Zero Effect for Zeros
“Does “000,000” Matter? Psychological Effects of Turkish Monetary Reform,” Sonia Amado, Mert Teközel, Yurdal Topsever, Rob Ranyard, Fabio Del Missier and Nicolao Bonini, Journal of Economic Psychology, vol. 28, no. 2, April 2007, pp. 154-69 (http://dx.doi.org/10.1016/j.joep.2006.05.003). The authors, who are variously at Ege University and Izmir University in Turkey, at Bolton University in the U.K, and at the University of Trento in Italy, report:
Turkish monetary reform, which took effect in January 2005, introduced the New Turkish Lira (NTL) by deleting six zeros from the former currency, the Turkish Lira (TL). Two experiments investigated how the introduction of the NTL might affect price estimation…. [Our results show that] there were no significant differences between TL and NTL, suggesting that Turkish consumers had quickly adapted. Such ease of adaptation is consistent with a rescaling hypothesis: when one or more zeros are dropped from a currency, consumers rescale all prices relatively quickly rather than relearn them selectively through gradual exposure.
(That’s an excerpt from the article “Soft Is Hard,” published in AIR 14:3.)