IDEAS home Printed from https://ideas.repec.org/a/eee/joepsy/v104y2024ics0167487024000527.html
   My bibliography  Save this article

Replication: The money illusion effect in a Brazilian sample and meta-analyses

Author

Listed:
  • de Moraes Ferreira, Mariana
  • Yumi Tsushima Santiago, Milena
  • Bastos, Rafael
  • Fatori, Daniel
  • Sardinha Borborema, Rodrigo
  • Seda, Leonardo
  • Camargo Batistuzzo, Marcelo

Abstract

Shafir, Diamond, and Tversky (1997, Money illusion, The Quarterly Journal of Economics, 112(2), 341–374) described the phenomenon of money illusion as the inclination to consider money without adequately taking into account the inflation factor, emphasizing nominal values rather than real ones. This study aims to replicate the four conditions outlined in the original research by Shafir and colleagues, adapted to the Brazilian context: problems that include different financial decision-making situations (regarding earnings, transactions, contracts) that might be affected by money illusion. This cross-sectional and pre-registered study evaluated the money illusion in a sample of 372 Brazilian participants and was conducted via mobile phone/computer. The results found were very similar to the original findings: depending on the terms used (real, nominal, or neutral framing), participants showed varying inclinations towards opting for economically advantageous opportunities. Based on these findings, it is plausible that the money illusion effect may exhibit cultural independence. This assertion is substantiated by the replication of the effect within a distinct cultural context from the original study. To reinforce the empirical basis of this assertion, future investigations should analyze these findings across diverse cultural settings.

Suggested Citation

  • de Moraes Ferreira, Mariana & Yumi Tsushima Santiago, Milena & Bastos, Rafael & Fatori, Daniel & Sardinha Borborema, Rodrigo & Seda, Leonardo & Camargo Batistuzzo, Marcelo, 2024. "Replication: The money illusion effect in a Brazilian sample and meta-analyses," Journal of Economic Psychology, Elsevier, vol. 104(C).
  • Handle: RePEc:eee:joepsy:v:104:y:2024:i:c:s0167487024000527
    DOI: 10.1016/j.joep.2024.102744
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167487024000527
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.joep.2024.102744?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Darriet, Elisa & Guille, Marianne & Vergnaud, Jean-Christophe & Shimizu, Mariko, 2020. "Money illusion, financial literacy and numeracy: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 76(C).
    2. ., 2023. "Tariffs and quantitative restrictions," Chapters, in: The Law and Economics of International Trade Agreements, chapter 6, pages 127-158, Edward Elgar Publishing.
    3. Ernst Fehr & Jean-Robert Tyran, 2001. "Does Money Illusion Matter?," American Economic Review, American Economic Association, vol. 91(5), pages 1239-1262, December.
    4. János Vincze, 2019. "Money Illusion: Reconsidered in the Light of Cognitive Science," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 69(2), pages 191-215, June.
    5. He, Xuming & Pan, Xiaoou & Tan, Kean Ming & Zhou, Wen-Xin, 2023. "Smoothed quantile regression with large-scale inference," Journal of Econometrics, Elsevier, vol. 232(2), pages 367-388.
    6. Li, Jianbiao & Wang, Wei & Cao, Qian & Niu, Xiaofei, 2023. "Transcranial stimulation over the medial prefrontal cortex increases money illusion," Journal of Economic Psychology, Elsevier, vol. 99(C).
    7. Ziano, Ignazio & Li, Jie & Tsun, Shue Man & Lei, Hoi Ching & Kamath, Anvita Anil & Cheng, Bo Ley & Feldman, Gilad, 2021. "Revisiting “money illusion”: Replication and extension of Shafir, Diamond, and Tversky (1997)," Journal of Economic Psychology, Elsevier, vol. 83(C).
    8. Andrade, Ana C.C. & Pereira, Gustavo H.A. & Artes, Rinaldo, 2023. "The circular quantile residual," Computational Statistics & Data Analysis, Elsevier, vol. 178(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Jianbiao & Wang, Wei & Cao, Qian & Niu, Xiaofei, 2023. "Transcranial stimulation over the medial prefrontal cortex increases money illusion," Journal of Economic Psychology, Elsevier, vol. 99(C).
    2. Lorenzo Esposito & Lorenzo Marrese, 2021. "The impact of cognitive skills on investment decisions. An empirical assessment and policy suggestions," DISCE - Quaderni del Dipartimento di Politica Economica dipe0019, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    3. Fabrizio Adriani & Giancarlo Marini & Pasquale Scaramozzino, 2009. "The Inflationary Consequences of a Currency Changeover on the Catering Sector: Evidence from the Michelin Red Guide," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 111-133, February.
    4. Jonas Agell & Helge Bennmarker, 2003. "Endogenous Wage Rigidity," CESifo Working Paper Series 1081, CESifo.
    5. Fehr, Ernst & Goette, Lorenz, 2005. "Robustness and real consequences of nominal wage rigidity," Journal of Monetary Economics, Elsevier, vol. 52(4), pages 779-804, May.
    6. Camille Cornand & Frank Heinemann, 2015. "Macro-expérimentation autour des fonctions des banques centrales," Revue française d'économie, Presses de Sciences-Po, vol. 0(2), pages 3-47.
    7. Felici, Marco & Kenny, Geoff & Friz, Roberta, 2023. "Consumer savings behaviour at low and negative interest rates," European Economic Review, Elsevier, vol. 157(C).
    8. Suleyman Basak & Hongjun Yan, 2010. "Equilibrium Asset Prices and Investor Behaviour in the Presence of Money Illusion," Review of Economic Studies, Oxford University Press, vol. 77(3), pages 914-936.
    9. Nobuyuki Hanaki & Nicolas Jacquemet & Stéphane Luchini & Adam Zylbersztejn, 2016. "Cognitive ability and the effect of strategic uncertainty," Theory and Decision, Springer, vol. 81(1), pages 101-121, June.
    10. Blumkin, Tomer & Ruffle, Bradley J. & Ganun, Yosef, 2012. "Are income and consumption taxes ever really equivalent? Evidence from a real-effort experiment with real goods," European Economic Review, Elsevier, vol. 56(6), pages 1200-1219.
    11. Deckers Thomas & Falk Armin & Schildberg-Hörisch Hannah, 2016. "Nominal or Real? The Impact of Regional Price Levels on Satisfaction with Life," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(3), pages 1337-1358, September.
    12. Andreas Hefti & Peiyao Shen & King King Li, 2021. "Igniting deliberation in high stake decisions: a field study," ECON - Working Papers 378, Department of Economics - University of Zurich.
    13. Cannon, Edmund & Cipriani, Giam Pietro, 2006. "Euro-Illusion: A Natural Experiment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(5), pages 1391-1403, August.
    14. Zizzo, Daniel John, 2013. "Claims and confounds in economic experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 186-195.
    15. Davis, Douglas & Korenok, Oleg, 2011. "Nominal shocks in monopolistically competitive markets: An experiment," Journal of Monetary Economics, Elsevier, vol. 58(6), pages 578-589.
    16. Luhan, Wolfgang J. & Scharler, Johann, 2013. "Monetary Policy, Inflation Illusion and the Taylor Principle – An Experimental Study," Ruhr Economic Papers 402, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    17. János Vincze, 2019. "Money Illusion: Reconsidered in the Light of Cognitive Science," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 69(2), pages 191-215, June.
    18. Pope, Robin & Selten, Reinhard & Kube, Sebastian, 2009. "Nominalist Heuristics and Economic Theory," Bonn Econ Discussion Papers 17/2009, University of Bonn, Bonn Graduate School of Economics (BGSE).
    19. M. Fase, 2007. "Notes and Communications," De Economist, Springer, vol. 155(2), pages 221-238, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joepsy:v:104:y:2024:i:c:s0167487024000527. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/joep .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.