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Virtual Economies As Financial Literacy Sandboxes: Case Study in Gaia Online

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Virtual Economies As Financial Literacy Sandboxes: Case Study in Gaia Online Virtual Economies as Financial Literacy Sandboxes: Case Study in Gaia Online A DISSERTATION SUBMITTED TO THE FACULTY OF THE GRADUATE SCHOOL OF THE UNIVERSITY OF MINNESOTA BY Barbara Zebe Johnson IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF EDUCATION Joyce Strand, Terrie Shannon June 2012 © Barbara Z. Johnson 2012 Acknowledgements First and foremost, I want to recognize the hospitality Nyght, her staff, and customers extended to me during the five years I spent as an explorer in their world. They were always welcoming and willing to help out a newcomer. It is my hope that I can convey something of the amazing complexity of this parallel economy and the sophisticated financial and business activities that take place there every day. I also want to thank my mentor, Terrie Shannon, my committee, and the first ever UMD Ed.D. cohort for their support during this long process. The journey toward a dissertation is long, and it is best to undertake it with good guides and good company. That company included also some very good friends who happen to be colleagues: Beth King and Betty Hayes. I am so grateful to have worked with you both on the project that inspired this dissertation (the Tech Savvy Girls), and I look forward to many years of studying how role-playing games function as tools for imagining and creating future selves. Last but certainly not least, I want to thank all of the Tech Savvy Girls for asking good questions while creating your dream businesses. You sparked my exploration of the state of financial literacy education globally and served as examples of what experiential learning could offer the field. Thank you, ladies, and may the best of your dreams and imaginings of what it is to be an adult come true. i Dedication This dissertation is dedicated to the most supportive guild in any world – my family. ii Abstract Currently, our global economy faces numerous challenges that have adverse effects at every level, impacting both multi-national businesses and the average consumer. A recent report from the Presidential Advisory Council on Financial Literacy (PACFL) strongly linked the recent and continuing economic downturn with a need to improve the financial skills of people in the United States. Unfortunately, financial literacy among people in the United States is generally poor. This is partially because few states require financial literacy education among high school students but also because most financial literacy courses are ineffective. Courses that show learning gains often include experiential learning methods. This five-year single case study of a teen- aged business owner in the virtual world Gaia Online investigates how development of a business in a virtual world can facilitate informal experiential learning and the development of financial literacy among teen and young adult business owners. A specific set of subject domains and a model of types of understanding are used to evaluate financial literacy manifest by the case study participant and evaluate the potential overlap of the financial literacy affordances of Gaia Online with definitions used in the literature and computer games used to teach financial literacy in school and community programs. With the exception of credit and insurance, the case study participant evidenced understanding of standard financial literacy domains. Based on the experiences of the case study participant, this study proposes expanding the subject domains to include property, especially intellectual property. The model of iii understandings is also modified to separate specialized language from conceptual knowledge of financial literacy. The study also explored experiences that encouraged learning. Changes in the business’ status quo, positive or negative, caused the case study participant to seek out advice or resources to help her learn in order to adapt to the changes. This high- commitment, low-stakes environment mirrored the real world economy sufficiently to allow the participant to bridge between virtual experiences and real world formal learning and financial management. Over time, the participant’s confidence in managing her virtual business and real life finances increased, and adopted an identity as a financially literate person. iv Table of Contents List of Tables..........................................................................................................................viii List of Figures...........................................................................................................................ix Chapter One –Introduction...................................................................................................1 Our Financial Crisis.......................................................................................................................... 1 Need for Financial Literacy............................................................................................................ 2 What is Financial Literacy?............................................................................................................ 4 Financial Illiteracy............................................................................................................................ 5 Financial Literacy Education......................................................................................................... 6 Poor Results of Current Education Programs ......................................................................... 9 Improving Effectiveness of Financial Literacy Education Programs.............................10 Experiential Learning in Financial Education.......................................................................11 Experiential Learning in Virtual Worlds.................................................................................13 Game­Like Elements in Financial Literacy Education ........................................................15 Importance of Developing Situated Skills and Habits ........................................................16 Virtual Businesses as Experiential Learning Sites...............................................................17 Study Objectives and Research Questions..............................................................................19 Study objective ...............................................................................................................................................19 Research question.........................................................................................................................................20 Significance of the Study...............................................................................................................20 Definitions.........................................................................................................................................22 Casual games...................................................................................................................................................22 Computer game..............................................................................................................................................22 Computer simulation...................................................................................................................................23 Digital media ...................................................................................................................................................23 Informal learning...........................................................................................................................................23 Mobile app........................................................................................................................................................24 Massively multiplayer online games (MMOGs)................................................................................24 Pro‐Am...............................................................................................................................................................24 Sandbox games...............................................................................................................................................25 Smart phones ..................................................................................................................................................26 Serious games .................................................................................................................................................26 Virtual business .............................................................................................................................................26 Virtual world ...................................................................................................................................................26 Conclusion .........................................................................................................................................28 Chapter Two – Literature Review.................................................................................... 30 What is Financial Literacy?..........................................................................................................30 Facets of financial literacy.........................................................................................................................33 Subject domains.............................................................................................................................................46
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