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Lotteries as a Game Mechanicā€¦ Fun or Manipulation? (Part 2)

adult learning e-learning game design gamification motivation Jan 07, 2019

by Jonathan Peters, PhD
Chief Motivation Officer, Sententia Gamification

In a previous article, I wrote about the evolutionary psychological aspects of the game mechanic of lotteries. In this article, I want to share some of the cool uses of lotteries to change behaviors. While these examples are not about employee engagement and learning, I think you’ll find them interesting, and hopefully they’ll generate some creativity on how you can use lotteries as a game mechanic in your programs.

In my previous article, I noted that lotteries are enjoyed by most people except for those who place a high emphasis on Savings and Tranquility (the need to be safe). For them, the risk outweighs any pleasure gained from anticipating a large windfall. 

Lotteries are certainly popular, especially when the pots reach tens of millions of dollars, but when we discuss lotteries as a game mechanic, we find that lotteries are about more than simply rewarding with cash. The fun comes from the anticipation of a windfall. This is why people continue to engage in lotteries even when they lose over and over.   

From an evolutionary psychology perspective, you don’t have an award process for saving for retirement. No brain chemical is released when a percentage of your paycheck goes into a retirement fund. People highly motivated by Savings might enjoy watching the digits tick higher on investment statements, but they could gain similar enjoyment from a collection of vintage cars.

So, if we want to encourage savings for retirement, we can use game mechanics that do have reward systems. And if we are trying to reach an audience that does not typically save, it is our job to employ game mechanics that appeal to them. In this case, people who are not highly motivated by Savings and Tranquility probably enjoy the thrill of lotteries. In fact, the more at risk they are of not saving for a raining day, the more they may enjoy risking large amounts for a high payout.

In fact, there are several examples of this very thing happening.

The first notable example was in 1956 when Britain instituted Premium Bonds. With these bonds, interest isn’t paid to the holders; instead, the interest goes into a prize fund. Every pound a person saves gives them a chance to win a monthly £1 million jackpot plus many smaller prizes. The original ad campaign, “Savings With a Thrill,” appeals to people highly motivated by Adventure, the very ones who are unlikely to invest in bonds.  

The program was highly successful. At its 50th anniversary, there were £32 billion in bonds and nearly 40% of the population held the bonds (only 1.3% of Americans directly own any type of bond). 

In 2005, a bank in South Africa created the “Million-a-Month Account.” If you had a savings account with them, you’d be eligible for a monthly drawing of 1 million rand (around $150,000 US). The program encouraged people with no savings accounts and high debt levels to begin saving. In fact, the average increase in savings was an average of 1% of the participants’ annual income, that is 38% higher than the mean savings rate in South Africa. Interestingly, there is evidence to suggest that the increase in savings came from people cutting back on their purchases of lottery tickets. 

Similarly, an experiment at the University of Maryland offered students savings accounts that added potential prizes to a lower interest rate account. The study acknowledges that relatively low interest rate of savings accounts was not enough to motivate students to save. So, while still paying interest, just at a lower rate, an account holder had a one-in-a-thousand chance to win $5,000. The result was a significant increase in student savings, especially among students who had purchased lottery tickets in the previous year. 

Here’s another interesting example from China: If a sales receipt wasn’t printed, there is no record of a transaction, and therefore no sales taxes are paid. Since most sales are through cash, it was a common practice to not take a receipt, and thus bypass sales taxes. Even as the government punishments increased in severity (including the possibility of execution), people continued to pay cash without asking for a receipt.

Since the stick wasn’t working, China offered the carrot of a lottery where each receipt is a scratch-off. Within a relatively short time, new tax revenues outpaced the cost of lottery prizes by 30 times.

Lotteries have been used to change other behaviors as well, from the famous speed-camera lottery, to (controversially) voting in midterm elections, to testing for sexually transmitted diseases. I chose to focus on savings and paying taxes because the use of lotteries caused people to perform an action they are not motivated to take. By looking at how participants are motivated, the designers of these programs used game mechanics that are motivating to their target audience. 

Think about the actions you want your participants and employees to take. What game mechanics will appeal to those who would normally resist taking those actions?

The danger of citing examples of financial programs is that I’ve limited your creativity to cash prizes. Studies show that cash rewards in the workplace to not motivate over the long-term. If you were to use lotteries to motivate your employees and learners, what other types of prizes might you offer? Are there prized resources at your company, such as covered parking? Bonus time? Free lunch? Flex time? Choice of projects? If you have a gamified program, it is easy to have “in-game” prizes that have little value outside of your program.

Let me know your ideas about using lotteries as a game mechanic in your programs. I’d love to have a list of ideas to share with folks.

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