Valuing Money: Research says More is Better

Obvious? Perhaps. Havings 100 pennies always did feel like more money than 1 boring dollar bill. Don’t get me started on the 1 dollar coins.

Confirmation through academia is nice, however. Research done at INSEAD has shown that consumers feel more rich when using a lower valued nominal currency. As an example, they state the following:

“Imagine going to the bakery with FF65 in your wallet and buying a baguette for FF6.50. You’d have FF58.50 left over after the purchase. Now imagine going with €10 in your wallet and spending €1 on the baguette. You’d have €9 left over.

Psychologically, the 9 euro currency units feel a lot less than the 58.5 French franc currency units. So you end up feeling poorer when both your budget and the price you pay are measured in a low – as opposed to high – numerosity currency. The existing research until now didn’t look at the effect of taking your budget into account and so came up with different results.”

In conclusion, I’ll be changing out all of my money for pennies to ease the burden of the slacking US dollar performance.