Why losing the "pain of paying" could end up hurting

The psychology behind how digital payment methods affect our spending habits
According to neuropsycologist Moira Somers, using credit and debit cards to pay reduced the feeling of disgust, or "pain of paying", that can help us regulate our spending. (Reuters)

For most of us, it is completely common to pull out a credit or debit card when at a cash register. Maybe using cash has become the exception. But according to neuropsychologist Dr. Moira Somers, not all forms of spending are equal. She says, "there are some forms of technology that certainly assist in the mindlessness aspect of personal financial management."

While people have an emotional reaction when seeing bills and coins, credit and debit cards abstract the experience of paying. "You get several iterations away from paying with a chicken and a bucket of honey," says Dr. Somers. "We are much more aware of the value of money when we fork over cold hard cash, and we don't feel quite the same about handing over debit or credit cards." That feeling we experience when forking over cash is what Dr. Somers refers to as "the pain of paying."

The concept of the pain of paying comes from research done in behavioural economics, including research done by Dan Ariely, Professor of Psychology and Behavioural Economics at Duke University. One study from Carnegie-Mellon University used fMRIs to look at how people's experience spending cash differed from spending using credit cards. The researchers found that, while those using cash experienced pleasure from their purchase, they also felt some disgust. Those using cards, on the other hand, says Dr. Sommers, get "...all the activation of the pleasure centres, and all the activation of the please centres... and all the activation of the pleasure centres."

Dr. Somers says one of the biggest things things is to be conscious of how you are spending you money. That might mean returning to using cash, at least for a while. "There are more ways now that we can torpedo ourselves financially than ever before, I think, in human history," says Dr. Somers, "and so we just have to be diligent about that."


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