Does ‘Dirty’ Money Influence Consumer Spending?

0

Schulich School of Business Associate Marketing Professor Theodore Noseworthy and Chelsea Galoni. a PhD student at Kellogg School of Management, Northwestern University, have published a study in the Journal of Consumer Psychology, “Does Dirty Money Influence Product Valuations?”, which examines whether people value products differently when purchasing them using unclean and decrepit looking bills.

The study found that dirty money (in the literal sense) can not only alter what people choose to buy, but make them seemingly compensate for lower inferred value by purchasing items in greater quantity, Noseworthy said.

“When a person handles dirty money, they infer that the money is contaminated,” Noseworthy said. “This contamination can transfer to the products purchased, subsequently lowering their perceived value.”

This idea is not as farfetched as it may seem. We have all been asked to wash our hands after touching money for fear of germs and bacteria. As Noseworthy said, “We have known for some time that consumers infer contamination between and among objects, and contamination from money is no exception.”

Given that replacing currency is expensive and dirty money has been demonstrated to increase spending, it has been suggested that keeping worn bills in circulation could be a win-win solution

Across two studies, the authors found support for their hypothesis that the physical appearance of money can change product valuations. In both studies, participants were given a clean or dirty $20 bill and went shopping in a mock retail lab that the authors had set up to look like a convenience store.

Does ‘Dirty’ Money Influence Consumer Spending? soiled notes

The anatomy of dirty money! (Infographic courtesy creditnet.com)

In the first study, the store was stocked with snacks and beverages, while in the second study, the store was stocked with office supplies and cleaning supplies. On average, participants systematically spent more money and devalued the products purchased with dirty bills, with one striking exception.

“The cleaning supplies were interesting,” said Noseworthy. “Cleaning supplies cannot be contaminated as the purpose of most cleansers is to remove contaminants. We find a reversal in the results for dirty money, where the cleansing qualities of the cleaning supplies actually increased how much people valued them.”

“Cleaning supplies cannot be contaminated as the purpose of most cleansers is to remove contaminants. We find a reversal in the results for dirty money, where the cleansing qualities of the cleaning supplies actually increased how much people valued them.”

Furthermore, the authors demonstrated that the devaluation was caused by contamination inferences by varying whether participants could touch the products during the shopping experience. The authors find that product value only drops when participants with dirty money are allowed to touch the products.

Overall, the authors provide some of the first evidence that the physical appearance of money can change product valuations. These results are of interest to consumers, academics, and practitioners alike. In particular, the recent economic recession has sparked considerable media attention around the need to decrease government spending while increasing domestic spending. Given that replacing currency is expensive and dirty money has been demonstrated to increase spending, it has been suggested that keeping worn bills in circulation could be a win-win solution.

However, the current research argues that keeping dirty money in circulation might have negative long-run implications on consumer utility; as Noseworthy cautions, “Governments may be better served keeping bills in circulation, but the consumer may not be.”

Furthermore, the results caution consumers to pay attention to the consequences of the appearance of their money. As Noseworthy said, “If you find a dirty bill in your wallet — be careful how you spend it.” Cover Image Courtesy Supermoney.com

Leave A Reply