A TFI research project by Andrea Weihrauch & Tobias Schlager


Saving for a rainy day is a hard concept for many people to adopt. We find it difficult to foresee future events that might impact us financially. But would immersive simulation of these events help consumers to realise the impact this could have on them and hence motivate them to financially prepare?

The risk of using immersive technologies to stimulate saving behaviour, is one of the long-term research projects supported by the Think Forward Initiative. Researchers Andrea Weihrauch (University of Amsterdam) and Tobias Schlager (HEC Lausanne) set out to test how simulation of future events using new technologies could help people to save more.

It is well known that consumers find it hard to make well-considered financial decisions, and are generally not saving enough for future events. Instead of saving, they spend their (entire) salary on current consumption, or borrow to spend even more.

Traditionally (and in most previous research), future life simulations were created by showing consumers a video of a future situation. However, with the development of new technologies such as VR, we have the opportunity to create greater immersive simulation of these life events and place the consumer in the experience.

Researchers Andrea Weihrauch and Tobias Schlager, wanted to test whether using VR would increase the likelihood that someone would be able to better prepare financially. The concluding results of the study found that these new technologies need to be treated with caution, especially when they’re trying to nudge consumers. The outcomes of two experiments show that less immersive and more cost-efficient technologies (such as a video of the event) sometimes can stimulate saving behaviour more effectively than VR simulations.  Event valence (positive versus negative events) is the deciding factor that needs to be considered when creating realistic simulations. When exposing consumers to a negative life event (e.g., losing your job or a divorce) video technology works better than VR technologies.

The reason for this is that VR technologies, more than video simulation, trigger people’s cognitive defense mechanisms when envisioning a negative life event. The level of realism in a video simulation is high enough to trigger attention and awareness, but not “scary” enough to trigger cognitive defenses. When things get too realistic, consumers quickly put up their cognitive guard, which won’t stimulate them to buffer up. These defense mechanisms can be weakened by having people think about the reasons why the event is likely to happen to them.

Are VR technologies doomed to help people save more? Not necessarily, but think twice before you use them. It is recommended to only use them when envisioning positive life events (e.g marriage or a job promotion). VR technology works slightly better when enhancing savings for future positive events. For negative life events video simulation is the better choice.

To access the full report click here.

Think Forward Initiative
The Think Forward Initiative (TFI) is based on the belief that our society is better off when people make sound financial decisions. That is why they have a mission to empower 100 million people to make better financial choices. The TFI Research Hub is focused on delivering cutting-edge, data-driven research in social and behavioural sciences to learn more about people’s financial decision-making.
Think Forward Initiative