Proven: Coffee Tastes Better When You Pay for It in Cash

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Coffee Tastes Better When You Pay for It in Cash

Paying for our purchases with cold, hard cash hurts. But that may also mean we put more value on what we buy. Here’s how one cup of coffee led to a revealing discovery in consumer science.

Eureka!

Avni Shah, an assistant marketing professor, relies on a latte for a morning fix. Walk in a coffee shop. Order the usual cuppa. Swipe the card. Repeat.

But forgetting her debit card one day, she was forced to break out of her routine. She had to pay for her coffee with cash for the very first time. And sipping from her warm cup, Avni felt a noticeable difference. Her coffee tasted better!

The professor’s pure curiosity was triggered. Is there a correlation between how we feel about our purchases with how we pay for them?

Two years later, Avni – now a doctoral student at Duke University – launched a research to assess her theory.

The story of mugs

For her first experiment, Avni sold coffee mugs worth US$6.95 for a discounted price of US$2. She asked one group to pay cash; the other with cards.

Two hours after, she offered each buyer a new, enticing deal. She would repurchase the mug at a price they want. Customers who paid for cash asked, on average for, for US$6.71 while those who paid with their cards asked, on average, for US$3.83 back.

Paying in hard cash for your coffee might make it taste better!

What could account for the US$3 difference? “Those who paid with cash reported feeling more emotionally attached to their mug. Some cash folks literally blocked their hand over the mug and said, ‘You can’t take it back’,” Professor Shah said.

But there are other reasons for cash payers charging more, such as their efforts trying to find ATMs, paying bank fees, or the profit. These independent factors must be ruled out before Avni’s research could come to an irrefutable conclusion. Hence another social experiment was carried out.

Donating to charity

The next test involved two sets of participants. One group was given US$5 in cash to donate to charity; the others were given vouchers. Ribbons were also given, to be worn their lapel as an expression of their donation.

The result: almost 50% of those who donated through cash wore their ribbons compared to only 14% of those who contributed vouchers.

“We found that people who donated by cash felt more connected to their chosen charities than those who donated by voucher. Cash donors also reported feeling less attached to the charities they didn’t choose,” said Professor Shah.

Pain of payment

Professor Shah’s research proves that payments through physical methods like cash or cheque result in greater emotional attachment to the purchased good. Conversely, intangible payments (such as digital payments) lead to less emotional attachment to the items or brands bought.

Her research complements what behavioural economists call as “the pain of payment” or “the pain of paying.” According to this theory, people are generally loss averse, and we don’t like parting away with money. But when we do, we become fully aware of how much our purchases cost us.

The bottom line

Seeing how our cash is depleted could greatly help us in making purchasing decisions. So if the budget is tight or if you want to be a wiser consumer, use cash  and stash those cards away in a vault.

Related: [Infographic] 8 Money-Saving Techniques for the Weak-Willed

For more posts on how our psychology affects our wealth, check these out:

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