The Basic Idea
When you go shopping, is your default payment method cash or a credit card? If you typically pay with your cards, you may find this a silly question - carrying a single card is more convenient than a wallet full of cash! Aside from the factor of convenience, there may be another subconscious reason behind your choices.
The pain of paying refers to the negative emotions we feel when making a purchase.1 This happens because as humans, we are loss averse: we want to avoid losses whenever possible, and losses are perceived to be more powerful than equal gains. When we make payments, we incur a loss, which is why these transactions can be painful. Moreover, the pain of paying has been found to be stronger when paying with cash than with a credit or debit card.2 Our loss of money is more salient to the brain when handing over physical cash, rather than swiping a piece of plastic.
I don’t think we should go around life being miserable all the time and feel the pain of paying. It’s a question of what categories we want to spend more on and what categories we feel that we are spending too much on and we want to cut down.
– Dan Ariely, behavioral economist and author of Predictably Irrational: The Hidden Forces That Shape Our Decisions
