Socialization: An important factor of redenomination success in Indonesia

Abstract

Redenomination discourse has become a concern, again, in line with the instructions of the Indonesian President to the Finance Minister to re-socialize the program to the society. Socialization is important given the Indonesian society is geographical, demographical, and psychographic heterogeneous. The heterogeneous society is potential to have a low understanding level of what and how redenomination would be applied, while the ignorance would trigger rush and hyperinflation. Hence, a research is needed to acknowledge the people understanding about redenomination. This is a door knocking survey which involved 600 respondents in Semarang, Kudus, and Banjarnegara as representatives of Indonesian society with diverse backgrounds. The data were processed using Cramer's V Test and Crosstab. The results show that Indonesians' understanding of redenomination is low, especially the people living far from the government centers. In addition, educational factors and occupations are the main factors that determine the level of understanding on redenomination. There is an indication that the higher the education, the higher the public understanding of redenomination. Similarly, people with the Teachers/Lecturers profession, working in the formal sector, and have managerial positions, have a better understanding of redenomination, than people who are not working or working in the informal sector.

Money Illusions: Post Redenomination Shopping Behavior

“…However, there is a greater potential for money illusion in low-educated communities; this is because of their lack of understanding of redenomination. For that, a proper approach for the special characteristics of the segment becomes crucial (Prabawani, 2018).…”

“…High spending especially happened in secondary need consumption (Purwana et al, 2012). In contrast, money illusion in Ghana is avoidable when there is adequate public education (Dzokoto, Young, & Mensah, 2010), similar to the case in Indonesia in the context of redenomination (Prabawani, Musfirowati, & Riandhita, 2018).…”

“…Thus, redenomination that makes the nominal value smaller, irrespective of the real value, has the potential to encourage money illusion. In Indonesia and Ghana, redenomination can strengthen the exchange rate and reveal real economic conditions, but it also has the potential to stimulate rush and hyperinflation if it is not accompanied by adequate socialization (Dzokoto, Young, et al, 2010;Prabawani, 2017;Prabawani et al, 2018). The money illusion phenomenon would weaken the theory that humans economically behave rationally, even though such behavior may only be temporary.…”

“…Individuals will act rationally after understanding the economic context. (Fehr & Tyran, 2007) Previous research related to money illusion was done in the US, China (Mees & Frances, 2014;Seiler, 2014), Ghana , Germany (Boes et al, 2007), and Indonesia (Prabawani, 2017;Prabawani et al, 2018). Research focused on various kinds of consumers; some involved only young people (Seiler, 2014) while others focused on middle lower urban communities (Purwana et al, 2012), students and workers (Boes et al, 2007;Mees & Frances, 2014), and entrepreneurs (Prabawani, 2017;Prabawani & Prihatini, 2014).…”

Enhancement Operation System Model in Managing Local Resources-Based Environment towards Sustainable Development

“…Even to create a sustainable model of natural resource management and also focuses on optimizing local resources. This case is important given the use of local resources, both of human and natural in environmental management can ensure the sustainability of conservation and utilization of the environment [1]- [6] The logical reason that can be put forward is that local people know in detail about the condition of the area and have both emotionally and physically related in the nature conservation in which they live and live [7].…”