The Social Meaning of Mobile Money: Earmarking Reduces the Willingness to Spend in Migrant Households

Jean Lee (), Jonathan Morduch, Saravana Ravindran () and Abu Shonchoy ()
Additional contact information
Jean Lee: World Bank
Saravana Ravindran: Lee Kuan Yew School of Public Policy, National University of Singapore
Abu Shonchoy: Department of Economics, Florida International University

No 2402, Working Papers from Florida International University, Department of Economics

Abstract: Behavioral household finance shows that people are often more willing to spend when using less tangible forms of money like debit cards or digital payments than when spending in cash. We show that this "payment effect" cannot be generalized to mobile money. We surveyed families in rural Northwest Bangladesh, where mobile money is mainly received from relatives working in factories. The surveys were embedded within an experiment that allows us to control for the relationships between senders and receivers of mobile money. The finding suggests that the source of funds matters, and mobile money is earmarked for particular purposes and thus less fungible than cash. In contrast to the expectation of greater spending, the willingness to spend in the rural sample was lower by 24 to 31 percent. In urban areas, where the sample does not receive remittances on net, there are no payment effects associated with mobile money.

Keywords: payment effect; digital finance; willingness to pay; social meaning of money; earmarks (search for similar items in EconPapers)
JEL-codes: D14 D91 G41 G50 O15 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2024-04
New Economics Papers: this item is included in nep-ban, nep-dcm, nep-exp, nep-mon, nep-pay and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://economics.fiu.edu/research/working-papers/2024/2402.pdf Second version, 2024 (application/pdf)

Related works:
Journal Article: The social meaning of mobile money: Earmarking reduces the willingness to spend in migrant households (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fiu:wpaper:2402

Access Statistics for this paper

More papers in Working Papers from Florida International University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sheng Guo ().