The “Euro Illusion”: Illusion or Fact?

Gamble, Amelie

doi:10.1007/s10603-007-9044-3

Cited by 16 publications

(35 citation statements)

References 47 publications

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“…As discussed in other papers in this special issue Gamble, 2007), the euro illusion is a phenomenon related to the money illusion (Shafir et al, 1997). Due to differences in nominal values of currencies, the same goods or services will be rated as less expensive when the money unit is larger.…”

Section: Euro Price Evaluationmentioning

confidence: 95%

Euro Stories: The Irish Experience of Currency Change

Ranyard

2007

J Consum Policy

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This paper presents an overview of an interview study carried out in the Republic of Ireland approximately one year after the introduction of the euro in January 2002, and also compares the Irish experience to that of the other initial Eurozone countries. The new currency seems to have been rather more positively received in Ireland than elsewhere. Irish adults had a generally more positive attitude towards the new currency and seemed to have adapted to it rather well. Nevertheless, they shared some common experiences and problems with citizens of other countries, such as the perception that the introduction of the euro raised inflation more than it actually did, confusion of notes and coins, and the use of coping strategies involving price conversion to the former currency. The implications of the Irish experience for policy are discussed.

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Section: Euro Price Evaluationmentioning

confidence: 95%

Euro Stories: The Irish Experience of Currency Change

Ranyard

2007

J Consum Policy

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“…It means that individuals spend their budgets more easily while using currency with lower nominal value. Differences between prices also appear slighter -it is called compression effect (Gamble, 2007). These tendencies can be explained by numerosity heuristics.…”

Section: The Impact Of Money Illusion On Individuals' Economic Behaviourmentioning

confidence: 99%

“…It also brings the opportunity to compare prices in different countries more precisely. It should make the market more competitive and lead to lowering the prices of goods and services across the Euro zone (Gamble 2007). However, adaptation to the euro is not an easy process -citizens need to adapt too many changes as prices, salaries and all financial contracts are converted to euro.…”

Section: Money Illusion In the Context Of The Euro Introductionmentioning

confidence: 99%

“…In most Euro zone countries, citizens perceived their salaries as smaller when they were converted from domestic currency to the euro. In this way, euro illusion causes people to feel poorer (Gamble 2007).…”

Section: Money Illusion In the Context Of The Euro Introductionmentioning

confidence: 99%

“…In some cases, the adaptation may take less time. For example, in Austria the relearning to the euro scale was processing quite smoothly and quickly in comparison with Portugal, where the adaptation tooks longer (Gamble, 2007). Germans have also adapted the euro easier comparing to citizens of most other Euro zone countries (Jonas, 2003).…”

Section: Money Illusion In the Context Of The Euro Introductionmentioning

confidence: 99%

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Assessment Of Money Illusion Impact On Individuals’ Economic Behaviour In Lithuania

Jurevičienė

Markelova

2016

ESJ

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Behavioural economics was in a process of rapid development in the last century. One of behavioural phenomenon discovered by economists is money illusion -an inclination to make biased decisions based on nominal rather than real monetary values. This illusion influences individuals' perception of money-related processes and, hence, their economic behaviour. Euro illusion concept, which represents money illusion in countries that adopted the euro, became commonly used after money illusion has been identified and studied in a number of Euro zone countries. Money illusion has not been deeply discussed in Lithuania. The euro introduction in 2015 provides an additional reason to study its impact on Lithuanian citizens. The purpose of the paper is to evaluate money illusion impact on individuals' economic behaviour in Lithuania after assessment whether Lithuanians experience it. Analysis of scientific literature, experimental study and statistical methods were applied. It was found that citizens are prone to money illusion, which causes irrational economic behaviour. Despite difficult adaptation to the euro, Lithuanians do not experience euro illusion. Newly collected data on money illusion in Lithuania suggests critical evaluation of individuals' economic behaviour. Performance of such experiment has some limitations as problems presented in a survey are hypothetical and decisions made by participant may not extend to real world. In addition participants may bear in mind their own assumptions like personal experience (e.g. income, savings, debts etc.) which could affect their decisions.

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Cognitive Euroscience in Croatia: Price estimations in the new and old currency in the face of inflation

Beg,

Domijan

2024

Applied Cognitive Psychology

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Do customers convert values to a familiar currency (rescaling hypothesis) or do they learn item‐price pairs (relearning hypothesis) when they estimate the prices of consumer goods and services in a currency they are unfamiliar with? We addressed this question by replicating the study conducted in Portugal and Austria in 2001 and 2002, around the time when these countries switched to the euro (Marques & Dehaene, Journal of Experimental Psychology: Applied, 2004, 10, 148–155). The study was made in Croatia where university students (N = 181) were asked to estimate the typical price of a set of 60 items from November 2022 to June 2023, around the time at which changeover to the euro took place. The results support the rescaling hypothesis by showing concurrent improvements in the precision of price estimates for frequently and rarely bought items. The reliance on rescaling is probably caused by a high inflation that accompanied a changeover to the euro in Croatia.

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The “Euro Illusion”: Illusion or Fact?

Abstract: Nominal representation, Subjective value, Euro illusion, Money illusion, Accuracy-effort tradeoff, Conversion strategy, Price evaluation,

Cited by 16 publications

References 47 publications

Euro Stories: The Irish Experience of Currency Change

Euro Stories: The Irish Experience of Currency Change

Assessment Of Money Illusion Impact On Individuals’ Economic Behaviour In Lithuania

Cognitive Euroscience in Croatia: Price estimations in the new and old currency in the face of inflation

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