12
Age, education, and country are all significantly
correlated, so it is little difficult to disentangle the inde-
pendent effects of each of these.
13
The factor representing descriptive norms was not
tive norms are only expected to guide behavior in no-
vel situations. Although the subjects were not
especially familiar with the specific tax issue that was in-
cluded in the questionnaire, it is unlikely that making
tax compliance choices would be considered a novel
situation.
14
It is important to note that most of the subjects be-
lieved that they could cheat in this setting and not get
caught. Based on the Theory of Planned Behavior [see
Bobek and Hatfield (2003) for a discussion], without
sufficient opportunity all other influences on behavior
(e.g., social norms) are stifled. For example, in the U.S.
wages are subject to 3rd party reporting to the IRS.
Even without favorable norms toward compliance,
cheating by omitting wages reported on a W-2 form is
not something that most taxpayers will do because they
know they are likely to get caught.
15
Considering that the Australian sample was stu-
dents, we reran all of the statistical tests leaving out
these subjects. The results were qualitatively the same as
what is reported in the paper (including the fact that
the variable age was significant).
Acknowledgments
The authors appreciate the data collection assistance of
Eunice Hooi, in Singapore, as well as helpful comments
regarding the manuscript from Charles Kelliher and
three anonymous reviewers.
 Social norms of tax compliance
Appendix
Australian and United States scenario
The Browns have an automobile that they use for
business and personal reasons. The tax laws provide
that automobile expenses are deductible to the ex-
tent the automobile is used for business. In preparing
their tax return, the Browns calculate that the
automobile was used 50% for business. However,
the Browns know that if they falsely claimed it was
used 80% for business, their deduction would in-
crease by $1,400.
Singaporean scenario
Mr. Tan, a self-employed individual, has incurred
overseas traveling expenses which include both busi-
ness and private traveling. The tax laws provide that
traveling expenses are deductible against the business
profits to the extent they are incurred for business
reasons. In preparing his tax return, Mr. Tan has cal-
culated that 50% of traveling expenses were incurred
for business purposes. However, Mr. Tan knows that
if he falsely claimed that 80% of the traveling expenses
were incurred for business reasons, the deduction
would increase by $1,400.
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