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Do higher denomination banknotes make you value money more?

Yes. More interesting perhaps is that if you are walking around with smaller denominations you are more likely to be persuaded to make purchases and spend more.

A recent study by a team of persuasion researchers suggested that people place more value on their money if they possess it in higher denominations of notes than smaller ones. This is the case even if the amount of money they have is the same. The study went on to show that not only do people value the same amount of money more if it is represented with higher denominations of banknotes than smaller ones, they are also more likely to be persuaded to make purchases and spend more when they possess their money in smaller denominations than larger ones. Given that an important part of stimulating the economy is in persuading consumers to start spending again, filling cash machines with £5 notes rather than £20 ones seems as if it might be a smart move.

The study authors noted that this ‘denomination effect’ doesn’t just apply to cash but to other nominal values. For example, studies have shown that people tend to rate purchases as more positive if they are informed how a purchase equates to a per day or per week value rather than a total purchase price value. As a result more people can be persuaded to choose a particular product or service if they hear that owning the product costs less than £3 a day rather than describing it as a £1,000 per year cost.


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