A recent U.S. study found cashless payments increase purchases of unhealthy foods, and explains this phenomenon by exploring how differing physical responses to cash versus cashless payments influence consumer choices.
Published in the University of Chicago Press’s Journal of the Association for Consumer Research, the study—Why do Cashless Payments Increase Unhealthy Consumption? The Decision-Risk Inattention Hypothesis—proposes that paying with cash elicits ‘different levels of negative arousal when making shopping decisions’ compared to using a cashless method. This awareness of financial loss in turn makes people more aware of the risk inherent in their purchasing decision, whether in how much they can afford to spend, or if what they are buying is healthy or unhealthy.
Most people experience a spontaneous negative emotional response to the loss of wealth, particularly when such loss is concrete and vivid.
To test the theory, the study authors simulated a grocery shopping experience in a laboratory, equipped participants with a hand-worn device to measure their physical state and asked them to imagine making payments using either cash, or cashless methods. Those making cashless payments were less stimulated than those making cash payments.
The greater stimulation from cash payments was found to make participants pay more attention to the health risks associated with certain items, and they were less likely to buy unhealthy items such as cookies and confectionary. No changes in behaviour surrounding healthy food items—such as apples or salad—were observed between the two payment types.
In a second phase, participants were told a dessert bar was opening, and the owner was interested in understanding the popularity of different desserts. They were shown pictures and descriptions of desserts and asked to indicate how much they would pay for each one. Those asked to imagine using cashless payment methods were prepared to pay more for the desserts than those imagining paying cash.
The authors note their research has ‘important implications’ in a world of increasing cashless options, and call for the risks of cashless payments to be drawn to people’s attention.
To help consumers regulate their unhealthy consumption, popular press and policy makers should educate consumers about the unintended detrimental effects of cashless payment.