Gambling research sheds light on harm minimisation
New gambling research undertaken in mid-2020 found that the proportion of gamblers wagering four or more times a week has increased.
The Conversation reported that online wagering, the fastest growing segment of gambling in Australia, saw its biggest segment, men aged 18 to 34, spend $1075 a month gambling, up from $687.
Whether in life, the stock market or at the horse races, most of us are notoriously bad at assessing the real odds of good or bad things happening.
For example, we fear dying in a plane crash, with the odds of such a thing so small the US National Safety Council doesn’t even provide a calculation.
According to the research of 2000 gamblers, they underestimate their chance of losing and overestimate the odds of winning.
This is despite the odds in games they are playing being precisely calibrated to ensure the house always wins in the long run.
As Nassim Nicholas Taleb puts it in his book, Fooled by Randomness, it is “not about the odds, but about the belief in the existence of an alternative outcome, cause or motive”.
Selective recall put to the test in lab study
For gamblers, the biggest bias in the research is that they remember their wins more than their losses, known as selective recall.
Feedback that clearly shows them their losses can counteract this.
This is, no doubt, why many online wagering service providers don’t give feedback to their customers at all.
Those that do tend to use “activity statements” that present a long list of transactions that are often hard to navigate and so don’t help gamblers appreciate just how well, or more likely poorly, they are doing.
Making gambling companies provide such feedback in a clear, comprehensive form is something that policy makers should put high on their reform list.
To find the best solution to this problem, the federal Department of Social Services commissioned the Australian government’s Behavioural Economics Team (BETA) to trial feedback online gamblers get from their wagering activities.
Varying types of activity statement put to the test
The trial tested ways to let customers see at a glance how much they had spent, won, lost and their overall net profit or loss from their bets.
These numbers were displayed in an “activity statement”, presented in two formats, one as a table, similar to a bank statement, the other using more graphic elements.
BETA tested a range of statements in an experiment involving about 1500 participants in a virtual horse race betting game.
Each participant was given “lab dollars” to bet on a series of races in blocks.
Some were randomly chosen to get one or other of the activity statements after each block of races.
Others received no statement.
On average, those who did not see a statement bet $36
Those who saw the “table” statement bet about $350, while those who saw the graphic statement bet $340.
These reductions may seem relatively minor but they are still promising.
Participants benefit from activity statements
The majority of participants said they would use a summary statement like the ones in the experiment if they were on real apps.
Results also suggested participants with poor financial literacy benefited the most from receiving feedback statements.
Whether the same results would be achieved in real life is hard to say.
Though many participants rated the experiment as at least somewhat like real-life gambling, there are certainly differences between experimental trials and actual online wagering apps, where there can be higher stakes and longer gambling times.
With the right kind of feedback to help us learn, our decisions can improve.
These simple summary statements could be the way forward from a harm minimisation point of view.