If you want to save money you should ask your bank to hand over crisp new bills, new research suggests.
It seems that people are less likely to spend money if the bills are clean and crisp. But if they have old, crumpled bills in their pocket, they are likely to spend more.
The study appears in the Journal of Consumer Research and was titled: “Money Isn’t Everything, but It Helps If It Doesn’t Look Used: How the Physical Appearance of Money Influences Spending.”
The study authors, who tested undergraduates at the University of Winnipeg, found that consumers will spend more to get rid of worn bills “because they evoke feelings of disgust,” the authors say.
“Consumers tend to infer that worn bills are used and contaminated, whereas crisp bills give them a sense of pride in owning bills that can be spent around others,” according to Canadian authors Fabrizio Di Muro and Theodore J. Noseworthy.
Here’s how the study worked: Consumers were given either crisp or worn bills and asked to complete a series of tasks related to shopping.
However, when consumers thought they were being watched, they tended to spend crisp bills more than worn bills. The authors attribute this behaviour to a source of pride that using the new bills expressed around others.
The authors point out that the primary reason for replacing currency is not wear, but instead what the Federal Reserve in the U.S. refers to as “soil content.”
“People want to rid themselves of worn currency because they are disgusted by the contamination from others,” the authors say.
The authors also pointed to the well-known finding that people spend more when given the equivalent amount in lower denominations (four $5 bills) than when holding a large single denomination (a $20 bill).
They say the physical appearance of money can reverse this effect.
The authors found that consumers were more likely to break a worn larger bill than pay the exact amount in crisp lower denominations.
Di Muro is an assistant professor of marketing with the University of Winnipeg and Noseworthy is an associate professor of marketing at the University of Guelph.
