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



Share Proceeding

Featured papers

See More

Featured

Q11. The Effect of Message Ephemerality on Information Processing

Uri Barnea, University of Pennsylvania, USA
Robert Meyer, University of Pennsylvania, USA
Gideon Nave, University of Pennsylvania, USA

Read More

Featured

Good Gets Better, Bad Gets Worse: The Polarizing Effect of Rating a Consumption Experience

Nahid Ibrahim, University of Alberta, Canada
Gerald Häubl, University of Alberta, Canada
Rory Waisman, University of Alberta, Canada

Read More

Featured

Red Flag! The Consequences of Alerting Consumers to Fake Reviews

Jared Joseph Watson, New York University, USA
Amna Kirmani, University of Maryland, USA

Read More

Engage with Us

Becoming an Association for Consumer Research member is simple. Membership in ACR is relatively inexpensive, but brings significant benefits to its members.