It May Be that Young People have been Paying Attention

This interesting report by NPR challenges the speculation that we may be moving to a cashless society.

“People seem really wary of the mistakes of their parents,” Shahani says. “There is something relieving about, you know, that it’s not lost on them that their parents were deep into debt. And people seem to carry that maybe in the way that their parents’ generation didn’t.”

Many young people, it seems, prefer to use cash rather than plastic.

“The perception that young people rarely use cash is just not correct,” [Doug Conover, an analyst with the Federal Reserve Bank of San Francisco] says.

The Federal Reserve Bank put together a study asking people to keep a diary of their spending. Compared with their elders, young adults (ages 18 to 24) reported using cash more, for nearly half of all purchases.

In the end, of course, it’s an empirical question, not one that can be answered by anecdotes or surveys. The per-capita use of currency has been declining for many years now.* Will that usage level off, or even increase? Time will tell.


* [update, later in the day] My assertion about per-capita decrease was challenged by some of my fellow Georgers. I based that statement on some reading I had done lately on the new epayment systems, and articles which cited a trend to less and less currency being used.

This is something that I need to research, because it is fairly complex, but one thing that is clear is that my statement was wrong. At least on the surface. The number of bills in circulation, according to the FRB, has increased at an average annual rate of 6.4% over the past 10 years. Population growth in the US is about 1% per annum.


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    • Ed Arnold on April 8, 2015 at 12:07 PM
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    Both of my children are currently attending college. The college has completely gone to an electronic wallet that is their college ID which gets charged with money. So, cashless? No. But the next generation is being steeped in living with as little cash as possible.

    Also, the “cash back” credit cards certainly give a financial incentive to being cashless. More empirical observation … my brother’s family uses cash absolutely as little as possible.

    Ed Arnold

  1. Ed, when I say “empirical” I mean data-driven. At the macro level. Even that is fairly complicated, because there are a host of interacting variables. Benjamins, for example, are famous for being used overseas as a store of value to protect people from possible devaluation of their own currency. And, presumably, are involved to some extent in criminal activity, though it’s a bit hard to get data on that. 😉

    It’s also impossible to know with certainty the velocity of money (how many times per year it changes hands). So, if more money if being printed but people are just socking it away, it may actually be being used less in daily transactions. Not likely, but possible. And, adjustments must be made for inflation, population growth, and income levels.

    Also, it’s necessary to look at all the alternative forms of payment. ACH is growing, check-writing is on a downward trend. Credit cards are stagnant, but debit cards are becoming more popular. And so on.

    Your observation, I would say, is not “empirical” but “anecdotal” (with all due respect to your family).

    I hope to see you sometime soon on the Georging trail and we can discuss this and other weighty matters in person. 🙂

    • Deborah on March 29, 2019 at 5:18 PM
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    I’m wondering whether you still always carry a two-dollar bill in your billfold? (For that matter, do you still carry a billfold/wallet?) I still look for silver certificates on those rare occasions when I have a cash transaction — very, very rare these days (i.e., silver certificates and cash transactions).

    1. I often tell my Georging friends (and my poker buddies, and anyone else who will listen) that I have a fondness for $2 bills that goes back to my childhood, when they were in common circulation in Stockbridge.

      I remember one of the adults in my life (Jim Farnam) telling me that we were at the southwest corner of where $2 bills were commonly used. Outside the northeast, not so much. I wonder if that was accurate, but in any case, I do remember that when you spent a $2 bill, it was put in the till next to the ones. Today, that slot would be mostly empty, so everything has been shifted over one position and now the leftmost bill slot is used for large bills, checks, and coin rolls. Twos are placed under the ones, or, more commonly in with the large bills (or under the till).

      $2 was a virtual fortune to a child in the 1950s, when a cup of coffee, a phone call, a Coke, and an ice cream cone all cost a nickel. Today, twos may be making a comeback because the value of ones has been so severely eroded.

      I had forgotten that I had always carried a $2 bill in my wallet, but now that you mention it, yes, I never let go of my fondness for that denomination, and I spend at least one with every transaction.

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