Denomination Effect
The finding that people are less likely to spend a sum held as one large bill than the same sum held as many smaller bills.
What it is
Raghubir and Srivastava reported it in three field studies in 2009 and explained it through large denominations being less psychologically fungible. It is drawn from work by Priya Raghubir and Joydeep Srivastava (2009).
In effect
In the article on spending abroad, the first purchase that breaks a large note turns a sum into smaller bills.
What it does not say
The finding concerns how readily a sum is spent when held as large or small bills. It does not say that people spend carelessly with small bills, and it was reported in three field studies.
Sources
- Raghubir, P., & Srivastava, J. (2009). The denomination effect. Journal of Consumer Research, 36(4), 701-713.