I didn’t use any cash during my Iceland trip. That is really really convenient during your travels. At the same time I really didn’t know how much I was spending. This is ofcourse always the luxery when being abroad in a country with a different currency. But now it is even more untouchable. No cash at hand, a foreing currency, an exchange ratio not totally clear. Only pay by plastic. Ingredients for trouble. A little shock for me when the credit card was charged. Not that bad. But more than I expected.
Can the future generations make a difference between 1 euro and 10 euro if all they know is this number on their mobile screen? That number which corresponds to their current savings (or better; loans). It doesn’t give any emotional reaction to spending, like it does with spending actual cash money. No attachment to the hard work that went into it, to buy the stuff.
Research (by Prelec and Simester) has shown that spending with your credit card doesn’t give the same emotional reaction as with cash. And people are even willing to offer higher prices due to the fact that the don’t feel the pain of spending. That’s why credit card company are so big. And a lot of people come into troubles.
But I guess we have a huge problem if this virtual number is all we ever are going see. How should coming generations coop with this? No emotions attached. We as humans are simple not able to give any emotion to a digital number.
That is a problem!