At the register, some people still pull out bills while everyone around them taps a card or a phone. It can look a little old-fashioned. But researchers who studied the way we pay found that cash payers end up feeling something that card users don’t.
In short
- A 2016 study in the Journal of Consumer Research compared paying with cash and paying with a card.
- People who paid cash for a mug valued it nearly $3 more two hours later.
- They also said they felt more emotionally attached to it.
- The researchers link this to what they call the “pain of payment.”
The mug experiment
The study was led by Avni Shah, an assistant professor of marketing at the University of Toronto Scarborough and the Rotman School of Management, with co-authors from Duke University and the University of North Carolina at Chapel Hill, according to U of T News.
In the first experiment, participants bought a mug normally priced at $6.95 for just $2, paying either with cash or with a credit card. Two hours later, they were offered the chance to sell it back, at a price they chose. Those who had paid cash asked for nearly $3 more than those who had paid by card. They also reported feeling more emotionally attached to their new mug.
The charity test
The second experiment moved away from shopping. Participants received $5, either in cash or in vouchers, to donate to one of three charities, and got a ribbon lapel pin for the one they picked. The setup was designed to rule out other explanations, such as the effort of going to an ATM, bank fees or card reward points.
The result pointed the same way. Cash donors felt more connected to the charity they had chosen, and less connected to the ones they hadn’t.
Why cash feels different
Shah explains the effect with the “pain of payment.” The more tangible the payment, the more it hurts to give it up, and the more people value what they get in return. “Something tangible like cash will feel more painful to part with than paying by cheque,” she said. In her ranking, cash comes first, then checks, then cards. She adds that the same logic extends to mobile payments, such as phones, smart watches and Apple Pay.
Her conclusion is a gentle warning: “Debit and credit cards rule the marketplace, and while going cashless is convenient, that convenience may come at a price.” Money and the law don’t always mix the way people think either, as we explained with the cash you find lying on the ground.
The limit
This was two experiments, with a mug and a $5 donation, not a study of everyday budgets. Feeling more attached to a purchase doesn’t make cash better or worse than a card, and the study doesn’t compare security or rewards. Small daily habits can say a lot, as psychologists also note about people who clean their kitchen at night, but they never tell the whole story.
That’s the story.
