Psychological effects of the Euro - Experimental research on the perception of salaries and price estimations

In five studies we show that the introduction of the Euro influences price estimations and the perception of salaries among people in Germany. People confronted with wages given in Euros compared to the German Mark (DM) showed a reduced willingness to face long distances to get to work when accepting a job offer. When asked to price various consumer goods appropriately, they estimated higher prices if they used the ‘Euro’ currency compared to price estimations made in DM. This phenomenon only occurred with regard to the Euro, but not in comparison with other currencies (cf. the British Pound and Austrian Schilling). The differing price estimations between the Euro and the German Mark were not influenced by participants' attitude towards the Euro. Moreover, it turned out that they depended on how the judgement context was framed. Only if participants expected to make price estimations for shops in their home country, Germany, did the familiar nominal DM figures serve as an anchor heightening the estimated prices in Euro. The same effect disappeared if participants were instructed to make their price estimations for shops in a foreign country (Ireland). Copyright © 2002 John Wiley & Sons, Ltd.

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