Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/333508 
Year of Publication: 
2025
Series/Report no.: 
Working Paper No. 25.04
Publisher: 
Swiss National Bank, Study Center Gerzensee, Gerzensee
Abstract: 
Despite the long-term trend away from cash and the widespread adoption and acceptance of payment cards, many people still carry considerable amounts of cash. In a preregistered study, I examine whether risk attitudes can explain consumers' persistent cash holdings. To self-insure against the possibility of being unable to pay by card, risk-averse consumers are expected to hold cash in larger amounts. Moreover, consumers who overweight the small probability of card non-acceptance and those who prefer early resolution of uncertainty are also predicted to carry more cash. I test these predictions using data from the RAND American Life Panel (N = 989) and on experimental preference data from Swiss consumers (N = 1'666). 86% of U.S. and 95% of Swiss individuals carry cash in their wallets, with an average of USD 64 and CHF 94, respectively. Neither risk aversion, probability weighting, nor a preference for early resolution of uncertainty are consistently related to cash holdings.
Subjects: 
cash holdings
money demand
risk aversion
probability weighting
uncertainty resolution
pre-analysis plan
JEL: 
D14
D81
D91
E41
G41
O33
Document Type: 
Working Paper

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