LDT Program 2007 Master’s Project

1. LDT Program 2007 Master’s Project Vic Vuchic Greg Warman

2. Have you ever been asked for advice?

3. responsibility

4. sociology social exchange theory evolutionary biology altruism as adaptive trait psychology diffusion reciprocity liking religion prescribed value system as identity philosophy Hume’s ’generous action’ political theory marxism education student as teacher responsibility

5. design

6. personal finances

7. a fiscal crisis is looming 2005 was the first year since the Great Depression with a personal negative savings rate.

8. a fiscal crisis is looming • About 43% of American families spend more than they earn each year. • 2003 Federal Reserve • As of 2004, of households that have at least one credit card, average households debt is over $9,000. • CardTrack.com • Personal bankruptcies have doubled in the past decade. • The Fragile Middle Class: Americans in Debt • Average household debt excluding mortgages was $18,654/household! • Federal Reserve Board, 2003 survey • Formal “financial literacy” tests among youth reveal a significant decrease in financial knowledge. • 2006 Jumpstart Survey, the mean was score of 52% (a passing grade was 60%)

9. learning problem Our educational environment is not effectively teaching financial concepts to its citizens and this is reflected in people’s financial habits. • People with an understanding of financial concepts have better financial habits than others who do not understand basic personal finances. • Given that financial literacy is not mandatory in most school curriculums, people educated in the U.S. are mostly left to fend for themselves. Something significant has to be done to teach financial literacy in a manner that impacts behavior.

10. our process • Research • Synthesize findings • Design Solution • Test Prototype 1: Internal • Test Prototype 2: External • Launch Beta (today!) • Conduct Assessment

11. research Interviews Observe FLeducation Reviewcurrentofferings IN PARALLEL Mary Morrison @ Stanford U from Banks from FL Advocates Adam Tolnay @ Eastside HS Group Brainstorm Review literature Financial literacy Learning & Cognition Gaming Mobile learning Motivation Persuasion Transfer

12. synthesis & design • It’s critical to get information to individuals at a time in their life when they’re most receptive to learning and applying it (Prochaska and Velicer, 1997) Target Learner Students, High School or College, on the verge of graduating and entering the workforce.

13. synthesis & design • Rudimentary financial knowledge is lacking among youth (OECD Report, 2003). Learning Goals Basic, sequential building blocks regarding Cash Flow, Credit Management, and Savings.

15. synthesis & design • Challenges vary from person-to-person and it is counter-productive to “hit people over the head with what they’re not doing.” (Gurney, 1988; NEFE Conference Proceedings, 2004) Pre-Assessment Determine the learner’s financial habits and then match him / her with a similar protégé. The resulting game scenario is relevant for the learner.

16. synthesis & design • For financial literacy, experience is cited as the best teacher, followed by learning from friends & family (Hilgert et al, 2003) Model Experience Learner navigates scenarios and witnesses (and hears about!) the direct impact on his/her protégé

17. synthesis & design • Behavioral economics demonstrates that people will make decisions counter to their best interest because of ‘loss aversion’ in today’s marketing saturated culture. (NEFE Conference Proceedings, 2005; Tversky and Kahneman, 1991) Metrics Poor financial decisions are shown to be a loss of happiness and future freedom

19. synthesis & design • There is an asymmetry between the financial literacy concepts taught in most financial literacy interventions and how they manifest in practice. The mismatch of elements impedes transfer, (Thorndike and Woodsworth, 1901). Context of Decisions Colloquial language and the ‘money map’ bridge concept and practice. Through the mobile interaction the timing of financial decisions more closely resembles reality.

20. synthesis & design • Financial matters are emotionally charged. Cultural taboos, fear of being duped, and frustration with financial jargon impede financial literacy education. Framing & Structure of FS! FS! is a single-user experience and positioned as an opportunity to learn how to “stick it to the man!”. And yes, gameplay is fun!

21. synthesis & design • Conflict in the brain (emotional vs. analytical) makes it challenging to maintain a patient, long-term view to finances. (Laibson, 1997; NEFE Conference Proceedings, 2005) Implementation FS! will include a “mechanism for action” to help the learner start practicing good financial behaviors immediately.

22. prototyping Evolving the concept: • Internal • Technology: Excel, Word, and “SneakerNet” 2) External • Technology: Flash and SMS

23. assessment Subjects are given a list of scenarios and asked to determine: a) What would they do? b) Why? scope of decision outcomes 2 1 INCREASESFREEDOM The answers to (a) will be compared to best practice (as per the learning goals). The answers to (b) will be reviewed to see if learners’ explanations reflect the relationship between happiness and freedom. 4 3 LOWERSFREEDOM LOWERS HAPPINESS INCREASES HAPPINESS

24. questions?

25. appendices

26. How do I get my character?

27. How do I get my character? • Complete the pre-assessment answering questions like “If I were to receive an unexpected gift of money I would…” Based on your determined “money personality”, you receive a circumscribed list of possible characters. These characters’ scenarios reflect the type of money challenges appropriate for one’s “money personality”.

28. How do I get my character? • Select a character that appeals to you.

29. why mobile? • Meet the learner on their terms • 158 billion text messages in 2006 (double previous year). Those aged 13 to 24 are heaviest users. • Amplify sense of social interaction (i.e. liking) • “Email is for business, text is for friends!” HS Student • Reflect nature of financial decisions • Multiple, disparate, spontaneous • Ease of implementation • minimize class time requirement for use • It’s fun!!!

30. kinship Identification – select character Liking – social responses from character reciprocity Exchange – framing of game as opportunity to learn reputation Reciprocity, Dominance – high scores list ownership Singular onus – 1:1 match between character & learner responsibility

31. Learning Goals and Scenarios • Cash Flow • Build a budget to track their money • Differentiate between ‘needs’ and ‘wants’ • Compare alternatives before committing money • Won’t overspend on monthly budget • Credit Management • Utilize credit card to build a good credit history • Exhaust liquid (low-interest) savings prior to carrying debt • Avoid debt unless it is an emergency or investment related • Take advantage of lower cost borrowing before carrying a balance on credit cards • Compare alternatives when applying for credit cards • Savings • Participate in employer’s retirement plan when matching funds available • Save money for unforeseen emergencies (3x monthly ‘needs’ expenses) • Save money for long term goals (e.g. further education, car, retirement)

32. Learning Goals and Scenarios

33. user experience The Learner Student about to enter the workforce The Solution Web and mobile interface Set Up Play Evaluate Act! Habitsquiz Behaviorquiz Selectcharacter 20 minutes 12 days 20 minutes a lifetime! ? ? ? ?