Monday, January 10, 2011

A Smiling Horse

I have mentioned some of the activities of the Financial Literacy Center (FLC) in previous posts and I want to discuss them further here. We place a high value on creativity and ingenuity in the design of financial literacy programs and have found that this is particularly important when trying to reach certain segments of the population such as the young and those not in school and not in the workplace.

One needs to think outside the box to find effective solutions to financial illiteracy. One of our teams has certainly gone in that direction. Doorways to Dreams Fund (D2D) has been developing video games targeted to low-income individuals to provide training in critical financial literacy areas, including household budgeting, consumer decision making, and cost-effective use of financial service providers.

The team has already launched Celebrity Calamity (, a game targeted to lower-income women aged 18-30, especially single mothers. Players become the financial manager for up-and-coming celebrities who spend beyond their means. To be successful, players must effectively use a bank account, debit card, and credit card, so the game teaches the importance of paying off credit card balances, minimizing credit card finance charges, avoiding fees (including bank overdrafts, late payments, and over-the-limit fees), and making informed annual percentage rate choices. The game also includes a number of implicit learning objectives, such as raising awareness of spending behavior and the value and utility of saving money.

The game that the FLC supported and that D2D is now completing is called Bite Club. Designed for lower-income adults, this game is inspired by the very popular casual video game Diner Dash. Bite Club offers players a simulated experience in which they face the real-world tension between managing debt payments and current spending needs on the one hand and saving for the long-term goal of retirement on the other. For low-income and minority adults, building retirement savings may seem completely out of reach, given pressing needs to pay down debt and manage daily expenses. Bite Club players experience the natural tension that exists among debt service, spending, and long-term saving as the game unfolds.

I want to explain the workings of the game to show you what I mean when I say we need to think outside the box! To win, players must successfully manage a “day club” for vampires. By featuring vampires, who live forever, the game is able to highlight the impact of long-term savings. Bite Club is a 15-round game with three years’ time passing between each round, allowing the game play experience to span 45 years. In effect, the players enter a financial simulation running from age 22 to age 67.

The core challenges of the game include the following:

• Running a club for vampires that offers patrons seating areas with tables and couches, a bar (type A, B, or O blood!), a DJ booth with interactive song selections, and a dance floor.
• Servicing the four stations of the club in order to satisfy a variety of vampire customers and earn revenue.
• Making financial management decisions related to paying off debt, managing current consumption, and saving for retirement.
• Reacting to a variety of savings offers, which include retirement “open enrollment” and additional long-term savings promotions.

The core instructional design content includes

• Saving for Retirement. Players’ characters long to move to the “No Sun-belt” for retirement, but because vampires are immortal, they must save a substantial amount of money to finance their retirement dream, and they must reach this retirement savings goal before they can close down their “day club” and retire.
• Paying Down Debt. Players start with credit card debt (from purchases of items needed to open the club) from the Werewolf Bank. And in order to retire, players must pay off low annual percentage rate student loans from their university business classes.
• Managing Current Consumption. The club must be managed effectively to continue to satisfy customers. Players are offered the option to purchase various upgrades, some of which are valuable (needs) and some of which are merely aesthetic (wants).

Why this approach to improving financial literacy? As many as 72% of Americans play video games, with rates of play highest among those under age 35. Moreover, video games are the fastest growing form of entertainment in the United States. We need to find ways to engage individuals in financial education. Learning through traditional venues like classrooms and the workplace are not feasible or desirable for all populations.

Thinking outside the box requires creativity and ingenuity. Nick (Maynard), Tim (Flacke), Peter Tufano, and others at D2D have been willing to experiment with new ways to improve financial literacy. They have been willing to think differently and consider unique approaches. Often it seems this kind of thinking requires the creative mind of a child not yet locked into traditional ways of thinking. I was in Boston Common last summer and saw a group of people around a guard riding a tall, beautiful horse. I joined them to admire the horse. Everyone in the group had comments on the horse, very similar to what I was thinking too, until a little girl looked up and asked, “Does this horse smile?” Now, who would have thought of that?