Are you looking for innovative ways to learn about or teach personal finance? One way to accomplish this is through playing games. Financial video games, apps, and board games have become more popular over the years. Research has shown that the gamification of financial education is not only fun but also an effective learning tool. Games allow participants to learn through doing the tasks they are learning about within a simulated environment.
The Cheat Sheet spoke with Nick Maynard, Doorways to Dreams Fund senior innovation director, and Victor Ricciardi, finance professor at Goucher College and co-editor of the book Investor Behavior: The Psychology of Financial Planning and Investing, to learn more about the impact of video games on financial education. Here are four ways video games can improve financial literacy.
1. Improved sense of self-efficacy
The Doorways to Dreams Fund (D2D Fund), which designed several financial literacy video games, conducted research exploring the impact of these games on one’s financial capability. The organization proposed a Theory of Change, which posits that video games can help users develop basic financial knowledge and foster one’s confidence in their ability to reach financial goals. This is accomplished through being able to engage in financial tasks within a fun and low-stress environment. Consequently, the increased confidence will encourage users to become motivated to take action with their finances in real life.
A portion of D2D Fund’s research analyzed levels of financial self-efficacy and financial literacy for games released under their Financial Entertainment franchise, which include Bite Club, Celebrity Calamity, and Farm Blitz. The Fund began by testing the impact of their Farm Blitz and Bite Club games. Users were tested in six cities, consisting of groups of nine to 18 people per city. Each participant was asked to complete a financial confidence test before and after each game played, in addition to a financial literacy test. The financial literacy questions were based on the NEFE Financial Education Evaluation Toolkit. The results showed improvement in financial knowledge and confidence after the games were played.
2. Increased engagement
The study says one problem that often occurs with traditional financial education is a lack of interest. Consequently, D2D Fund has used gaming as means to encourage consumers to develop a desire to learn about money management through an engaging, casual representation. Research suggests video games help participants become more engaged with the material.
“Video games offer the opportunity to present the otherwise dry, and often stressful, topic of personal finance to a larger and more diverse audience. We are discovering new ways to deliver financial capability building tools to the people who typically don’t engage with traditional materials. The introduction of complex topics through fun and engaging gameplay is unique and often surprising to those who have played Financial Entertainment titles. Our games have generated over 100,000 hours of game play across all 50 states,” said Maynard.
3. Improved knowledge retention
Games also provide a way for participants to remember financial concepts more easily. Presenting educational material in a relaxed and fun environment relieves the anxiety that often comes with learning something new.
“Studies have shown that games have the ability to shift cognitive processes. Psychologists have found that casual games — meaning simple games like ours and Candy Crush — improve mood, promote relaxation, and ward off anxiety. They’ve also posited that failing in a game may promote resilience in the real world. It is truly fascinating to think that games actually change the brain’s chemistry and may provide an improved receptivity to learning,” said Maynard.
Furthermore, video games incorporate story telling. This method of relaying information can have powerful impact on one’s ability to recall information.
“…Games can tell stories, and the history of religion and literature shows that narratives are memorable,” said Peter Tufano, Doorways to Dreams Fund chairman and co-founder, in the study’s opening statement.
4. Better communication
Instruction through video games provides building blocks through which students can gain the confidence and tools needed to learn increasingly complex financial topics. Learning the basics allows students to more easily collaborate with their financial education instructors and help them communicate what they need in order to further the learning process.
“Money and investing games are important tools in an overall financial education approach because the research demonstrates students have improved learning outcomes based on experience-related activities. This approach allows for the teacher and student to have better communication throughout the entire education process. Games can be used to reinforce concepts covered in the classroom and the students find this a fun learning environment,” said Ricciardi.