The social meaning of mobile money: Earmarking reduces the willingness to spend in migrant households

Jean N. Lee, Jonathan Morduch, Saravana Ravindran and Abu S. Shonchoy

Journal of Economic Behavior & Organization, 2024, vol. 221, issue C, 675-688

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)
Date: 2024
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Working Paper: The Social Meaning of Mobile Money: Earmarking Reduces the Willingness to Spend in Migrant Households (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:221:y:2024:i:c:p:675-688

DOI: 10.1016/j.jebo.2024.04.023

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