Articles from Cass Knowledge

Can "gamification" encourage people to save for the future?

A new research report for the Think Forward Initiative explores how gamification can increase the motivation to save, and ultimately help people reach their savings goal.

Saving isn't easy. Consumers often struggle to attain their saving goals because saving requires them to forego spending, and consumers love to spend. The benefit of saving money is only experienced in the future whereas the reward of spending money is immediate, in the present. As a result, consumers may refrain from saving, and this can leave them vulnerable to financial difficulties in the future.

One theory is that If saving could be shown to be more immediately rewarding, it could prove a more attractive proposition. Nethal Hashim and fellow researchers from the Business School (formerly Cass) looked at how gamification could help accomplish this.

Gamification refers to the use of elements typically found in games to motivate behaviour in otherwise “serious” contexts. These elements provide rewarding psychological motives for consumers to experience. For example, leaderboards could allow consumers to experience a sense of competition, winning a trophy or badge can provide an experience of achievement, and narratives can immerse consumers in a story and offer escapism.

The research argues that engaging with game elements is immediately rewarding for consumers, and so if gamification can offer these positive psychological responses, performing an otherwise unrewarding activity (such as saving money) within a gamified environment might increase saving behaviour.

For this research, 331 participants took part in a four-week field study on saving behaviour. They set themselves a saving goal they could realistically achieve during that period, and tracked their savings toward that goal on a web application. When participants signed up to the web application, they were randomly assigned to one of two conditions: gamified vs. control.

The web app showed participants their set goal and how much they had already saved toward that goal. Participants were able to use an add-savings button and a decrease-savings button to adjust and monitor the amount of money they had saved. The web app also showed participants an indicator of how many days were left to achieve their goal.

The gamified version included a leaderboard (on which participants competed with other participants on their saving goal achievement), a progress bar, and badges that participants could achieve for reaching saving milestones. In the control condition, the web app did not feature any game elements.

It was tested whether participants were more likely to achieve their saving goal in the gamified condition compared to the control condition. To see if participants found saving in the gamified condition more immediately rewarding, the study measured:

  • how enjoyable they found the app each week;
  • their satisfaction with the amount of money they had saved each week;
  • how useful they found using the web app each week, and
  • how often they had logged their savings onto the web app each week.

The study then measured how likely participants would be to recommend the web app, and if they would continue using it if they could. Finally, it looked at individual differences between participants, including thrift vs spendthrift tendencies, debt aversion, propensity to plan for money, self-control, financial literacy, future orientation, and playfulness, to see how these individual differences affected participants’ ability to reach their saving goal.

The results provided some initial evidence that gamification can be used to help consumers save. Participants in the gamified condition saved a higher percentage of their saving goal each week than those in the control condition. However, participants in the gamified condition did not find the web app more enjoyable than those in the other group, contrary to the supposition that gamification motivates saving behaviour because it confers immediate rewards.

In addition, the results did not find any differences between conditions in satisfaction with saving, perceived usefulness, frequency of use, likelihood to recommend the web app, and likelihood to continue using the app.

Overall saving goal achievement varies with the individual's propensity to plan for money in the long run, their debt aversion, and their financial literacy. Participants with a higher propensity to plan for money in the long run, a higher debt aversion, and a higher financial literacy score had a higher saving goal achievement, which is in line with past research on saving behaviour.

The study found that the main effect (that participants in the gamified condition saved a higher percentage of their goal than participants in the control condition) was robust to the inclusion of these individual difference measures. It also found some initial evidence that more playful participants had higher saving goal achievement. As more playful people might be more likely to enjoy gamified environments, gamification might be more effective for some people than for others.

The results have practical implications for consumers, banks, and policy makers. Gamified interventions can help consumers to pursue behaviours they might otherwise resist or ignore, saving included. Consumers could also take the initiative by setting themselves small challenges and giving themselves rewards, or even by competing with peers towards the achievement of certain goals.

Policy makers could educate consumers about the use of self-imposed gamification principles to encourage saving. Younger consumers, who typically struggle the most with saving for the future but who are more likely to be familiar with games, might benefit most from gamification. Therefore, interventions at schools or universities could be particularly effective at helping consumers develop better saving behaviour.

Read the Think Forward Initiative report and download the paper Gamification Can Help Consumers Reach Their Saving Goals