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Consumer Behavior

Try Not to Spend Your Annoying Pennies, It Adds Up

People spend coin money just to rid the nuisance of carrying them around.

Key points

  • People spend more money when they carry coins than equivalently valued notes.
  • They are more likely to spend coins because they experience the "pain of holding."
  • Other types of money, foreign currency or dirty money, can also induce the pain of holding.
  • People undersave because of this pain of holding.

By Jay Zenkic, Ph.D. with Nicole Mead, Ph.D.

Have you ever found yourself spending money just to get rid of it? This might sound ridiculous, but our research suggests that people may spend money every day just because they have annoying coins jingling in their pockets. This kind of spending seems trivial at first because coins usually aren’t worth very much individually, but remember that all spending adds up and that many of us really can’t afford to spend money just because it’s annoying.

What’s the alternative to coins? Banknotes. In fact, many countries including the U.S., India, and China, print banknotes of the same denomination (for example, $1 or 10INR banknotes) as they mint coins (for example, $1 or 10INR coins). This means that governments do have the choice to make a given denomination (for example, $1) either a coin or a banknote, or both.

Armed with this knowledge, and a backpack full of 10-rupee coins and banknotes, we wanted to test spending with an experiment in the field. To really drive home that this spending affects even people who cannot afford it, we ran an experiment with rural Indians, who are some of the most vulnerable people in the world. To do this, we partnered with a rural, Indian shop that catered to the local population and sold a number of affordable products to them for cash. We also had two research assistants, Sanju and Rohith, who helped us run this experiment.

Sanju stood outside of the shop and gave people 100 rupees for a short survey. While this was only about $1, this was a lot of money for people who often earned as little as $5 a day. The catch was that we gave some people mostly 10 rupee coins, while we gave other people 10 rupee banknotes. Inside, Rohith would then give people their purchases and secretly record how many coins and banknotes they spent. Remarkably, the people we gave coins to spent 28 percent more of this money on average than those who we gave banknotes to. In fact, one participant told us that they were buying a coconut just to avoid keeping their last few coins.

To see if this kind of spending was really happening because coins are more annoying than banknotes of the same value, we conducted another two experiments with Americans. Sure enough, these people found $1 coins to be more of a pain to hold on to than $1 banknotes, and this led them to spend and donate more money. The higher donation was particularly interesting because it suggests that this pain of holding can drive us to get rid of coins in whatever way might be most convenient right now.

If seemingly everyone is affected by this pain of holding, what then can you do as a consumer to save your annoying money? Well, the problem might not even just be down to coins being more annoying (compared to banknotes). It may be that foreign or physically worn money is annoying too. In fact, even a large stack of banknotes might be uncomfortable to keep. If you find yourself about to buy something, ask yourself if you really want what you’re buying or if you’re just trying to get rid of annoying money. Better yet, reuse an old jar or box and put all your annoying money in that. You might be surprised by how much this money adds up to after just a year.

Jay Zenkic, Ph.D., is a lecturer at Deakin University


Zenkić, Jay, Nicole L. Mead, Kobe Millet (forthcoming), “When Cash Costs You: Consumers Spend More When Carrying Coins than Same Denomination Banknotes,” Journal of Consumer Psychology.

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