Economics & Sociology

ISSN: 2071-789X eISSN: 2306-3459 DOI: 10.14254/2071-789X
Index PUBMS: f5512f57-a601-11e7-8f0e-080027f4daa0
Article information
Title: Money Illusions: Post Redenomination Shopping Behavior
Issue: Vol. 11, No 3, 2018
Published date: 09-2018 (print) / 09-2018 (online)
Journal: Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Authors: Bulan Prabawani
Diponegoro University
Keywords: money illusion, spending behavior, redenomination, Indonesia, survey, Cramer’s V-test
DOI: 10.14254/2071-789X.2018/11-3/10
Index PUBMS: 4ffbd5e5-cdf7-11e8-92b1-901b0efa6e97
Language: English
Pages: 161-169 (9)
JEL classification: D12, D14

Money illusions potentially occur in a post-redenominating country. This is triggered by the public tendency to merely pay attention to the nominal value listed on the currency rather than the real value. Money illusion often occurs in Indonesian society and encourages hyperinflation, as one indicator of redenomination failure. Therefore, this research explores the potential of money illusion in Indonesia with Semarang, Kudus, and Banjarnegara as the research locations. These three locations represent Indonesian urban, coastal and inland areas. The data collection was conducted with a survey of 600 respondents. The data were analyzed with Cramer's V-test in order to know the potential difference of money illusion among people with different geographic, demographic, and psychographic characteristics. The results show there is a potential for money illusion in terms of educational expenses by educational level; social spending by region; electricity expenses by occupation; water expenses by occupation; entertainment spending by age and sex; and medical expenses by occupation. Hence, the government should provide additional programs to increase the people’s understanding of the redenomination agenda and provide strong policies to maintain economic stability.


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