Sunday, October 06, 2013


Richard Thaler writes about Americans' appalling financial illiteracy. As a result, many plan poorly and become dependent on others, including the various forms of public assistance.  This links to the various debts and unfunded liabilities at the various levels of government.  Timothy Taylor cites a 75-year $50-trillion problem at the federal level (mostly medicare and social security).

Federal budget problems are all over the news and have given us the (partial) closure of the federal government, the debt ceiling debate(s) and all of the associated problems.  Both sides have their well rehearsed talking points, many of which were recited on this Sunday morning's TV talk shows. It is just sound bites and talking points because of the many uninformed and untrained in the audience who Thaler writes about. They would be unable to grasp national financial planning and debt if they cannot even understand their own financial situation.

What to do? Tyler Cowen mentions that the brightest spot on the horizon for improved learning involves games. Here is the relevant quote from his recent econtalk conversation with Russ Roberts:
Russ: I agree with that. Let's talk about games. You have some interesting things to say about games and the application toward education. Guest: Well, if you ask in what sphere of modern life has education really succeeded, I think it's gaming. These games are incredibly complex. When I look at them I feel they are too complicated for me; I could never learn them. But the people who are interested--the game itself teaches people how to play. It's all done by software and very often online. And it seems it really works. They teach you in steps. They make it hard enough to be interesting but easy enough that you feel you are making progress. And in my view the big educational breakthrough has already come with games. It's just a question of how do we apply that to educating everyone else to do other things. And we're far behind on that. Russ: What are some of the ways that might be applied? Guest: Imagine an intro to economics textbook but structured more like a game, where you move on to different levels and maybe you capture pieces or you acquire points. And there's a competitive angle. And I'm not saying everyone has to do it that way. But I think there's really a big chunk of people who get interested in games, who would otherwise, say, never be interested in medieval history or battles or whatever else, but the games get the interested. And I think that's a big frontier for education, where we've actually solved the problem. We don't quite even know we've done it yet. Now we just need to apply what we've already learned.
Bill Gates and other philanthropists have been supporting various educational experiments. All this suggests that the way out may involve pairing philanthropists with gamers. The latter would have to invent games that boost financial literacy. Would that put an end to the sorts of claims the talking heads and pols were making on TV this morning?  One can hope.