Article featured in the Guelph Mercury.

People are quicker to part with crumpled paper currency, University of Guelph prof says

At a time of year when money is changing hands faster than you can say eggnog, Theodore Noseworthy’s research is getting a lot of attention.

The University of Guelph professor has discovered that given a choice between using a crinkled, dirty-looking bill and a crisp, new one, we’re quicker to spend the old one.

A new bill in our wallet is more likely to stay there, unless we’re trying to impress someone. In that case, we bypass the old bill and whip out a new one to pay the tab.

In several studies, people were given new and/or old bills and told to shop in a mock retail outlet. In each study, they spent more when they had the worn bills and also took more chances with them.

“It seems like you buy more because you’re dumping more,” says Noseworthy, 33, a professor in the university’s department of marketing and consumer studies. “You want to be rid of them.”

A lot of this behaviour has to do with the “ick factor,” says Noseworthy, who conducted the research with University of Winnipeg professor Fabrizio Di Muro.

People don’t like “dirty” money. “It is rather gross,” Noseworthy says.

“If they see a bill that’s all crumpled and worn, they will believe it’s basically contaminated . . . They won’t value it to the same extent as a crisp and clean bill.”

Noseworthy, who trained as a consumer psychologist, says his colleague has a particular dislike of germs, so the topic intrigued him personally and professionally.

Many countries, including Canada, check their currency regularly for bacteria content.

“The U.S. is very good at pulling bills out of circulation for soil content,” Noseworthy says.

“The greatest contributor to currency production costs, at least in the U.S., is bacteria, which is rather interesting. You’d think they have to pull them (from circulation) more for damage.

“I think every economy in the world is a little bit afraid of that superbug. We don’t want to talk about it because we don’t want to scare society, but . . . money is pretty porous.”

In fact, Canada’s decision to start producing smooth, durable polymer bills — including the $20 polymer banknotes that began appearing in November — was not only about cost, he says.

“They just don’t like to talk about bacteria. You can actually really get around some of the bacteria content because polymer is pretty slick to touch. It doesn’t carry germs the way that other bills do.”

In their money studies, the researchers found the “ick factor” was so strong that it changed our usual spending behaviour.

Past research has shown that if we’re given four five-dollar bills, we spend more than we would if we were given a single $20 bill, Noseworthy says.

“People tend to look at smaller denominations as loose change or petty cash.”

Not so, however, if the $20 bill is decrepit and if the fives are brand new, Noseworthy says.

“You would actually spend more with the worn $20.”

“We even found that people, if they could pay exact change with crisp bills, they will break a higher denomination (bill) that’s old and incur change, which is rather interesting.”

So . . . given that we don’t like old bills and we like to hold on to new ones — unless a dinner date with our future in-laws pries them out of our hands — how can people use this information to their advantage?

Noseworthy, who has a PhD, plus a master of science degree in marketing consumer studies and a master of business administration degree, says he cares more about why people do things than what they do with the information.

But if you press him, he says he wonders what would happen to domestic spending if a government left worn bills in circulation.

Or, from another perspective, will the durable, fresh-looking polymer bills hurt spending because we might hold on to them?

Noseworthy is not the only one thinking about this.

He is cagey about saying who, or from what country, but people with “influence in monetary policy” have contacted him, he says.

“I would say I’ve had . . . someone in charge of the money of an economy talk to me. I wouldn’t know if they’re in charge of the money. They’re in the building that’s in charge of the money.”

Business people have also called him, mistakenly thinking his studies show a “massive effect” on spending.

He has told them that there are “a million things that change your spending” — everything from how much cash you have on hand to the pressures in your day and how much time you have.

The condition of the currency is but one factor and it’s not the No. 1 thing, he says.

Noseworthy says it can be tricky being a researcher and not in control of how your findings are used by others.

For example, his research on pathological gambling once initiated a call from a casino operator who wanted to use the findings to boost gambling. But the research, in fact, was intended to suggest policy on how to curb gambling, not increase it, he says.

“I just stick to my guns.”

In the case of the money study, “some people raise the concern: what happens if an economy did exploit an effect like this? You’re now playing . . . with something that people aren’t aware that they’re doing.”

The question will be academic once Canada has adopted polymer bills for all paper currency. Obviously, we won’t be keeping all the new-looking bills in our pockets because that’s all we’ll have.

Noseworthy is surprised the money study results have been reported by so many publications, ranging from the Financial Times newspaper to the Forbes and Smithsonian magazines — with varying “spins.”

Some articles have suggested that “maybe you can help yourself save on some psychological level by asking for crisp, new bills,” Noseworthy says.

“A lot of other releases are actually taking the spin: how do you make people spend?”

Noseworthy, who calls himself a “hyper-saver,” says his own behaviour hasn’t changed with the findings.

He never carries cash, he said, preferring to use debit or credit cards.

“I rarely ever go to the mall. I’m more interested in how things are marketed so I’ll go to the mall to see displays, how things are done. I think it’s because of that, I’ve gotten turned off of consumerism.”

The Noseworthy and Di Muro study is titled: Money Isn’t Everything, But It Helps if it Doesn’t Look Used: How the Physical Appearance of Money Influences Spending. It has been published online in the Journal of Consumer Research.