Replication: The money illusion effect in a Brazilian sample and meta-analyses

Abstract

Shafir, Diamond, and Tversky (1997, Money illusion, The Quarterly Journal of Economics, 112(2), 341–374) described the phenomenon of money illusion as the inclination to consider money without adequately taking into account the inflation factor, emphasizing nominal values rather than real ones. This study aims to replicate the four conditions outlined in the original research by Shafir and colleagues, adapted to the Brazilian context: problems that include different financial decision-making situations (regarding earnings, transactions, contracts) that might be affected by money illusion. This cross-sectional and pre-registered study evaluated the money illusion in a sample of 372 Brazilian participants and was conducted via mobile phone/computer. The results found were very similar to the original findings: depending on the terms used (real, nominal, or neutral framing), participants showed varying inclinations towards opting for economically advantageous opportunities. Based on these findings, it is plausible that the money illusion effect may exhibit cultural independence. This assertion is substantiated by the replication of the effect within a distinct cultural context from the original study. To reinforce the empirical basis of this assertion, future investigations should analyze these findings across diverse cultural settings.