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Abstract: Further Thoughts on the Cashless Society: A Reply to Dr. Shampine
Abstract
Further Thoughts on the Cashless Society: A Reply to Dr. Shampine
The Review of Network Economics
Vol. 6, Issue 4 - December 2007, pp 509 - 524
Author
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Daniel Garcia-Swartz
LECG Consulting
Robert W. Hahn
AEI-Brookings Joint Center on Regulatory Studies
Anne Layne-Farrar
E-mail: [email protected] |
Abstract
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We address Allan Shampine's critiques of our study on the costs and benefits of payment instruments, and review the current state of the literature. We argue that a consensus seems to be emerging in which: (a) different payment instruments appear to be socially efficient at different transaction sizes; (b) cash appears to be efficient for small payments; and (c) debit cards appear to overtake cash as the socially optimal instrument as the transaction size increases. Except for the fact that in our study credit appears to overtake debit at large transaction sizes, our 2006 findings are consistent with the consensus.
Keywords: credit card, cash, cost benefit, welfare
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