Immersive VR technologies: Not always the best option for our saving behaviour

A TFI research project by Andrea Weihrauch &Tobias Schlager
Posted on December 20, 2019

“The more immersion is not always better! The risk of using immersive technologies to stimulate saving behaviour” is one of the long-term research projects supported by the Think Forward Initiative.

Saving for unexpected future events seems to be difficult to many of us. We find it hard to envision future events and the economic resources that they require. How can people be motivated to increase their safety buffer? Researchers Andrea Weihrauch and Tobias Schlager tested how simulation of future events using new technologies could help people save more.

Are VR technologies successful to increase savings? Or should we rely on more subtle simulation techniques? And does it matter whether people imagine positive or negative life events?

Download the report below and find out!

Imagine Tom, an accountant in his early fifties. As the familys breadwinner, he supports a wife and two children on the brink of college. For many years now, hes worked for the same company. One day, his boss calls him to the office, thanking Tom for his excellent work and laying him off.

Losing your job is just one example of a negative life event that can suddenly shake your world. Getting a divorce, battling an illness, recovering from a serious accident – very often these type of life events mean dealing with change and, more often than not, affect one’s financial situation (Bartels & Rips, 2010; Mathur, Lee, & Moschis, 2006; McKay & Kempson, 2003). Especially for negative life events, the financial impact is usually negative. In extreme cases, a life event can endanger the financial health and well-being of entire families.

Time to buffer up

Preparing oneself for an unexpected turn of events is important; it’s a logical move to start saving money, creating a “safety buffer”. So why do savings rates so often fall painfully short (Macrae et al., 2017)? It turns out that consumers find it hard to make well-considered financial decisions, and are generally not saving enough for future events (Lusardi, 1999; Peetz & Buehler, 2009). Instead of saving, they spend their (entire) salary on current consumption, or borrow to spend even more (Skinner, 2007).

The reasons why human beings lack financial responsibility are complex, but one that certainly matters in the context of negative life events is that we are inherently bad at envisioning some vague future life event (Gilbert & Ebert, 2002). We also tend to find it tough to imagine the possible economic resources we may require in the future (Bartels & Rips, 2010; van Gelder et al., 2013). People are just better at identifying with their near future self, compared to an older version of themselves (Frederick, Loewenstein, & O’Donoghue, 2002; Hershfield, 2011). That’s why many consumers are financially unprepared for (negative) life events.

How can consumers be stimulated to increase their safety buffer? One strategy would be to expose them to simulations of the future. Loewenstein (1996) theorized that a vivid impression of engaging in some future action can have a powerful impact on current behaviour. Exposing consumers to a simulation of a future event might help them envision the event occurring to them, hence motivating them to financially prepare.

Virtual reality to the rescue

Traditionally (and in most previous research), such simulations were created by showing consumers a video of a future situation. However, with the development of new technologies, more immersive options are available. Immersive technologies are defined as technologies that induce a specific psychological state, in which you perceive yourself as being “included”. You are part of the experience. During an immersion you can interact with a detailed environment providing a continuous stream of stimuli (Witmer & Singer, 1994; Witmer, Jerome, & Singer, 2005).

One of the technological innovations particularly suited to create immersion is virtual reality (VR). An increasing number of studies have found that immersive, interactive media technologies such as VR have the capability to help and encourage people to improve their behaviour. Hershfield et al. (2011), for instance, used VR when exposing their participants to an aged-progressed avatar of themselves. As a result, consumers were more willing to save money for retirement after the VR exposure.

The characteristics of VR technology, as well as the powerful outcomes of the studies like that of Hershfield et al. (2011) shed a positively light on using VR to encourage saving. However, developing VR stimuli is costly, especially when trying to meet the industry standard that “the more immersion the better”, and we do not know enough yet about its efficiency.

What we wanted to find out in our research project is whether a VR experience might be enough of a trigger for consumers to start putting aside savings for negative life events. In addition to this efficiency test, our research projected wanted to uncover some risks of making life events as realistic and immersive as possible.

Facing an ugly future

During an extremely immersive medium which simulates a life changing event, the emotions you feel are very real, and you will experience confrontation very intensely (McMahan & Bowman, 2007). Imagine experiencing a highly realistic simulation of a conversation with an angry boss, in which you’re told that you’re fired. That will probably feel uncomfortable or even painful.

People do not like to feel uncomfortable and use strategies to deal with such confrontation – they use cognitive defences (Miceli & Castelfranchi, 1998). Examples for such cognitive defenses are thoughts such as “this would never happen to me” (Parfit, 1984; Taylor, 1991), or “this would not have a big effect on my finances” (Sims et al., 2015; Taylor, 1991). In a way, you manipulate yourself to avoid having to deal with such an ugly future, Suddenly, a highly realistic and immersive simulation of a negative life event could lead to an unwanted side effect: because of such cognitive defenses, the simulation could fail to have an effect on saving motivation, or even decrease it.

To test this prediction, we used two types of technology (video and VR) in a series of experimental settings, to simulate a positive and negative life event. Consumers experienced a simulation of being dismissed for six months, framed as a sabbatical (positive) or a temporary lay-off (negative). The simulations empowered the consumers to feel what it’s like to be told that your monthly income would be decreased significantly. After exposure, we assessed our participants’ saving intentions and behaviours, so we could better understand the potential of immersive technologies to financially prepare consumers for (negative) life events.


Our results ring a cautionary bell to the current excitement of using new technologies to nudge consumers. The trendy theory of “the more immersion the better” needs to be evaluated with care, because our results show that less immersive and more cost-efficient technologies (such as a video of the event) can stimulate saving behaviour more effectively than VR simulations.

Event valence (positive versus negative events) is a crucial factor when creating realistic simulations. When exposing consumers to a negative life event (which is what we focused on), video technology works best, while happy experiences have a greater effect in a virtual reality immersion.

Why does it work that way? As it turns out, the level of realism in a video simulation is high enough to trigger attention and awareness, but not “scary” enough to trigger cognitive defences. When things get too realistic, consumers quickly put up their cognitive guard, which won’t stimulate them to buffer up. These defence mechanisms can be weakened by having people think about the reasons why the event is likely to happen to them.


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