Gamification of Finances May Help People Achieve Savings Goals Faster
The early days of the pandemic brought a new phenomenon to light: the rise of the retail investor. Along with it, came the gamification of finance via new platforms and apps. While many deemed gamification as “dangerous” — especially for younger investors — a new study indicated that it could actually help investors reach their savings goals faster.
The study, performed by the University of London’s Bayes Business School, noted that consumers could be 20% more likely to reach their saving goals if they are offered psychological rewards by banks and financial institutions.
“Gamifying” the perceived unpleasant task of saving for the future has a significant effect on participants’ behavior, shown in their capacity to meet a saving goal they set for the following month, according to a statement on the study. The research aimed to show how consumers often have difficulty saving money because they prefer the immediate pleasure of spending over the delayed reward of having savings.
“Gamification can make the pursuit of a long-term goal more enjoyable by associating the target behavior with the experience of rewarding psychological responses typical of games such as mastery, competition, and escapism,” according to the study. “For example, consumers may compete on a leaderboard with each other on the amount they save toward a given goal, experiencing the benefits of competition. Or they may win badges by reaching pre-set, intermediate targets, experiencing the benefits of mastery. These psychological benefits can be immediately rewarding for consumers and can favor the pursuit of a behavior such as saving by making it more enjoyable in the short-run.”
The researchers asked around 300 people, split into two groups, to set a saving goal for the subsequent month and track their savings using a web app over the four weeks, with one group being randomly assigned to a gamified version and the other not.
“At the end of the four weeks, participants’ savings were compared, and the results showed that those who used the gamified app saved almost 20 percent more in proportion to their goal than participants who used the non-gamified app,” according to the statement.
The study likened this to other gamifying environments, which have been hugely beneficial to applications including Duolingo, “which motivates users to learn a language, and Zombie Run, which motivates users to be physically active — using progress trackers and rewards.”
Introducing these game-like psychological rewards can help improve consumers’ financial well-being through more effective saving behavior, according to Professor Irene Scopelliti, one of the researchers.
“The start of the year presents an ideal opportunity to motivate ourselves into good habits such as avoiding unnecessary spending and sticking to our saving goals,” she said in the statement. “This study shows that associating small but immediate psychological rewards to the act of saving can improve our ability to achieve important and rewarding goals for the future.”
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