Social Science

The Psychological Effects of Rupiah Redenomination
Harry Susianto, Universitas Indonesia

Money occupies a central role in modern society, and has been subject to various studies including psychology. One interesting topic is the psychological effects of currency redenomination—changing the nominal value of banknotes or coins without changing its buying power. Indonesia will undergo a currency redenomination. Learning from other countries that have redenominated their currencies, the change in nominal value will influence how people estimate prices and subsequent spending decisions. In this presentation, I will discuss some psychological studies on money—e.g. coin size estimation, money primes, physical appearance of money, money illusion, and report our study on the effects of Rupiah redenomination on consumer behavior.

Background Review Articles:
Gamble, A. (2007). The Euro Illusion: Illusion or fact? Journal of Consumer Policy 30, 323-336.

Raghubir, P. & Srivastava, J. (2002). Effects of face value on product valuation in foreign currencies. Journal of Consumer Research 29, 335-347.

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Social Science

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