Abstract

We replicate the landmark study of Shafir, Diamond and Tversky (1997) to examine whether individuals in China are prone to money illusion. We find that money illusion is prevalent in China as well. Respondents in the Chinese sample are often somewhat more likely to base decisions on the real monetary value of economic transactions compared to respondents in the U.S. sample. If asked explicitly to evaluate a transaction in terms of happiness or satisfaction instead of economic terms, money illusion among respondents in the Chinese sample is comparable to money illusion among respondents in the U.S. sample.

Additional Metadata
Keywords China, Behavioral economics, Money illusion
JEL Laboratory, Individual Behavior (jel C91)
Persistent URL dx.doi.org/10.1016/j.socec.2014.03.003, hdl.handle.net/1765/76081
Series Econometric Institute Reprint Series
Journal Journal of Behavioral and Experimental Economics
Citation
Mees, H, & Franses, Ph.H.B.F. (2014). Are individuals in China prone to money illusion?. Journal of Behavioral and Experimental Economics, 51, 38–46. doi:10.1016/j.socec.2014.03.003