According to a new study conducted by researchers from Guelph's Department of Marketing and Consumer Studies, people tend to hold on to new bills and spend old ones, thus, affecting their spending habits.
The physical appearance of bills play an important role in the way people spend money, says researchers from Guelph's Department of Marketing and Consumer Studies. According to a study, people value new bills more than old ones, commonly termed as "dirty money."
"Basically, the physical appearance of money matters more than traditionally thought," said Theodore Noseworthy, a professor in Guelph's Department of Marketing and Consumer Studies who conducted the research with Fabrizio Di Muro of the University of Winnipeg.
This discovery, according to the professor, speaks volumes about how people perceive money and questions the popular belief that man only looks at money at its nominal (face) value.
"We tend to regard currency as a means to consumption and not a product itself. In other words, it should not matter if it's dirty or worn because it has the same value regardless," he said. "But what we show is that money is indeed a vehicle for social utility, and that it's actually subject to the same inferences and biases as the products it can buy."
The research was conducted across five different studies where a group of voluntary participants were given some money consisting of both new and old bills and were asked to spend it. It was found that all of them held on to the new bills while spending the old bills without a second thought.
"It's the 'ick' factor," Noseworthy said. "The idea of touching something that others also handled: people want to rid themselves of worn currency, because they are disgusted by the contamination from others.
Noseworthy noted that people value new bills more as they take pride in spending it when others are around. During such a scenario people are more likely to pay with new bills even if it included paying four new $5 bills than a crumpled $20 bill.
"It turns out money itself can be part of conspicuous consumption," Noseworthy said.
