‘The Power of Cash’ Review: When Paper Beats Plastic

We feel the cost of our purchase more when we use cash. Handing over notes triggers a different feeling than merely swiping a card

By Philip Delves Broughton. He reviewed the book The Power of Cash: Why Using Paper Money is Good for You and Society by Jay Zagorsky (who teaches at Boston University’s business school). Excerpts:

"In 2015, he reports, 17.1% of Americans said they did not carry cash. By 2022 that number had more than doubled to 34.6%. Among 18-to-34-year-olds the number not carrying cash went from one in four to almost one in two."

"Visits to bank machines peaked in 2009 with about six billion withdrawals. By 2021 the number of ATM withdrawals had fallen to less than four billion."

"Measured by cash in circulation as a percentage of gross domestic product, Japan emerges as far and away the most cash-intensive developed economy at 23%. The U.S., by contrast, sits at around 10%. Sweden, at 1.3%"

"A 2021 survey found that only 4% of Germans did not carry cash, and 30% said cash was their preferred method of payment"

"What happens if an earthquake strikes, or a foreign enemy takes down the communication and banking systems? In the ensuing chaos and darkness, the author writes, those with cash will survive and those without will be left waving their plastic into the wind."

"when people spend cash, they tend to feel the cost of their purchase more acutely than when they pay electronically. Handing over notes triggers a different set of reactions in the brain than merely swiping a card. We feel the loss more, and become more attached to what we buy when we pay in cash."

"electronic payments generate data that retailers use to tailor—and often increase—prices"

"The unbanked poor still depend on cash, as do people who beg for money on the street. Cash does not require an immigrant or tourist to read transaction documents in a foreign language. It also cannot be arbitrarily cut off by autocratic governments."

"The elimination of cash from so many purchase processes has also eliminated the time to think, reflect and change your mind in your own financial self-interest."

Related posts:

More than half of $100s are held abroad (2024)

When Money Is No Object: Sure, using a credit card is easy, but paying with invisible money makes saving harder and spending easier. People behaved differently when they saved—and spent—cold, hard cash.  (2021)

Coins are more valuable right now than they normally are (2020)

Is $900 billion in cash missing? (2019)

How much cash is out there and where is it? (2018)

Let’s Not Start a War on Cash by James A. Dorn of The Cato Institute (2016)