The Denomination Effect On Spending Through Experimental Approach

  • Bambang Juanda IPB
Keywords: denomination, spending, laboratory study, field study

Abstract

This paper discusses the denomination effect on shopping decisions in a more realisticspending scenario with various types of goods and relatively adequate denominations,including the specimen of IDR 200,000 banknote which was being investigated, in2015, to be printed by Bank Indonesia, and some other factors affecting spending. Thisresearch used an experimental design in a laboratory study and quasi-experimentaldesign in a field study. In the field study, the denomination of IDR 200,000 wasrepresented by using two pieces of the existing IDR 100,000 banknote, consideredas a single IDR 200,000 banknote. Therefore, if it was used for shopping, both twobanknotes of IDR 100,000 must be given to the seller even though the price of thepurchased goods was below IDR 100,000.This research showed consistent results between the laboratory and field studies, whichcan be summarized as follows: (1) total spending is not significantly different whenusing large or small denominations; (2) total expenditure is greater for consumers withlow self-control; and (3) the large denomination is very influential for goods with highprice, especially during unplanned shopping. This result implies the need for largerdenominations for regions with high priced goods.

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Published
2018-04-30
How to Cite
Juanda, B. (2018). The Denomination Effect On Spending Through Experimental Approach. Buletin Ekonomi Moneter Dan Perbankan, 20(4), 493-528. https://doi.org/10.21098/bemp.v20i4.903
Section
Articles