Monopoly Money: The Effect of Payment Coupling and Form on Spending Behavior (PDF; 312 KB)
Source: Journal of Experimental Psychology: Applied (via American Psychological Association)
From press release:

There is fresh evidence that people spend less when paying cash than using credit, cash-equivalent scrip or gift certificates. They also spend less when they have to estimate expenses in detail.

These findings appear in the September issue of the Journal of Experimental Psychology: Applied, published by the American Psychological Association.

The conclusion that cash discourages spending, and credit or gift cards encourage it, arises from four studies that examined two factors in purchasing behavior: when consumers part with their money (cash versus credit) and the form of payment (cash, cash-like scrip, gift certificate or credit card). The results build on growing evidence that, as the authors wrote, “The more transparent the payment outflow, the greater the aversion to spending, or higher the ‘pain of paying.’” Cash is viewed as the most transparent form of payment.

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