Fintech companies are using elements of video games to make personal finance more fun. But does it work, and what are the risks?
- Gamification is the process of incorporating elements of video games into a business, organization, or system, with the goal of boosting engagement or performance.
- Gamified personal finance apps aim to help people make better financial decisions, often by redirecting destructive financial behaviors (like playing the lottery) toward positive outcomes.
- Still, gamification has its risks, and scientists are still working to understand how gamification affects our financial behavior.
- YouTube www.youtube.com
The human brain is a pretty lazy organ. Although it's capable of remarkable ingenuity, it's also responsible for nudging us into bad behavioral patterns, such as being impulsive or avoiding difficult but important decisions. These kinds of short-sighted behaviors can hurt our finances.
However, they don't hurt the video game industry. In 2020, video games generated more than $179 billion in revenue, making the industry more valuable than sports and movies combined. A 2021 report from Limelight Network found that gamers worldwide spend an average of 8 hours and 27 minutes per week playing video games.
Good at gaming, bad at saving
It's not necessarily bad that Americans spend millions of dollars and hours on video games. But consider another set of statistics: 25 percent of Americans have no retirement savings at all, while roughly half are either living "on the edge" or "paycheck to paycheck," according to a recent report on the Financial Resilience of Americans from the FINRA Education Foundation. Meanwhile, experts predict that Social Security funds could dry up by 2035.
So, why don't people save more? After all, the benefits of compounding interest aren't exactly a secret: Investing a few hundred bucks every month would make most people millionaires by retirement if they start in their twenties. However, the recent FINRA report found that many Americans have alarmingly low levels of financial literacy, a topic that's not taught in most public schools.
Even for the financially literate, saving money is psychologically difficult
But what if we could infuse the instant gratification of video games into our long-term financial habits? In other words, what if finance looked less like an Excel spreadsheet and more like your favorite video game?
A growing number of finance applications are making that a reality. By using the same strategies video game designers have been optimizing for decades, gamifying personal finance could be one of the most efficient ways to help people save for the future while reaping instant psychological rewards. But it doesn't come without risks.
What is gamification?
In simple terms, gamification takes the motivating power of video games and applies it to other areas of life. The global research company Gartner offers a slightly more technical definition of gamification: "the use of game mechanics and experience design to digitally engage and motivate people to achieve their goals."
The odds are you have encountered gamification already. It's utilized by many popular apps, websites, and devices. For example, LinkedIn displays progress bars representing how much profile information you have filled out. The Apple Watch has a "Close Your Rings" feature that shows how many steps you need to walk to meet your daily goal.
Brands have used gamification to boost customer engagement for decades. For example, McDonald's launched its Monopoly game in 1987, which essentially attached lottery tickets to menu items, while M&M's gained consumer attention with Eye-Spy Pretzel, an online scavenger hunt game that went viral in 2010.
In addition to marketing, gamification is used in social media, fitness, education, crowdfunding, military recruitment, and employee training, just to name a few applications. The Chinese government has even gamified aspects of its Social Credit System, in which citizens perform or refrain from various activities to earn points that represent trustworthiness.
Finance is arguably one of the best-suited fields for gamification. One reason is that financial data can be easily measured and graphed. Perhaps more importantly, financial decisions occur in the background of almost everything we do in modern life, from deciding what we eat for lunch to where we are going to spend our lives.
Gamification doesn't just make boring stuff fun; it's also an effective way to change our behavior. Used properly, it can also disrupt our habits.
The nature of habits
It's tempting to think that we make our way through life by thoughtfully considering the information before us and making sensible choices. That's not really the case. Research suggests that about 40 percent of our daily activities are performed out of habit, a term the American Journal of Psychology defines as a "more or less fixed way of thinking, willing, or feeling acquired through previous repetition of a mental experience."
In other words, we spend much of our lives on autopilot. From an evolutionary perspective, it makes sense that we rely on habits: our brains require a lot of energy, especially when we're faced with tough decisions and complex problems, like financial planning. It's relatively easy to rely on learned behavioral patterns that provide a quick, reliable solution. However, those patterns don't always serve our long-term interests.
Saving money is a good example. Imagine you have $500 with which to do whatever you want. You could invest it. Or you could go on a shopping spree. Unfortunately, the brain doesn't process these two options the same way; in fact, it actually processes the investing option as something like a pain stimulus.
Why gamification works
Saving is painful. But can't people simply choose to be more financially responsible? In short: Yes, but it takes a lot of effort. After all, when it comes to changing behavior, willpower is only part of the equation.
Some psychologists think willpower is a finite resource, or that it's like an emotion whose motivational power ebbs and flows based on what's happening around us. For example, you might establish a monthly budget and stick to it for a couple weeks. But then you get stressed. The next time you're out shopping, you might find it harder to resist making an impulsive purchase in your stressed-out state.
Pixel Art Lootvlasdv via Adobe Stock
"A growing body of research shows that resisting repeated temptations takes a mental toll," the American Psychological Association writes. "Some experts liken willpower to a muscle that can get fatigued from overuse." In the terminology of psychology, this is called ego depletion.
Gamification offers a way to outsource your willpower. That's because games offer psychological rewards that can motivate us to perform certain actions that might otherwise have seemed too boring, taxing, or emotionally draining. What's more, gamifying parts of your life is less of a change of mind and more of a change of environment.
A 2017 study published in Computers in Human Behavior noted that "enriching the environment with game design elements, as gamification does by definition, directly modifies that environment, thereby potentially affecting motivational and psychological user experiences."
The study argued that games are most motivational when they address three key psychological needs: competence, autonomy, and social relatedness. It's easy to imagine how games can tap into these categories. For competence, games can feature badges and performance graphs. For autonomy, games can offer customizable avatars. And for social relatedness, games can feature compelling storylines and multiplayer gameplay.
Gamification and the brain
Games can motivate us by satisfying our psychological needs and giving us a sense of reward. From a neurological perspective, this occurs through the release of "feel-good" neurotransmitters, namely dopamine and oxytocin.
"Two core things have to happen in the brain to influence your decision-making," Paul Zak, a neuroscientist and professor of economic sciences at Claremont Graduate University, told Big Think. "The first is you have to attend to that information. That's driven by the brain's production of dopamine. The second thing, you've got to get my lazy brain to care about the outcomes. And that caring is driven by emotional resonance. And that's associated with the brain's production of oxytocin."
Cheerful Father And Son Competing In Video Games At HomeProstock-studio via Adobe Stock
When released simultaneously, these neurotransmitters can put us into a state that Zak calls "neurologic immersion." In this state, our everyday habits have less control over our behavior, and we're better able to take deliberate action. It's an idea Zak and his colleagues developed over two decades of using brain-imaging technology to study the nature of extraordinary experiences.
As he wrote in an article published by the World Experience Organization, neurologic immersion can occur when experiences, including video games, are unexpected, emotionally charged, narrowing one's focus to the experience itself, easy to remember, and provoking actions.
"The components of the extraordinary come as a package, not in isolation from each other," Zak wrote. "It's the 'action' part that is key to finding immersion. Extraordinary experiences cause people to take an action, whether it's donating to charity, buying a product, posting on social media, or returning to enjoy an experience again."
Games can invoke these types of immersive experiences.. But how exactly are financial organizations using gamification to help people "level up" their financial futures?
Gamifying personal finance
Banks and financial companies have been using gamification for years. What started with simple concepts, like PNC Bank's "Punch the Pig" savings feature, has evolved into a diverse field of games that are helping people stick to budgets, save money, and pay off debt.
What's surprising about the gamification of personal finance is that some of the most successful apps are redirecting destructive financial behaviors, like buying lottery tickets, toward positive outcomes. One example is an app called Long Game, which uses an approach called "lottery savings."
"People actually really love the lottery," Lindsay Holden, co-founder and CEO of Long Game, told Big Think. "The lottery today is a $70-billion-dollar industry in the U.S., and the people that are buying lotto tickets are the people that least should be buying lotto tickets. And so how can we redirect that spend into something that's helping them in their lives?"
Long Game's answer is to encourage users to make automatic or one-time investments into a prize-linked savings account. As users make investments, they earn coins that can be used to play games, some of which offer cash prizes. But unlike the real lottery, the prize money comes from banks that are partnered with Long Game, meaning users can't lose their principal investment.
Blast is a savings app aimed at traditional gamers. The platform lets users connect a savings account to their video game accounts. Users then set performance goals in the video games, such as killing a certain number of enemies. Accomplishing these goals triggers a pre-selected investment into the savings accounts. In addition to earning interest, users can also win prize money by accomplishing certain missions or placing high on public leaderboards.
"Gamers tell us they feel better with the time they spend gaming when they know they are micro-saving or micro-earning in the background," Blast co-founder and CEO Walter Cruttenden said in a statement.
Young gamer playing a video game wearing headphones.sezer66 via Adobe Stock
Fortune City takes a different approach to gamified finance. The app encourages users to track their spending habits, which are represented by visually appealing graphs. As users log expenses, they're able to build buildings in their own virtual city. The expense categories match the types of buildings users can construct; for example, buying food lets users construct a restaurant. It's like "SimCity" meets certified public accountant.
The risks of gamification
Gamifying your finances might help you save money, but it doesn't come without risks. After all, receiving extrinsic rewards when we perform a behavior can affect our intrinsic motivation to repeat that behavior both positively and negatively. It's a phenomenon called the overjustification effect.
In addition, gamified finance apps can also be addictive and encourage risky financial behavior. Robinhood, for example, uses visually appealing performance metrics and lottery-like game elements to incentivize the trading of stocks and cryptocurrencies. But while investing in these assets might be a good financial decision for some people, Robinhood arguably encourages its users to be "players" in the difficult world of trading, not necessarily rational investors.
What's more, gamification doesn't seem to work for everyone.
"From social psychology and behavioural economics, we know that the most likely [result of] gamification [is that you] will motivate some people, will demotivate other people, and for a third group there'll be no effect at all," noted a 2017 study on gamification and mobile banking published in Internet Research.
But given that 14.1 million Americans are unbanked, and millions more struggle with financial literacy, it's reasonable to think that gamified finance apps could help many people work toward financial independence.
"One of the most interesting things we've found is that people want help when it comes to making difficult decisions," Zak told Big Think. "In my view, any app that helps you be a more effective saver is probably a good app. But I think we have to do a lot more work to really understand the underlying neuroscience of gamification. And so we need to continue to design games that teach you more about how to 'level up in life,' not just level up in the game."
Playing video games could help you make better decisions about money.
- The word is out on gaming—it's not just something that children do for fun anymore. Games are tools that can be used to teach new skills, reduce stress, and even change behaviors by triggering chemical reactions in the brain.
- These benefits and more have provided scientists and developers with a promising path forward. "Games reduce the stress of making decisions," says neuroscientist and professor Paul Zak. "App designers have now used game structures to help people learn new information, make new decisions; and one of the most exciting applications is in financial decision making."
- But simply turning something into a game isn't enough to see meaningful changes in habits. Developers of gamified apps like Long Game have found ways to combine the engaging and fun experience we expect from video games, with something that has traditionally not been very fun: saving money.
Lose yourself in entertainment with this epic collection of games and restriction-free encrypted browsing.
- Playstation Plus gives you an incredible library of free games and fresh deals.
- Your gaming experience can be seriously updated for just one low price.
- With VPN Unlimited, you don’t have to be worried about your privacy while gaming, streaming, or browsing.
Gaming has become a way of life throughout quarantine. Stuck inside, many of us have embraced our inner gamer and turned to our screens to escape the mundanity of lockdown. This has brought on a massive rise in active players for a huge variety of games, as well as a concurrent rise in interest for consoles like the Playstation 5. There’s so much to experience and enjoy on the Playstation, and the best way to optimize your experience on it is to upgrade to Playstation Plus.
Playstation Plus offers an enormous community of fellow gamers on games like Star Wars: Battlefront and Uncharted, as well as a plethora of other classic titles. You can play online with people all around the world on the best games Playstation has to offer. And, if that isn’t enough, you’ll also gain access to a monthly collection of free games, alongside a library which is constantly expanding what is available. Once you take into account the premium discounts that go along with it, this membership essentially pays for itself on the first day you buy it.
This bundle doesn’t just include Playstation Plus, though. It also includes KeepSolid VPN Unlimited, a premium VPN that provides users with privacy and anonymity. VPN Unlimited uses military-grade encryption to ensure your data is locked down from the malicious folks who want to gain access to it. This is valuable both at home and on the go, as KeepSolid will reliably protect your data even on unsecured public WiFi servers. Alongside that, you are given the ability to switch your location to over 80 countries, which allows you to access content online that's typically unavailable in your home country.
Together, this bundle gives you one year of Playstation Plus and lifetime access to KeepSolid VPN Unlimited for the low price of just $49.99 (regularly $258). With Playstation Plus, you’ll be enjoying yourself on a variety of great games, and with KeepSolid, you won’t have to worry about your data while you play.
Prices subject to change.
When you buy something through a link in this article or from our shop, Big Think earns a small commission. Thank you for supporting our team's work.
Enter for free or get more entries (and chances of winning) by donating to the Playing For Change Foundation.
- You could win an epic arcade system for your home as part of this Polycade Lux Giveaway.
- The winner will receive the epic home arcade system worth $4,000, which features over 54 built-in modern and retro games.
- Enter for free or get more entries (and chances of winning) by donating a minimum of $10 to charity.
Calling all gamers for the ultimate Polycade Lux Giveaway. This is your chance to win an epic home arcade system valued at $4,000 and all you have to do to enter is donate a minimum of $10 to charity. Yup, it's that easy and you'll feel good doing it.
Each donation amount gets you a specific number of entries and the more you donate, the more chances you'll have to win. The minimum $10 donation provides you with 100 entries, while $25 equals 250 entries, $50 is 1,000 entries, $75 is 1,500 entries, $100 is 2,500 entries, and $150 is 4,500 entries. In the end, the proceeds will go toward the Playing For Change Foundation, an organization founded in 2007 that works to create positive change for children in underserved communities across the world through music and arts education.
In addition to the Polycade Lux Home arcade, it will include the Ultimate Modern Fighting Game Pack, which will feature heavy hitters such as Street Fighter V, Mortal Kombat 11, DRAGON BALL FighterZ, Soul Caliber VI, Street Fighter X, and plenty more.
Don't miss out on the opportunity to have the dream at-home arcade you've always wanted. In total, the giveaway has a value of $4,449, so fingers crossed you end up being the winner. Then again, you can definitely increase your chances by simply giving back and donating.
Prices subject to change.
When you buy something through a link in this article or from our shop, Big Think earns a small commission. Thank you for supporting our team's work.
Can playing video games really curb the risk of depression? Experts weigh in.
- A new study published by a UCL researcher has demonstrated how different types of screen time can positively (or negatively) influence young people's mental health.
- Young boys who played video games daily had lower depression scores at age 14 compared to those who played less than once per month or never.
- The study also noted that more frequent video game use was consistently associated with fewer depressive symptoms in boys with lower physical activity, but not in those with high physical activity levels.
A new study published by a UCL researcher has demonstrated how different types of screen time can positively (or negatively) influence young people's mental health. The study suggests that boys who play video games frequently in early adolescence (around age 11) are less likely to develop depressive symptoms throughout the following years. Additional findings in this study suggest that girls who spend more time on social media appear to develop more depressive symptoms.
How do video games and social media impact young kids?
The study gained interesting insight into the link between depression rates at age 14 and video game usage a few years earlier.
Credit: Pixel-Shot on Adobe Stock
The study's lead author, Ph.D. student Aaron Kandola, explains to Eurekalert: "Screens allow us to engage in a wide range of activities. Guidelines and recommendations about screen time should be based on our understanding of how these different activities might influence mental health and whether that influence is meaningful."
How this study was conducted:
- These findings come as part of the Millennium Cohort Study, where over 11,000 (n = 11,341) adolescents were surveyed.
- Depressive symptoms were measured with a Moods and Feelings Questionnaire (age 14).
- "Exposures" were listed as the frequency of video games, social media, and internet usage (age 11).
- Physical activity was also accounted for on a self-reporting basis.
When comparing young boys (age 11) who played video games to those who don't, the study showed interesting results:
- Boys who played video games daily had 24.3 percent lower depression scores at age 14 (compared to those who played less than once per month or never).
- Boys who played video games at least once per week had 25.1 percent lower depression scores at age 14 (compared to those who played less than once per month or never).
- BOoys who played video games at least once per month had 31.2 percent lower depression scored at age 14 (compared to those who played less than once per month or never).
When comparing how depression impacted young girls based on their social media usage, the researchers found that:
- Compared with less than once per month/never social media usage, using social media most days at age 11 was associated with a 13% higher depression score at age 14.
Can playing video games actually be beneficial?
There has been a lot of speculation in the past two decades about screen-time, social media, and video games. Whether it's linking video games to violence and obesity or linking social media to depression and anxiety — this seems to be a controversial question. According to the research, the answer to this question is yes, video games can be beneficial in moderation when paired with physical activity and real-life application.
Adding in some physical activity could be the difference between beneficial and harmful.
The above-mentioned study also noted that more frequent video game use was consistently associated with fewer depressive symptoms in boys with lower physical activity, but not in those with high physical activity levels.
Previous studies have concluded there are some mental health benefits to playing video games.
A 2020 study by the University of Oxford analyzed the impacts of playing two extremely popular games at the time: Nintendo's "Animal Crossing: New Horizons" and Electronic Arts' "Plants vs. Zombies: Battle for Neighborville." The study used data and survey responses from over 3000 players in total — the games' developers shared anonymous data about people's playing habits, and the researchers surveyed those gamers separately about their well-being.
Results of this study found that time spent playing these games was associated with players reporting that they felt happier.
Additionally, previous studies (such as this University of Arizona study) have linked video game usage with new learning opportunities: "
Games like Minecraft are being used in more and more classrooms around the country. MinecraftEdu (recently purchased by Microsoft), allows teachers to structure a sandbox-style play environment around any curriculum. Students can work together to learn the scientific method, build farms, or take advantage of turtle robots to learn basic programming. Not only do these activities improve team-building skills, but they give students the chance to develop and practice technological literacy."
"Everything in moderation" is an important factor in determining whether video game use is beneficial or harmful.
While there can be some positive impacts from playing video games, research (such as this study conducted in 2013) has also shown that people who spend a predominant part of their day gaming are at risk of showing lower educational and career attainment in addition to problems with peers and lower social skills.