Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Paper or plastic?

08.07.2016

Why the way we pay influences how much we value our purchase

When it feels easy to pay for something, it might just make us feel less connected to what we're buying, a new U of T Scarborough study says.


New research shows the way we pay influences how much we value our purchase.

Credit: U of T Scarborough

"Debit and credit cards rule the marketplace, and while going cashless is convenient, that convenience may come at a price," says Avni Shah, an assistant professor of marketing at U of T Scarborough and the Rotman School of Management.

Across two experiments Shah and her colleagues at Duke University and the University of North Carolina-Chapel Hill looked at the potential consequences of paying with cards over cash by focusing on how connected consumers felt towards what they bought.

The first experiment asked participants to buy a coffee mug normally priced at $6.95 for the discounted price of $2 with either cash or credit. Two hours after the purchase they were then asked to sell back their mugs at a price of their choosing. Despite the fact it was the same mug owned for the same amount of time, those who paid cash wanted nearly $3 more than those who paid with a card.

"Those who paid with cash also reported feeling more emotionally attached to their mug," says Shah.

In the other experiment the researchers wanted to eliminate possible reasons for the cash-payers charging more for their mugs because of the effort tied to finding an ATM and paying bank fees, or the added bonus for card-payers earning rewards points for their purchase. Here participants were given $5 in either cash or voucher to give to one of three charities and a ribbon lapel pin corresponding to the charity they chose.

"We found that people who donated by cash felt more connected to their chosen charity than those who donated by voucher. Cash donors also reported feeling less connected to the charities they didn't chose," says Shah.

"In other words, paying by cash made people feel more attached to what they bought and less connected to what they didn't buy."

So why is it that paying with cash makes you value something more than paying with a card? Shah says it comes down to something called pain of payment.

"You feel something when you physically part with your money, and there are different levels of pain depending on the type of payment," says Shah, whose research focuses on the costs associated with payment and how it affects consumer preference and choice.

"Something tangible like cash will feel more painful to part with than paying by cheque, which will feel more painful than paying by card and so on."

The effect extends beyond just cash and credit to include other mobile forms of payment including cell phones, smart watches and new products like Apple Pay, notes Shah. As North America continues to transition towards an ever increasing paperless economy, she says it's important to understand what the implications of these new payment systems will be for consumers.

"There are shorter product life cycles and if consumers are feeling less connected to the products they're already buying, just add easier access to credit and higher consumer debt levels and it's a toxic combination," says Shah.

There's been some positive systems in the marketplace that Shah points to as helpful to consumers including the recent Interac commercials extolling the virtue of cash over credit, and even mobile apps that remind consumers of when a purchase has been made on their account.

"These should be encouraged because they can help consumers more careful, deliberate and meaningful purchases," she says.

###

The study is available online and published in the current edition of the Journal of Consumer Research.

Media Contact

Don Campbell
dcampbell@utsc.utoronto.ca
416-208-2938

 @UofTNews

http://www.utoronto.ca 

Don Campbell | EurekAlert!

Further reports about: Consumer Research Paper cash cell phones credit cards plastic

More articles from Business and Finance:

nachricht Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik

nachricht RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Explosion on Jupiter-sized star 10 times more powerful than ever seen on our sun

A stellar flare 10 times more powerful than anything seen on our sun has burst from an ultracool star almost the same size as Jupiter

  • Coolest and smallest star to produce a superflare found
  • Star is a tenth of the radius of our Sun
  • Researchers led by University of Warwick could only see...

Im Focus: Quantum simulation more stable than expected

A localization phenomenon boosts the accuracy of solving quantum many-body problems with quantum computers which are otherwise challenging for conventional computers. This brings such digital quantum simulation within reach on quantum devices available today.

Quantum computers promise to solve certain computational problems exponentially faster than any classical machine. “A particularly promising application is the...

Im Focus: Largest, fastest array of microscopic 'traffic cops' for optical communications

The technology could revolutionize how information travels through data centers and artificial intelligence networks

Engineers at the University of California, Berkeley have built a new photonic switch that can control the direction of light passing through optical fibers...

Im Focus: A long-distance relationship in femtoseconds

Physicists observe how electron-hole pairs drift apart at ultrafast speed, but still remain strongly bound.

Modern electronics relies on ultrafast charge motion on ever shorter length scales. Physicists from Regensburg and Gothenburg have now succeeded in resolving a...

Im Focus: Researchers 3D print metamaterials with novel optical properties

Engineers create novel optical devices, including a moth eye-inspired omnidirectional microwave antenna

A team of engineers at Tufts University has developed a series of 3D printed metamaterials with unique microwave or optical properties that go beyond what is...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

Revered mathematicians and computer scientists converge with 200 young researchers in Heidelberg!

17.04.2019 | Event News

First dust conference in the Central Asian part of the earth’s dust belt

15.04.2019 | Event News

Fraunhofer FHR at the IEEE Radar Conference 2019 in Boston, USA

09.04.2019 | Event News

 
Latest News

New automated biological-sample analysis systems to accelerate disease detection

18.04.2019 | Life Sciences

Explosion on Jupiter-sized star 10 times more powerful than ever seen on our sun

18.04.2019 | Physics and Astronomy

New eDNA technology used to quickly assess coral reefs

18.04.2019 | Life Sciences

VideoLinks
Science & Research
Overview of more VideoLinks >>>