Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162908
Authors: 
Eschelbach, Martina
Year of Publication: 
2017
Series/Report no.: 
International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 25 - 27 April 2017, Island of Mainau, Germany
Abstract: 
This research note empirically investigates whether cash can prevent consumers from making needless purchases in unexpected shopping situations. Cash can have a disciplinary effect on short-term consumption because it imposes a strong temporary budget constraint and also reinforces the pain of paying. I use a sample of unexpected shopping situations that were recorded by participants of the Bundesbank’s study on payment behaviour. I find that the probability of a transaction subsequently being declared unnecessary is significantly lower when the consumer had paid the transaction in cash. The results are similar across different socioeconomic groups based on age, gender, education and income. I conclude that restricting the use of cash for transaction purposes can entail a reduction in consumer welfare.
Subjects: 
payment behaviour
consumer choice
overspending
JEL: 
D12
D14
D18
Document Type: 
Conference Paper

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