The Denomination Effect

This paper demonstrates that the decision to spend or save varies systematically as a function of the denomination of money. A series of studies are reported that show that individuals are less likely to spend when an identical sum of money is in the form of one large denomination relative to multiple small denominations. We argue that the denomination effect occurs because individuals experience more pain in parting with large denominations than small denominations. The denomination effect demonstrated in this paper is presented as a violation of the normative principle of descriptive invariance in the realm of money.



Citation:

Priya Raghubir, Joydeep Srivastava, and Ravi Dhar (2005) ,"The Denomination Effect", in E - European Advances in Consumer Research Volume 7, eds. Karin M. Ekstrom and Helene Brembeck, Goteborg, Sweden : Association for Consumer Research, Pages: 542-542.

Authors

Priya Raghubir, University of California at Berkeley
Joydeep Srivastava, University of Maryland
Ravi Dhar, Yale University



Volume

E - European Advances in Consumer Research Volume 7 | 2005



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