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This is what's in your wallet... and how you use it

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  • Briglevics, Tamás
  • Schuh, Scott

Abstract

Data from the 2012 Diary of Consumer Payment Choice (DCPC) shows substantial changes in payment instrument use of U.S. households compared to the results in Klee (2008) (which were based on data from 2001): Checks have virtually disappeared from purchase transactions, while still play a role in bill payments. Cash, on the other hand, still plays a large role for low-value transactions. The diary data is used to jointly analyse payment instrument use and consumers' demand for liquid assets. Preliminary results indicate that payment instrument choice is an integral part of consumers' cash management practices and hence cash demand; therefore, contrary to simple Baumol (1952)|Tobin (1956) models, they should be analysed together. JEL Classification: E41, E42

Suggested Citation

  • Briglevics, Tamás & Schuh, Scott, 2014. "This is what's in your wallet... and how you use it," Working Paper Series 1684, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20141684
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp1684.pdf
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    References listed on IDEAS

    as
    1. Klee, Elizabeth, 2008. "How people pay: Evidence from grocery store data," Journal of Monetary Economics, Elsevier, vol. 55(3), pages 526-541, April.
    2. Rust, John, 1987. "Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher," Econometrica, Econometric Society, vol. 55(5), pages 999-1033, September.
    3. Sergei Koulayev & Marc Rysman & Scott Schuh & Joanna Stavins, 2016. "Explaining adoption and use of payment instruments by US consumers," RAND Journal of Economics, RAND Corporation, vol. 47(2), pages 293-325, May.
    4. William J. Baumol, 1952. "The Transactions Demand for Cash: An Inventory Theoretic Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 66(4), pages 545-556.
    5. Ulf Kalckreuth & Tobias Schmidt & Helmut Stix, 2014. "Choosing and using payment instruments: evidence from German microdata," Empirical Economics, Springer, vol. 46(3), pages 1019-1055, May.
    6. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, January.
    7. Yassine Bouhdaoui & David Bounie, 2012. "Modeling the Share of Cash Payments in the Economy: An Application to France," International Journal of Central Banking, International Journal of Central Banking, vol. 8(4), pages 175-195, December.
    8. Ben Fung & Kim Huynh & Leonard Sabetti, 2012. "The Impact of Retail Payment Innovations on Cash Usage," Staff Working Papers 12-14, Bank of Canada.
    9. Nosal, Ed & Rocheteau, Guillaume, 2011. "Money, Payments, and Liquidity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262016281, December.
    10. Eschelbach, Martina & Schmidt, Tobias, 2013. "Precautionary motives in short-term cash management: Evidence from German POS transactions," Discussion Papers 38/2013, Deutsche Bundesbank.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Claire Greene & Scott Schuh & Joanna Stavins, 2017. "The 2015 Survey of Consumer Payment Choice: summary results," Research Data Report 17-3, Federal Reserve Bank of Boston.
    2. John Bagnall & David Bounie & Kim P. Huynh & Anneke Kosse & Tobias Schmidt & Scott Schuh, 2016. "Consumer Cash Usage: A Cross-Country Comparison with Payment Diary Survey Data," International Journal of Central Banking, International Journal of Central Banking, vol. 12(4), pages 1-61, December.
    3. Fernando Alvarez & David Argente, 2022. "On the Effects of the Availability of Means of Payments: The Case of Uber," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(3), pages 1737-1789.
    4. Martin Brown & Nicole Hentschel & Hannes Mettler & Helmut Stix, 2020. "Financial Innovation, Payment Choice and Cash Demand – Causal Evidence from the Staggered Introduction of Contactless Debit Cards (Martin Brown,Nicole Hentschel, Hannes Mettler, Helmut Stix)," Working Papers 230, Oesterreichische Nationalbank (Austrian Central Bank).
    5. Greene, Claire & Prescott, Brian & Shy, Oz, 2022. "How people pay each other: Data, theory, and calibrations," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 96(C).
    6. Krislert Samphantharak & Scott Schuh & Robert M. Townsend, 2018. "Integrated Household Surveys: An Assessment Of U.S. Methods And An Innovation," Economic Inquiry, Western Economic Association International, vol. 56(1), pages 50-80, January.
    7. Claire Greene & Scott Schuh, 2014. "U.S. Consumers' Holdings and Use of $100 Bills," Consumer Payments Research Data Reports 2014-03, Federal Reserve Bank of Atlanta.
    8. Claire Greene & Shaun O'Brien & Scott Schuh, 2017. "U. S. consumer cash use, 2012 and 2015: an introduction to the Diary of Consumer Payment Choice," Research Data Report 17-6, Federal Reserve Bank of Boston.
    9. Claire Greene & Joanna Stavins, 2020. "The 2017 Diary of Consumer Payment Choice," Consumer Payments Research Data Reports 2018-5, Federal Reserve Bank of Atlanta.
    10. Claire Greene & Scott Schuh, 2014. "U.S. consumers' holdings and use of $100 bills," Research Data Report 14-3, Federal Reserve Bank of Boston.
    11. Claire Greene & Oz Shy, 2020. "How Consumers Get Cash: Evidence from a Diary Survey," Consumer Payments Research Data Reports 2019-1, Federal Reserve Bank of Atlanta.
    12. Joanna Stavins & Huijia Wu, 2017. "Payment discounts and surcharges: the role of consumer preferences," Working Papers 17-4, Federal Reserve Bank of Boston.
    13. Gustavo A. Del Angel, 2016. "Cashless Payments and the Persistence of Cash: Open Questions About Mexico," Economics Working Papers 16108, Hoover Institution, Stanford University.
    14. Martin Brown & Nicole Hentschel & Hannes Mettler & Helmut Stix, 2020. "Financial Innovation, Payment Choice and Cash Demand - Causal Evidence from the Staggered Introduction of Contactless Debit Cards," Working Papers on Finance 2002, University of St. Gallen, School of Finance.
    15. Claire Greene & Scott Schuh & Joanna Stavins, 2016. "The 2014 survey of consumer payment choice: summary results," Research Data Report 16-3, Federal Reserve Bank of Boston.
    16. Joanna Stavins, 2017. "How do consumers make their payment choices?," Research Data Report 17-1, Federal Reserve Bank of Boston.
    17. Claire Greene & Scott Schuh, 2017. "The 2016 Diary of Consumer Payment Choice," Research Data Report 17-7, Federal Reserve Bank of Boston.
    18. Scott Schuh, 2017. "Measuring consumer expenditures with payment diaries," Working Papers 17-2, Federal Reserve Bank of Boston.
    19. Wang, Zhu & Wolman, Alexander L., 2016. "Payment choice and currency use: Insights from two billion retail transactions," Journal of Monetary Economics, Elsevier, vol. 84(C), pages 94-115.

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    More about this item

    Keywords

    cash withdrawals; Diary of Consumer Payment Choice; money demand; payment cards; payment instrument choice;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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