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The Social Meaning of Mobile Money: Willingness to Pay with Mobile Money in Bangladesh

Author

Listed:
  • Jean N. Lee

    (World Bank)

  • Jonathan Morduch

    (Robert F. Wagner Graduate School of Public Service, New York University)

  • Saravana Ravindran

    (Lee Kuan Yew School of Public Policy, National University of Singapore)

  • Abu S. Shonchoy

    (Department of Economics, Florida International University)

Abstract

Mobile money has spread globally, introducing new payment technologies and reducing dependence on cash. Using mobile money can affect spending decisions and how people perceive money itself. Behavioral household finance shows that people are often more willing to spend when using less tangible forms of money like debit and credit cards than when spending in cash. We test whether a similar positive "payment effect" holds for mobile money. In contrast, we find a consistently lower willingness to spend in Bangladesh, where mobile money is now widespread. We draw on surveys embedded within an experiment that allows us to control for the relationships between senders and receivers of mobile money. The findings are consistent with mobile money being earmarked or labeled for particular uses. For rural households, who typically receive remittances from relatives working in the city, for example, mobile money often comes with expectations of how the money should be spent. Spending with cash, in contrast, tends to be more fungible. In urban areas, where the sample is largely comprised of remittance-senders, payment effects are substantially smaller.

Suggested Citation

  • Jean N. Lee & Jonathan Morduch & Saravana Ravindran & Abu S. Shonchoy, 2023. "The Social Meaning of Mobile Money: Willingness to Pay with Mobile Money in Bangladesh," Working Papers 2304, Florida International University, Department of Economics.
  • Handle: RePEc:fiu:wpaper:2304
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    References listed on IDEAS

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    More about this item

    Keywords

    payment effect; digital finance; willingness to pay; social meaning of money; earmarks;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G50 - Financial Economics - - Household Finance - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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