Cognizing Demonetization: A Survey Study

In India, recent changes in economic policy have contributed to reshaping of the economy. One such change agent has been demonetisation. Technically, Demonetization is the act of ceasing a currency unit of its legal tender status. The current form of money is extracted from the circulation, retired, and replaced with new currency. Changes in the monetary policies, like any other changes in society, have a tangible impact upon the money related thinking of people. Within the human mind, the decisions to spend, invest, or to save money are understood in terms of opening of mental accounts (Thaler, 1999), followed by financial analyses and then finally reconfiguring the money related cognitions leading to such decisions where after the mental accounts can be closed. All human transactions in the market utilize either money or a token of money. Basically, whenever a change in either of these two takes place, human cognitions need to undergo a consequential transformation. Behavioural Economics understands that whereas the world of money in the market seems appropriate and logical in the context of transactions, human mind is predictably irrational and must understand and stabilize the change needed in a new cognitive set-up in the context of money. Against the background of the contemporary financial changes, the present study aimed to understand the demonetization linked cognitive modifications in the human mind since the state of mind undergoes changes during such events. The sample consisted of 90 participants which were uniformly divided into 3 segments: service providers, decision makers in businesses and students, all having minimum graduate qualification. A survey was devised to study the cognitions and subsequent behaviour indicators of people across these three segments individually and comparatively. The information thus collected gave valuable insights into the dynamics of demonetisation as reflected in human cognitive setup.