Video Games and Financial Literacy

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FinancialLiteracyCenterFLC

A joint center of the RAND Corporation, Dartmouth College,and the Wharton School

Insight October 2012 Number 9

Videogames: A Promising Strategy forImproving Financial Literacy

It is widely known that most American amilies arenot saving enough money or the uture and are

carrying too much debt. O those amilies, the most

vulnerable are those that earn the leastabout

75 million households earning low to moderate

incomes, many o which rely on costly loan services to

get rom one paycheck to the next or ace high late ees

on credit card bills. Financial education can help these

households improve their prospects, but it is dicult to

reach them through traditional programs. Like many

Americans, low-income employees oten do not attendor stay engaged innancial education programs. The

traditional approach to this problem has been to ocus

on the supply side: that is, to increase the availability o

nancial education programs. A promising new approach

is to ocus instead on the demand side by increasing the

appetite or nancial education through videogames.

This concept has been developed by the Doorways to

Dreams Fund (D2D), a nonprot organization dedicated

to expanding savings and other nancial opportunities

or Americans with low to moderate incomes. With sup-

port rom the Financial Literacy Center, D2D developed

and disseminated a series o videogames that immerse

players in the role o a business owner or nancial advi-

sor who must learn quickly how to make smart nancial

decisions or ace bankruptcy. The concept, which D2Dcalls Financial Entertainment, is to make the games

uneven exhilaratingand to impart basic principles

o nancial management during the course o play with-

out using traditional instruction.

This policy brie describes the concept behind the

games, how they are being disseminated, and the extent to

which the games are stimulating demand or this orm o

nancial education. Although a rigorous assessment o the

games value has yet to be done, preliminary research sug-

gests they are a promising approach to teaching nancialliteracy and promoting positive nancial behaviors, par-

ticularly or households with the least nancial security.

Educational Game Concept

The concept behind Financial Entertainment is to lever-

age the power and popularity o videogames to attract

people to an experience that has an instructional pur-

pose. In contrast to the experience o passive listeners in a

classroom, the goal is to stimulate players with the games

visual eects, story, sound, and pace. Because players

are motivated to win, they will continue to navigate the

increasing challenges the game presents, reinorcing their

new skills through repeated practice. They can also play a

This issue oInsightsummarizes research conducted within the Financial Literacy Center and reported

in Can Games Build Financial Capability?, by Nicholas W. Maynard, Preeti Mehta, Jonas Parker, Jerey

Steinberg (http://www.rand.org/pubs/working_papers/WR963.html) . These bries are designed to com-

municate emerging research to policymakers and the public. Al though the working papers on which they

are based have undergone peer review, the research should be treated as work in progress. Conclusions

are preliminary and subject to change.

Emerging Research from the Study of Financial Literacy
http://www.rand.org/pubs/working_papers/WR963.htmlhttp://www.rand.org/pubs/working_papers/WR963.html


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h t t p : / / f i n a n c i a l - l i t e r a c y . r a n d . o r gF I N A N C I A L L I T E R A C Y C E N T E R 2

their own pace, making it less likely they will get rus-

trated and give up. The role-playing experience o a game

can also be un and ree rom the anxiety some people

eel while in a classroom.

Financial Entertainment uses videogames that are

ree or low-cost to the public; easy to play; and accessible

to anyone online, on a smart phone, or via Facebook.

These games are reerred to as casualor socialgames.

Unlike traditional videogames that are costly and require

advanced skills to play and powerul personal computers

to run, social videogames are available to nearly anyone

with access to a computer, smart phone, or PDA. Some

social games have become extremely popularAngry

Birds, or example, has been downloaded by one billion

people. Their appeal is due to several eatures: (1) game

mechanics that are easy and addictive, (2) game motis

that are popular and nonviolent, and (3) game structures

built or short, oten episodic, play times.

Social games can also appeal to a broader demo-

graphic than traditional videogames. The average social

gamer is a 43-year-old woman. According to one source,

one out o every ve Americans over the age o six has

played an online social game at least once. More than

one-third o social gamers have had no previous video-

game experience. Most important, their users are repre-

sented across the income spectrum, social games have

the potential to capture a larger share o audiences look-

ing or low-cost orms o entertainment.

As o 2012, D2D has developed ve games, along

with two variations, each o which ocuses on dier-

ent nancial lessons (see textbox). In Celebrity Calamity,

or example, players become the nancial manager or

three up-and-coming celebritiesAlice Albudget, Ryan

Buster Buyin, and Missy Moolahwho spend beyond

their means. Players must eectively use a bank account,debit card, and credit card to keep their clients rom

bankruptcy. While ocused on un, the games explicit

learning objectives include:

payingmorethantheminimumcreditcardpayment

minimizingcreditcardnancecharges

avoidingfees,includingbankoverdraftfees,andcredit

card late payment and over-limit ees

makinggoodannualpercentagerate(APR)choices.

In another game,FarmBlitz, players are armers

who have to borrow money during the growing season

and invest in savings once they are paid or their crops.

Players accumulate savings by purchasing trees, which,

like a savings account, grow in value at a relatively low

rate. But i they borrow too much money beore harvest,

players experience rsthand how quickly compounding

debtrom high-interest credit cards and payday loans,

or examplecan make it impossible or saving habits to

take root. Rabbits, with their reputation or rapid repro-

duction, represent orms o high-interest debt. The more

rabbits the players introduce to their arms, the more

quickly they reproduce and consume the arms crops.

This games learning objectives include:

minimizinghigh-interest,short-termdebt

maximizinglow-interest,long-termsavings

understandingcompoundinterest.

In Bite Clubinspired by Diner Dash, one o the most

popular casual games o all t imeplayers manage a day

club or vampires. Over the course o the game, players

experience the tension between servicing debt, spending

money, and saving or the uture. As vampires, who live

Celebrity Calamity:

Manage credit & debt

FarmBlitz:Manage resources to build savings

Bite Club:Vampire retirement savings

Groove Nation:

Dance budget game

Refund Rush:

Make the most of a tax refund
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orever, players must save a substantial amount o money

to nance their dream o retiring to the No-Sun Belt.

The game aims to instill three major learning objectives:

savingforretirement

payingdowndebt

managingcurrentconsumption.

Outreach Strategies to Attract Players

In addition to designing games that players are likely to

nd engaging, D2D has pursued innovative strategies

to market and disseminate those games. It has established

eective partnerships or distributing the games and

developed social marketing strategies with those partners

to target specic populations. Two such partnerships are

described below.

Fort Hood

D2D ran an initial pilot with Fort Hood, one o the larg-

est Army installations in the world. Fort Hood decided

to partner with D2D because it recognized the need to

help the military community manage its nances, and

was having diculty getting people, especially spouses,

to attend traditional nancial education sessions on base.

Along with ocials at Fort Hood, D2D devised a strategy

to attract young enlisted personnel and their amilies to

playCelebrity Calamity. Leveraging the natural competi-

tion that exists in this community, the pilot consisted o

a game tournament that eatured prizes or top scorers

and or the strongest unit participation. The game was

introduced through a trusted source, the base nancial

coaching network, which invited soldiers and amily

members to play. Computer labs on the base were dedi-

cated to the tournament. Inormation about the compe-

tition was spread through email blasts rom base nan-cial coaches to their assigned units and through fyers

handed out on the base. Ater the tournament, a public

awards ceremony brought attention to the competition

and its winners.

According to one Fort Hood amily member, the

structured competition was an eective way to generate

sustained engagement: I think its a great idea to play

or high scores against others in your military commu-

nity. I played ar, ar longer than I would have otherwise

and the repetitive play drilled the recommended proce-

duresinto my head.

Ivy Tech Community College

D2D conducted another pilot with Ivy Tech Community

College in Indiana, the nations largest state-wide com-

munity college with single accreditation, oering low-cost

education to nearly 200,000 students a year. For this com-

munity, the marketing strategy was to create a tailored por

tal site available to all o its 11 campuses. Using that portal

D2D organized two tournaments, one in 2010 orCelebrity

Calamityand one in 2011 orFarmBlitzand Bite Club. The

tournaments were promoted through the Campus Con-

nect intranet; a compelling graphic on the Ivy Tech home

page; email blasts to students with customized messages

or dierent populations, including nontraditional stu-

dents; and announcements on Twitter and Facebook.

Results of Tournament Outreach

The level o participation in the Fort Hood and Ivy Tech

outreach eorts and tournament pilots is evidence that

D2Ds distribution tactics and marketing tools are work-

ing. Table 1 shows data gathered by Google Analytics

rom the tournament websites. Besides the thousands o

players who registered or the competition, thousands

more were attracted to the portals dedicated to the tour-

nament. The Ivy Tech tournament attracted 45,000 visi-

tors to the game portalan extraordinary number that

represents nearly a quarter o the schools entire student

body. Players in both tournaments showed a high level o

engagement, averaging 45 to 49 minutes o play per game

The table also displays the characteristics o the reg-

istered players who responded to the survey (85 percento players at Fort Hood and 94 percent o players at Ivy

Tech). At Fort Hood, 67 percent o the respondents were

men and 63 percent o the respondents reported annual

household incomes under $40,000. At Ivy Tech, 80 per-

cent o the respondents were women and 82 percent

reported household incomes o less than $40,000.

The total number o registered players in all D2D

distribution pilot tests, including those at Fort Hood and


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Ivy Tech, was 16,182, and they averaged 34 minutes on

a single game. Over 60 percent o the registered play-

ers were emale and over 80 percent were rom low- or

middle-income households. About one in ve players

came back to play the game again.

Overall, as shown in Table 2, the videogames devel-

oped by D2D reached over 280,000 people nationwide

during their distribution pilot testing eorts. That gure

includes participants in all their tournaments and play-ers who visited the portal sites supported by distribution

partners.

Cultivating Financial Capability: Preliminary Evidence

The goal o the game developers at D2D is to build nan-

cial capability and thereby improve real-world nancial

decisions and sustain behavioral change. Future research

will need to be conducted to demonstrate that game

play can achieve these eects. In the meantime, there is

promising evidence that the D2D games improve nan-

cial capability. One source o such evidence is the inor-

mal testing D2D carried out during the game develop-

ment process with user groups o low- and middle-income

adults between 18 and 35 years old. Although the sample

size was small (about 80 adults) and the games were not

nalized at the time o testing, quantitative measures

indicated an improvement in both knowledge and con-

dence across the testing groups.

Additional ev idence comes rom a modest random-

ized trial to compare the eects oFarmBlitzwith the

eects o more traditionally delivered, printed nancial

education materials. In the spring o 2011, D2D part-

nered with two local nonprot organizations to imple-

ment a 207-person experiment that measured nancial

condence, knowledge, and action taking. Participants

were randomly assigned to either playFarmBlitzor 30 to

45 minutes or read a brochure that contained nancial

education material available on the web. Both beore

and ater their task, all part icipants were given surveys o

nancial condence (12 questions in which participants

were asked to rate their condence on a scale o 1 [not

condent] to 5 [very condent]) and nancial knowl-

edge (10 true or alse questions). Both groups were also

oered nancial actions, such as signing up to receive

ree nancial inormation, pledging to save, pulling their

credit report, and buying a savings bond.

Table 1. Results of Tournament Outreach

Total Visitors and Players

During Tournament Fort Hood Ivy Tech

Portal visitors (during pilot periods) 5,300 45,000

Estimated game plays (all visitors) 6,127 45,708

Registered users 1,300 4,500

Average play time (registered users) 45 min 49 min

Demographic Percentages from

Registered User Survey

Gender

Male 67 20

Female 33 80

Ethnicity

African-American/black 28 11

Asian 3 1

Hispanic/Latino 18 3

White 43 82

Other 8 3

Annual household income

0 $19,999 14 52

$20,000$39,999 49 30

$40,000$59,999 26 12

$60,000 or more 12 6

SOURCE: Google Analytics

Table 2. Overall Reach of D2Ds Financial EntertainmentInnovation

Game Approximate Number of Plays

Celebrity Calamity 101,441

FarmBlitz 65,180

Bite Club 44,337

Groove Nation 18,556

Refund Rush 19,651

Total number of plays 260,785

Total site visits 281,918

Percentage of return visitors 18

SOURCE: Google Analytics


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WB-115 (2012

The Financial Literacy Center is a joint center o the RAND Corporation, Dartmouth College, and the Wharton School o the University o

Pennsylvania. Established in 2009 with support rom the Social Security Administration, its mission is to develop and test innovative programs

to improve fnancial literacy and promote inormed fnancial decisionmaking.

http://fnancial-literacy.rand.org

sometimes motivate real-world decisions to increase

nancial savings. Further research will be needed to

validate these eects.

D2D plans to expand upon its current partnerships

as well as develop additional partnerships to test dierent

game variations and new marketing strategies. It will also

experiment with new ways o linking gameplay with di-

erent levels o real-world nancial decisions that impose

light to heavy demands on the player. Lighter demands

include clicking through a website or urther inorma-

tion, while more demanding actions might involve join-

ing a group, signing up or a class (on buying a home or

completing an income tax orm, or example), or making

a nancial pledge (to save more or pay o some debt).

Heavier demands might include using personal nan-

cial management tools, making a deposit, enrolling in a

401(k), opening an account, or buying a bond.

The challenge is how best to integrate these choices

into gameplay. Should they be embedded at stressul

moments (such as when the player accumulates a moun-

tain o debt) or when an important level o achievement

has been attained (such as reaching Farm God status in

FarmBlitz)? And how can they be inserted into the game

without interrupting the fow o the game? What about

rewarding players or both game-based actions and real-

world nancial actions?

Ultimately, Financial Entertainment represents a

paradigm shit in the eld o nancial education. It demon-

strates that nancial education can be engaging, un, and

interactive. D2Ds most innovative step may be building a

bridge between the world o the game and the real world so

that players can make decisions about their own nances in

the game itsel. It is a pioneering concept that deserves to be

rened, tested, and assessed in uture research.
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Video Games and Financial Literacy