the 1980s the psychologists Stephen Lea and Paul Webley developed a psychological theory of money that shows we value cash, cheques, gift vouchers and bank account balances differently.5 One of the things they discovered was that we are particularly attached to physical forms of money.
A crisp new banknote is very satisfying to have and hold, particularly a rarely seen pink £50 note. To be ‘holding folding’, as the old British expression describes the possession of cash, gives us a visceral pleasure. When a lottery winner finds out they’ve won a few million they often say they can’t really imagine that much money. To make it feel more real, they might be presented with one of those giant cardboard cheques. But just imagine how much more thrilling it would be if the National Lottery handed the money over as stacks of bills in sleek leather brief cases. Far more exciting than an electronic money transfer.
Somewhat in the same way, we all enjoy a pile of coins. When I was little, my grandparents used to save particular pennies and halfpennies and give them to me to stack in satisfying piles. The ones they saved were the bright and shiny coins, which they called ‘new money’. A stack would have been worth less than twenty pence, but given the condition of the coins, we all considered my pennies a little bit special.
Most of us like wads of notes too, of course. But as notes get older and dirtier we actually spend them faster. Research has shown that their ‘dwell time’ – the time a particular note spends in a wallet – is shorter than for newer, cleaner notes.6 Ten pounds is ten pounds is ten pounds. But the fact is we regard different notes differently.
At the moment, the Bank of England is replacing paper £5 and £10 notes with stronger material made from polymer, which will last two-and-a-half times as long. Every day 2 million notes are removed from circulation, with high-speed sorting machines identifying those that are too dirty or torn, or have impaired security features. There are good, practical arguments for making this switch, but if history is anything to go by, the new notes are likely to excite comment and divide opinion.
We take the design, as well as the form of our money, very seriously. So seriously, in fact, that a change in design can spark outrage and even death threats. That’s what happened in Britain in 2013, when the Bank of England announced it was removing the picture of the social campaigner Elizabeth Fry from £5 notes and replacing it with an image of Winston Churchill, meaning there would be no women, other than the Queen, left on Sterling notes. Feminist campaigner Caroline Criado-Perez led calls for another notable woman, Jane Austen, to appear on £10 notes – and for her pains was threatened with rape and murder.
No doubt much of the vile abuse heaped on her through social media was simply down to misogyny. Even in this day and age, some men are unhappy that women speak out publicly. But the hatred directed at Criado-Perez was much worse than the harassment received by many other women who’ve campaigned for women’s achievements to be recognised. Why is that? When I met Caroline Criado-Perez at Cheltenham Science Festival, where she was speaking on a panel I was chairing about feminism and bringing up girls today, she told me she wonders whether the reason is that money is seen to emanate from the establishment, and so to have women demanding recognition on that money represents a particular threat to the ‘natural’ order of things.
Banknotes are both ubiquitous and somehow sacred. They’re a strong projection of nationhood and economic power. A banknote isn’t just a store of value; it is a symbol. One of the most powerful a country has. The choice of person featured on banknotes matters: kings and queens, independence leaders, military heroes, social reformers, writers and composers. Do governments hope that a reminder of power or influence in the form of a portrait on a note might add to our confidence in its currency? The implication is that this note, just a bit of paper (or soon, polymer) and of no intrinsic value, can be trusted because it is issued by the central bank of a country that produces such monumental figures.
Happily Criado-Perez eventually won her battle, and Jane Austen will feature on the new British £10 note.
HOW NOT JUST GRANNY STRUGGLED TO GET THE POINT
In 1971, Britain’s whole system of currency was overhauled. To aid the country’s accession to the European Economic Community, now the European Union, Britain changed to a decimal system to match the other countries involved.
Under the old system, a penny was one twelfth of a shilling, and there were twenty shillings in a pound. Under the new system, a penny was one tenth of the new 10 pence coin (effectively the replacement for the two-shilling coin) and ten 10 pences added up to a new pound.
Decimalisation was introduced only three months after I was born, so I’ve known nothing else. But for those who had grown up with the ‘old’ money, the change caused considerable confusion, as well as provoking strong reactions. Some saw it as a surrender of British uniqueness to European uniformity; others were suspicious they were in some way being swindled. Most were at the very least uneasy about such a big change to something as foundational as the currency.
The Government was concerned enough to commission a 5-minute public information film explaining the benefits of the new money. It was called, rather patronisingly, ‘Granny Gets the Point’. (They’d never get away with such ageism and sexism now.) My own grandmother could see the logic of the change well enough, but it didn’t stop her from feeling some mistrust. And that was an entirely rational reaction. For a start, for quite some time, whenever she bought something with the new money, she had to mentally calculate what it would have cost in the old money just to be sure she was getting a fair deal. It was like being abroad and having to work out whether two francs for a cup of coffee was a rip off.
It didn’t help that decimalisation coincided with an era of high inflation. Each month, the new pound bought you a little less than it did the month before. Of course, it was nothing like those situations in countries wracked by hyper-inflation – Germany between the wars; Zimbabwe more recently. In these places, in their darkest days, it took barrowfuls of bills to buy a loaf of bread, workers were paid as often as three times a day and 2,000 printing presses worked day and night to print higher denomination notes. Crazy numbers – 5 million marks, 500 million marks, 5 billion marks – reflected a complete collapse in economic confidence. Even so, in the 1970s British people came to see their new pounds and pence as diminished, not just in terms of what they could buy, but in their actual physical size.
Five years after the introduction of decimal coins, there was an experiment in which people were shown a series of circles of different sizes on a piece of paper and asked to guess from memory which best matched a coin of a particular value. It was true that the new decimal coins were generally smaller than the old coins, but even so people significantly overestimated the dimensions of the old coins.7 It was as if their minds were telling them that old money bought more so it must have been bigger.
Perception of size is something we learn through experimentation as babies and toddlers. As the developmental psychologist Jean Piaget famously discovered, very young children cannot fathom how a taller, thinner beaker could possibly hold the same amount of liquid as a shorter, fatter one. At that age tall means big. Only as our cognitive abilities improve do we develop a more sophisticated understanding of volume that enables us to estimate how much differently shaped beakers will hold.
As we develop, our perceptual skills gradually improve, only for things to go awry again when money is involved. In a classic study, conducted way back in 1947, children more than old enough to understand Piaget’s liquid conservation tasks were presented with a table laid out with a series of coins and cardboard discs. The discs were identical in size to the coins, but again and again the children judged them to be smaller than the real money.8 These were children who knew the value of the coins, and this knowledge seemed to skew their perception of size. More than that, the more the coin was worth, the more their perception became skewed. An abstract concept, the store of value in coins was overtaking their
